Very good financial performance despite a more difficult
market environment
2023 adjusted EBITDA target confirmed above €1.1
billion
Regulatory News:
Verallia (Paris:VRLA):
HIGHLIGHTS
- Increase in 9M revenue to €3,075 million, i.e. +22.1%
compared with the first 9 months of 2022 (+22.5% at constant scope
and exchange rates)1
- Sharp increase in adjusted EBITDA2 to €915 million from
€654 million in 9M 2022 (+39.9%)
- Expansion in adjusted EBITDA margin to 29.8% from 26.0%
in 9M 2022 (27.5% in Q3 2023 compared with 26.0% in Q3 2022)
- Further progress made with ongoing developments in terms
of new products, cullet treatment and decarbonisation
- Net leverage ratio of 1.2x last 12 months adjusted
EBITDA, compared with 1.3x at 30 June 2023 and 1.1x at 30
September 2022 (prior to the acquisition of Allied Glass)
“Verallia remains on track to deliver a very good 2023 despite
the drop in demand observed since August due to slowing consumption
and continued destocking down the value chain. Profitability
remained robust over the quarter thanks to the commitment shown by
all our teams and to the Performance Action Plan (PAP). We are
temporarily adjusting production capacity in the fourth quarter as
we prepare to begin 2024 under good industrial and economic
conditions. On the back of this agility and Verallia’s excellent
fundamentals, we confirm our 2023 adjusted EBITDA target of over
€1.1 billion and continue to implement our decarbonisation
roadmap,” noted Patrice Lucas, Chief Executive Officer of
Verallia.
REVENUE
In millions of euros
9M 2023
9M 2022
Revenue
3,074.5
2,517.6
Reported growth
+22.1%
Organic growth
+22.5% (+18.6% excluding
Argentina)
In millions of euros
Q3 2023
Q3 2022
Revenue
931.8
878.7
Reported growth
+6.0%
Organic growth
+11.3% (+4.9% excluding
Argentina)
Revenue in the first 9 months of 2023 totalled €3,075
million, up by a strong 22.1% on a reported basis compared with
last year.
Foreign exchange impact amounted to €(181) million, i.e.
-7.2%. This negative impact, which worsened in the third
quarter, is largely linked to the steep depreciation in the
Argentine peso.
Scope effects stemming from the acquisition of Allied
Glass (since renamed Verallia UK) in November 2022 were positive at
€170 million, i.e. +6.8%, boosting growth in the Group’s
sales of spirits bottles during the first 9 months of 2023.
Revenue at constant scope and exchange rates increased by
+22.5% (and by +18.6% excluding Argentina). Sales volumes
contracted significantly in August and September with beer
remaining the most heavily affected market. However, the sparkling
wines, non-alcoholic beverages and food jars segments showed good
resilience.
In addition, revenue growth was again driven by higher average
selling prices than in 2022 and product mix was also strongly
positive during the first 9 months of the year.
Revenue by region broke down as follows:
- Volumes contracted significantly over the quarter in Southern and Western Europe; revenue remained
up over Q3 2022 as the price effect remained positive and the mix
was favourable, especially in Italy.
- Volumes in Northern and Eastern
Europe were down, largely because of weak demand in Germany
(especially in the beer market), while the reopening of our second
furnace in Ukraine gave local business activity there a boost.
Verallia UK, the integration of which still progresses very
satisfactorily, also contributed positively to the growth in
revenue.
- Volumes in Latin America continued
to grow over the quarter in Brazil and the situation in Chile is
returning to normal but activity remains weak in Argentina as the
country remains penalised by political hesitancy and economic
upheaval.
ADJUSTED EBITDA
In millions of euros
9M 2023
9M 2022
Adjusted EBITDA
915.1
654.2
Adjusted EBITDA margin
29.8%
26.0%
In millions of euros
Q3 2023
Q3 2022
Adjusted EBITDA
256.1
228.8
Adjusted EBITDA margin
27.5%
26.0%
Adjusted EBITDA surged in the first 9 months of 2023 to €915
million (+39.9% compared with 9M 2022) despite a sharply
unfavourable foreign exchange impact of €(64) million resulting
largely from the steep depreciation in the Argentine peso. These
negative foreign exchange impacts were partially offset by the
positive contribution of Verallia UK.
The inflation spread3 remained largely positive at €296 million
in the first 9 months of 2023, with base effects still favourable
in Q3.
Net reduction in cash production costs (PAP) remains in line
with Group target and drove a €39 million improvement in EBITDA in
the first 9 months of 2023 (2.0% of cash production costs).
Adjusted EBITDA margin expanded to 29.8% during the first
nine months of 2023 from 26.0% in 9M 2022. It remained high
in Q3 at 27.5% (26.0% in Q3 2022) despite slower business
activity.
