Very strong revenue growth of 24% in highly
dynamic markets
Regulatory News:
Verallia (Paris:VRLA):
Highlights
- Substantial increase in revenue in Q1 2022 to €750 million,
i.e. +24.0% (+23.9% at constant exchange rates and
scope)(1)
- Adjusted EBITDA up at €183 million compared to €152
million in Q1 2021
- Adjusted EBITDA margin at 24.4%, down slightly compared
to Q1 2021 at 25.1%
- Reduction in net debt leverage to 1.7x adjusted EBITDA
for the last 12 months, compared to 2.1x as of 31 March 2021 and
1.9x as of 31 December 2021
(1) Revenue growth at constant exchange rates and scope
(excluding Argentina) of +24.1% in Q1 2022 compared to Q1 2021.
"Verallia posted a very strong sales increase as a result of a
highly dynamic glass market and price increases offsetting some of
the cost inflation. In the current geopolitical context leading to
unprecedented energy inflation and a negative inflation spread, the
Group increased its EBITDA thanks to the operational leverage from
the increase in volumes and its Performance Action Plan. Despite
the current uncertainty, Verallia can rely on its agility and
resilience and therefore reaffirms its 2022 objectives", commented
Michel Giannuzzi, Chairman and CEO of Verallia.
Revenue
In € million
Q1 2022
Q1 2021
Revenue
749.9
604.9
Reported growth
+24.0%
Organic growth
+23.9%
In the first quarter of the year, Verallia recorded
revenue of €750 million, compared to €605 million in
the first quarter of 2021, representing a strong 24.0% increase
in reported revenue.
The currency effect is almost negligible at +0.1% in Q1
(+€0.5 million).
At constant exchange rates and scope, revenue
significantly increased by 23.9% in the first quarter of the
year (and by +24.1% excluding Argentina). Highly dynamic sales
volumes over the quarter, which increased by almost 10%, coupled
with selling price increases of over 10%, offsetting some of the
significant inflation in production costs.
In addition, the product mix remains positive for the
quarter.
Revenue breakdown by region:
- In Southern and Western Europe,
sales volumes grew by more than 10%, with an increase across all
countries. Sales prices increased significantly over the quarter,
offsetting some of the high cost inflation. The product mix is also
very positive.
- The Northern and Eastern Europe
regionreported approximately 10% growth in sales volumes.
When the conflict in Ukraine began at the end of February, the
Group decided to halt production at its local plant while keeping
its two furnaces in hot condition. Since then, at the request of
our local customers and local teams, one of the two furnaces has
resumed production, mainly to produce food jars, while the other
has been turned off, emptied, and cooled down in order to keep it
in good condition. As detailed in Chapter 5.4.2.2. "Outlook for the
financial year ending on 31 December 2022" of the 2021 Universal
Registration Document published on 29 March 2022, the Group's
exposure to Ukraine remains limited, with one plant located in the
West of the country and revenue totalling around €50 million in
2021 (less than 2% of the Group revenue). Sales prices have also
been increased to mitigate the impact of the significant cost
inflation.
- In Latin America, sales volumes in
Brazil and Chile posted strong growth, while in Argentina
production was limited due to a furnace repair. Moreover, a highly
dynamic approach to managing sales prices has continued in order to
offset local inflation.
Adjusted EBITDA
In € million
Q1 2022
Q1 2021
Adjusted EBITDA
182.7
151.7
Adjusted EBITDA margin
24.4%
25.1%
Adjusted EBITDA increased over the first quarter of the
year and stood at €183 million. Despite the expected
negative inflation spread1 (-€34 million), adjusted EBITDA
increased in the first quarter of 2022, thanks to a strong positive
impact from activity (+€58 million) and a net reduction in
production cash costs (+€7 million of the Performance Action Plan).
In addition, unlike in previous quarters, the exchange rates impact
was almost negligible owing to the strength of the Brazilian
real.
However, the adjusted EBITDA margin decreased slightly
(-72 bps) due to the mathematical and expected dilution resulting
from the increase in sales prices. This amounted to 24.4%
over the quarter.
Continued reduction in
debt
Verallia continued to reduce its net debt during
the first quarter of the year. Net debt stood at €1,222
million at the end of March 2022. This corresponds to a net
debt ratio of 1.7x adjusted EBITDA for the last 12 months,
compared to 1.9x at 31 December 2021 and down from 2.1x at 31 March
2021.