VERY SOLID BALANCE SHEET
Verallia’s net debt at end-September 2023 stood at €1,304
million, putting its leverage ratio at 1.2x last 12 months
adjusted EBITDA compared with 1.3x at 30 June 2023 and 1.1x at
30 September 2022 (prior to the acquisition of Allied Glass).
The Group had liquidity4 in the amount of €947 million at
30 September 2023. It enjoys a healthy maturity profile on its
long-term debt with the nearest due date in April 2027 and the
following ones spread over four years.
SHORT-TERM FINANCING PROGRAMME (NEU CP) TRANSFERRED TO
VERALLIA SA
On 28 September 2023, the Verallia Group transferred its
short-term financing programme of Negotiable European Commercial
Paper (NEU CP) to Verallia SA, listed on Euronext Paris, to replace
the existing programme held by its subsidiary Verallia Packaging,
wholly owned by Verallia SA.
The Group pursues the centralization of its financing on
Verallia S.A., as were the two Sustainability Linked bonds and its
syndicated loan facilities.
The NEU CP programme has been increased to a maximum principal
amount of €500 million versus €400 million previously. The former
programme of Verallia Packaging will be turned off as from the
first issuances are made by Verallia S.A. and will progressively be
switched off until its outstanding issuances arrive at
maturity.
The programme will not be rated as the securities and shares
issued by Verallia S.A. are admitted to trading on the regulated
market of Euronext Paris. It is recalled that Moody’s and Standard
& Poor’s have attributed the credit rating of Baa3 (with stable
outlook) and BBB- (with positive outlook) to Verallia S.A.; both
Sustainability Linked bonds are rated BBB- by Standard &
Poor’s.
2023 OUTLOOK
With market conditions deteriorating since August, we are
temporarily adjusting production capacity as we prepare to begin
2024 under good conditions. We consider the current market
situation to be temporary and intend to pursue our profitable
growth strategy.
On the back of its fundamentals (positive inflation spread,
performance action plan) and its agility, Verallia confirms its
2023 adjusted EBITDA target of more than €1.1 billion.
Verallia will also make further progress with the ongoing
developments in the areas of new products, cullet treatment and
decarbonisation, which are central to its CSR roadmap.
An analysts’ conference call will be held on Friday 20 October
2023 at 9.00am (CET) via an audio webcast (live and replay)
and the results presentation will be made available on the
www.verallia.com website.
FINANCIAL CALENDAR
- 14 January 2024: start of the quiet period.
- 14 February 2024: financial results for Q4 and FY 2023 - Press
release after market close and conference call/presentation the
next day at 9.00am CET.
- 3 April 2024: start of the quiet period.
- 24 April 2024: financial results for Q1 2024 - Press release
after market close and conference call/presentation the next day at
9.00am CET.
- 26 April 2024: Annual General Shareholders’ Meeting.
- 3 July 2024: start of the quiet period.
- 24 July 2024: results for H1 2024 - Press release after market
close and conference call/presentation the next day at 9.00am
CET.
- 1 October 2024: start of the quiet period.
- 22 October 2024: financial results for 9M 2024 - Press release
after market close and conference call/presentation the next day at
9.00am CET.
About Verallia
At Verallia, our purpose is to re-imagine glass for a
sustainable future. We want to redefine how glass is produced,
reused and recycled, to make it the world’s most sustainable
packaging material. We are making common cause with our customers,
suppliers and other partners across the whole value chain to
develop new beneficial and sustainable solutions for all.
With more than 10,000 employees and 34 glass production
facilities in 12 countries, we are the European leader and the
world's third-largest producer of glass packaging for beverages and
food products. We offer innovative, customised and environmentally
friendly solutions to over 10,000 businesses worldwide.
In 2022, Verallia produced close to 17 billion glass bottles and
jars and posted revenue of €3.4 billion. Verallia is listed on
compartment A of the regulated market of Euronext Paris (ticker:
VRLA – ISIN code: FR0013447729) and is included in the following
indices: CAC SBT 1.5°, STOXX600, SBF 120, CAC Mid 60, CAC Mid &
Small and CAC All-Tradable.
Disclaimer
Certain information included in this press release comprises not
historical facts but forward-looking statements. These
forward-looking statements are based on current beliefs,
expectations and assumptions, including assumptions regarding
Verallia’s present and future business strategies and the economic
environment in which Verallia operates. They involve known and
unknown risks, uncertainties and other factors, which may cause
actual performance and results to be materially different from
those expressed in or implied by these forward-looking statements.
These risks and uncertainties include those described and
identified in Chapter 4 “Risk Factors” of the Universal
Registration Document approved by the AMF and available on the
Company’s website (www.verallia.com) and the AMF’s website
(www.amf-france.org). These forward-looking statements and
information are no guarantee of future performance.
This press release includes only summary information and does
not purport to be comprehensive.
Personal data protection
You may unsubscribe from our press release mailing list at any
time by sending your request to the following email address:
investors@verallia.com. Press releases will still be accessible via
the website at https://www.verallia.com/en/investors/.
Verallia SA, as data controller, processes personal data for the
purpose of implementing and managing its internal and external
communication. Personal data processing is carried out on a
legitimate interests basis. The data collected (last name, first
name, professional contact details, profiles, relationship history)
is essential for this processing and is used by the relevant
departments within the Verallia Group and, where applicable, by its
subcontractors. Verallia SA transfers personal data to its service
providers located outside the European Union, who are responsible
for providing and managing technical solutions related to the
aforementioned processing. Verallia SA ensures that the appropriate
guarantees are obtained in order to supervise these data transfers
outside of the European Union. Under the terms and conditions
defined by applicable regulations on personal data protection, you
may access and obtain a copy of the data concerning you, object to
the processing of this data and request that it be rectified or
erased. You also have a right to restrict the processing of your
data. To exercise any of these rights, please contact the Group
Financial Communication Department at investors@verallia.com. If,
after having contacted us, you believe that your rights have not
been respected or that the processing does not comply with data
protection regulations, you may submit a complaint to the CNIL
(Commission nationale de l'informatique et des libertés — France’s
relevant regulatory body).
APPENDICES - Key figures
In millions of euros
9M 2023
9M 2022
Revenue
3,074.5
2,517.6
Reported growth
+22.1%
Organic growth
+22.5%
Adjusted EBITDA5
915.1
654.2
Group margin
29.8%
26.0%
Net debt at end of
period
1,304.2
921.6
Last 12 months adjusted
EBITDA
1,126.4
804.7
Net debt/last 12 months adjusted
EBITDA
1.2x
1.1x
Growth in revenue by nature in millions of euros during the
first 9 months
In millions of euros
9M 2022 revenue
2,517.6
Volumes
-160.8
Price/Mix
+727.9
Exchange rates
-180.6
Scope
+170.4
9M 2023 revenue
3,074.5
Growth in adjusted EBITDA by nature in millions of euros during
the first 9 months
In millions of euros
9M 2022 adjusted EBITDA
654.2
Contribution from activity
-39.2
Price-mix/Cost spread
+296.2
Net productivity
+39.2
Exchange rates
-63.5
Other
+28.2
9M 2023 adjusted EBITDA
915.1
Reconciliation of operating profit (loss) to adjusted EBITDA
In millions of euros
9M 2023
9M 2022
Operating profit (loss)
663.5
432.2
Depreciation, amortisation and
impairment6
243.1
215.6
Restructuring costs
2.8
0.4
Acquisition and M&A costs
0.5
1.3
IAS 29, Hyperinflation (Argentina)7
(1.2)
(2.2)
Management share ownership plan and
associated costs
6.4
6.7
Other
-
0.1
Adjusted EBITDA
915.1
654.2
Adjusted EBITDA is an alternative performance measure according
to AMF Position no. 2015-12.
Adjusted EBITDA is not a standardised accounting measure meeting
a single, generally accepted definition under IFRS. It must not be
considered as a substitute for operating profit (loss) or cash
flows from operating activities, which are measures defined by
IFRS, or as a measure of liquidity. Other issuers may calculate
adjusted EBITDA differently from the definition used by the
Group.
IAS 29: hyperinflation in Argentina
The Group has applied IAS 29 in Argentina since 2018. The
adoption of this standard requires the restatement of non-monetary
assets and liabilities and of the statement of income to reflect
changes in purchasing power in the local currency. These
restatements may lead to a gain or loss on the net monetary
position included in financial income (expense).
Financial items for the Argentinian subsidiary are converted
into euros using the closing exchange rate for the relevant
period.
The net impact on revenue during the first nine months of
2023 amounted to €(3.6) million. The hyperinflation impact has
been excluded from consolidated adjusted EBITDA as shown in the
table “Reconciliation of operating profit (loss) to adjusted
EBITDA”.
Financial structure
In millions of euros
Nominal or max. amount
drawable
Nominal rate
Final maturity
30 September 2023
Sustainability-linked bond May
20218
500
1.625%
May 2028
501.0
Sustainability-linked bond
November 20218
500
1.875%
November 2031
501.4
Term loan – TL8
550
Euribor +1.25%
April 2027 + 1‑year extension
549.6
Revolving credit facility (RCF)
550
Euribor +0.75%
April 2028 + 1‑year + 1-year
ext.