In addition, liquidity2 remained very high at €897
million at 31 March 2022.
2022 Guidance
It should be noted that the consequences of the conflict in
Ukraine (direct and indirect) are changing rapidly, generating very
high volatility which is likely to affect forecasts.
Verallia is expecting a sharp growth in its annual
revenue (>10%) thanks to the substantial rise in
volumes in a buoyant market and the significant increase in sales
prices.
In today's environment of accelerating inflation that has been
ongoing since the second half of 2021, Verallia expects to see a
significant increase in its production costs in 2022, of which
energy is a major factor.
In this highly inflationary climate, the Group will continue to
adjust its sales prices in order to reflect the pressure from cost
inflation. Thanks to the additional contribution of increased
volumes and its PAP programme, Verallia reaffirms its objective of
achieving an adjusted EBITDA greater than €700
million.
Verallia continues to implement its ESG roadmap and reaffirms
its ambitious environmental objectives.
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 joining forces with our
customers, suppliers and other partners across the value chain to
develop beneficial and sustainable new solutions for all.
With around 10,000 employees and 32 glass production facilities
in 11 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 2021, Verallia produced more than 16 billion glass bottles
and jars and recorded a revenue of €2.7 billion. Verallia is listed
on compartment A of the regulated market of Euronext Paris (Ticker:
VRLA – ISIN: FR0013447729) and is included in the following
indices: SBF 120, CAC Mid 60, CAC Mid & Small and CAC
All-Tradable.
For more information, visit www.verallia.com
Follow us on LinkedIn, Twitter, Facebook and YouTube
An analysts' conference call will be held on Thursday, 21 April
2022 at 9.00 am (CET) via an audio webcast service (live and
replay) and the results will be available at www.verallia.com.
Financial calendar
- 11 May 2022 at 2.00 pm CET:Annual
General Shareholders' Meeting.
- 27 July 2022: results for H1 2022
– Press release after market
close and conference call/presentation the following morning
at 9.00 am CET.
- 19 October 2022: financial results
for Q3 2022 – Press release after
market close and conference call/presentation the following
morning at 9.00 am CET.
Disclaimer
Certain information included in this press release are not
historical facts but are forward-looking statements. These
forward-looking statements are based on current beliefs,
expectations and assumptions, including, without limitation,
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 or implied by these
forward-looking statements. These risks and uncertainties include
those discussed and identified in Chapter 3 "Risk Factors" in 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 information and statements are no guarantee
of future performance.
This press release includes only summary information and does
not purport to be comprehensive.
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purpose of implementing and managing its internal and external
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The data collected (last name, first name, professional contact
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order to supervise these data transfers outside of the European
Union. Under the conditions defined by the applicable regulations
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right to restrict the processing of your data. To exercise one of
these rights, please contact the Group Financial Communication
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us, you believe that your rights have not been respected or that
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you may submit a complaint to CNIL (Commission nationale de
l'informatique et des libertés — French regulatory body).
APPENDICES
Key figures during the first
quarter
In € million
Q1 2022
Q1 2021
Revenue
749.9
604.9
Reported growth
+24.0%
Organic growth
+23.9%
Adjusted EBITDA
182.7
151.7
Adjusted EBITDA margin
24.4%
25.1%
Net debt at the end of March
1,221.8
1,296.6
Last 12 months adjusted EBITDA
709.1
626.1
Net debt/last 12 months adjusted
EBITDA
1.7x
2.1x
Evolution of revenue per nature in €
million during the first quarter
In € million
Revenue Q1 2021
604.9
Volumes
57.2
Price/Mix
87.4
Exchange rates
0.5
Revenue Q1 2022
749.9
Evolution of adjusted EBITDA per nature
in € million during the first quarter
In € million
Adjusted EBITDA Q1 2021 (i)
151.7
Activity contribution
57.7
Price-mix/costs spread
(34.1)
Net productivity
6.9
Exchange rate
0.0
Other
0.5
Adjusted EBITDA Q1 2022 (i)
182.7
(i) Adjusted EBITDA is calculated on the basis of 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.
Reconciliation of operating profit
(loss) to adjusted EBITDA
In € million
Q1 2022
Q1 2021
Operating profit (loss)
109.1
83.5
Depreciation, amortisation and impairment
(i)
69.9
66.9
Restructuring costs
0.6
(0.3)
Acquisition costs, M&A
0.1
0.0
IAS 29 Hyperinflation (Argentina) (ii)
0.0
(0.1)
Management share ownership plan and
associated costs
2.5
1.7
Other
0.5
0.0
Adjusted EBITDA
182.7
151.7
(i) 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, including those linked to the
transformation plan implemented in France. (ii) The Group has
applied IAS 29 (Hyperinflation) since 2018.