-
Negotiable commercial paper (NEU CP)8
400
160.2
Other liabilities9
150.0
Total debt
1,862.2
Cash and cash equivalents
558.0
Net debt
1,304.2
GLOSSARY
Activity: corresponds to the sum of the change in volumes
plus or minus the net change in inventories.
Organic growth: corresponds to revenue growth at constant
scope and exchange rates. Revenue at constant exchange rates is
calculated by applying the same exchange rates to the financial
indicators presented for the two periods being compared (i.e. by
applying the exchange rates from the previous period to the
financial indicators for the current period).
Adjusted EBITDA: adjusted EBITDA is a non-IFRS financial
measure. It is an indicator for monitoring the underlying
performance of activities adjusted for certain expenses and/or
income which are non-recurring or liable to distort the Company’s
performance. Adjusted EBITDA is calculated based on operating
profit (loss) adjusted for depreciation, amortisation and
impairment, restructuring costs, acquisition and M&A costs,
hyperinflationary effects, management share ownership plans,
subsidiary disposal-related effects and contingencies, plant
closure costs and other items.
Capex: short for “capital expenditure”, this corresponds
to purchases of the property, plant and equipment and intangible
assets necessary to maintain the value of an asset and/or adapt to
market demand or to environmental and health and safety
constraints; or to increase the Group’s capacity. Securities
purchases are excluded from this category.
Recurring capex: this refers to purchases of the
property, plant and equipment and intangible assets necessary to
maintain the value of an asset and/or adapt to market demand and
environmental, health and safety constraints. It mainly includes
furnace renovations and the maintenance of IS machines.
Strategic capex: this refers to the strategic acquisition
of assets that significantly increase the Group’s capacity or its
scope (for example, the acquisition of plants or similar
facilities, and greenfield or brownfield investments), including
the building of additional new furnaces. Since 2021, this has also
included investments associated with implementing the CO2 emissions
reduction plan.
Cash conversion: this refers to the ratio between cash
flow and adjusted EBITDA. Cash flow is defined as adjusted EBITDA
less capex.
Free cash flow: this is defined as cash flow from
operating activities – other operating impacts – interest paid
& other financing costs – taxes paid.
The Southern and Western Europe segment comprises
production sites located in France, Spain, Portugal and Italy. It
is also designated by its acronym “SWE”.
The Northern and Eastern Europe segment comprises
production sites located in Germany, the United Kingdom, Russia,
Ukraine and Poland. It is also designated by its acronym “NEE”.
The Latin America segment comprises production sites
located in Brazil, Argentina and Chile.
Liquidity: this is calculated as available cash + undrawn
revolving credit facilities – outstanding negotiable commercial
paper (NEU CP).
Amortisation of intangible assets acquired through business
combinations: this corresponds to the amortisation of customer
relationships recognised upon acquisition.
1 Revenue growth at constant scope and exchange rates excluding
Argentina was +18.6% in the first 9 months of 2023 compared with 9M
2022.
2 Adjusted EBITDA is calculated based on operating profit (loss)
adjusted for depreciation, amortisation and impairment,
restructuring costs, acquisition and M&A costs,
hyperinflationary effects, management share ownership plans,
subsidiary disposal-related effects and contingencies, plant
closure costs and other items.
3 The spread corresponds to the difference between (i) the
increase in selling prices and the mix applied by the Group after
passing any increase in production costs onto these selling prices
and (ii) the increase in production costs. The spread is positive
when the increase in selling prices applied by the Group is greater
than the increase in its production costs. The increase in
production costs is recorded by the Group at constant production
volumes and before any production gap and Performance Action Plan
(PAP) effect.
4 Calculated as available cash + undrawn revolving credit
facilities – outstanding negotiable commercial paper (NEU CP).
5 Adjusted EBITDA is calculated based on operating profit (loss)
adjusted for depreciation, amortisation and impairment,
restructuring costs, acquisition and M&A costs,
hyperinflationary effects, management share ownership plans,
subsidiary disposal-related effects and contingencies, plant
closure costs and other items.
6 Includes depreciation and amortisation of intangible assets
and property, plant and equipment, amortisation of intangible
assets acquired through business combinations, and impairment of
property, plant and equipment.
7 The Group has applied IAS 29 “Hyperinflation” since 2018.
8 Including accrued interest.
9 o/w IFRS 16 leases (€61.1 million), Engie collateral (€49.5
million), local debts (€14.2 million).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231019274523/en/
Verallia Press contacts Annabel Fuder & Stéphanie Piere
verallia@wellcom.fr | +33 (0)1 46 34 60 60 Verallia Investor
Relations contact David Placet | david.placet@verallia.com
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