Financial structure
In € million
Nominal amount or max. amount
drawable
Nominal rate
Final maturity
31 March 2022
Sustainability-Linked Bond — May 2021
(i)
500
1.625%
May 2028
504.3
Sustainability-Linked Bond — November 2021
(i)
500
1.875%
Nov. 2031
495.4
Term loan A — TLA (i)
500
Euribor +1.25%
Oct. 2024
497.7
Revolving credit facility RCF 1
500
Euribor +0.85%
Oct. 2024
-
Negotiable debt securities (Neu CP)
(i)
400
135.0
Other borrowings (ii)
121.7
Total borrowings
1,754.2
Cash and cash equivalents
(532.4)
Net debt
1,221.8
(i) Including accrued interests. (ii) Including IFRS16 leasing
(€49.9m), local debts (€57.5m), factoring recourse (€19.6m).
IAS 29: Hyperinflation in
Argentina
Since 2018, the Group has applied IAS 29 in Argentina. The
adoption of this standard requires the restatement of non‐monetary
assets and liabilities and of the income statement 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 the finance costs.
Financial items for the Argentinian subsidiary are converted
into euro using the closing exchange rate for the relevant
period.
In the first quarter of 2022, the net impact on revenue amounted
to +€0.2 million. The hyperinflation impact has been
excluded from consolidated adjusted EBITDA as shown in the table
"Reconciliation of operating profit (loss) to adjusted EBITDA".
GLOSSARY
Activity category: 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 exchange rates and scope. Revenue growth
at constant exchange rates is calculated by applying the average
exchange rates of the comparative period to revenue for the current
period of each Group entity, expressed in its reporting
currency.
Adjusted EBITDA: This is a non-IFRS
financial measure. It is an indicator for monitoring the underlying
performance of businesses adjusted for certain expenses and/or
income which are non-recurring or liable to distort the company's
performance. Adjusted EBITDA is calculated on the basis of
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 represents purchases of 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.
It excludes the purchase of securities.
Recurring investments: Recurring
Capex represent acquisitions of property, plant and equipment and
intangible assets necessary to maintain the value of an asset
and/or adapt to market demand and to environmental, health and
safety constraints. It mainly includes furnace renovation and
maintenance of IS machines.
Strategic investments: Strategic
investments represent the acquisitions of strategic assets that
significantly enhance the Group's capacity or its scope (for
example, the acquisition of plants or similar facilities,
greenfield or brownfield investments), including the building of
additional new furnaces. Since 2021, they have also included
investments related to the implementation of the plan to reduce CO2
emissions.
Cash conversion: refers to the
ratio between cash flow and adjusted EBITDA. Cash flow refers to
adjusted EBITDA less Capex.
Free Cash Flow: Defined as the
Operating cash flow – Other operating impact – 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 the abbreviation
"SWE".
The Northern and Eastern Europe
segment comprises production sites located in Germany, Russia,
Ukraine and Poland. It is also designated by the abbreviation
"NEE".
The Latin America segment comprises
production sites located in Brazil, Argentina and Chile.
Liquidity: calculated as the Cash +
Undrawn Revolving Credit Facilities – Outstanding Neu Commercial
Papers.
Amortisation of intangible assets acquired
through business combinations: Corresponds to the
amortisation of customer relationships recognised upon the
acquisition of Saint-Gobain's packaging business in 2015 (initial
gross value of €740 million over a useful life of 12 years).
1 Spread represents the difference between (i) the increase in
sales prices and mix and (ii) the increase in its production costs.
The spread is positive when the increase in sales 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, before production gap and taking into
consideration the impact of the Performance Action Plan (PAP).
2 Calculated as the Cash + Undrawn Revolving Credit Facilities –
Outstanding Neu Commercial Papers.
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Verallia Investor Relations
contact Alexandra Baubigeat Boucheron –
alexandra.baubigeat-boucheron@verallia.com
Press contacts Julie
Bastien – julie.bastien@verallia.com Brunswick – Benoit
Grange, Hugues Boëton, Tristan Roquet Montegon –
verallia@brunswickgroup.com – +33 1 53 96 83 83
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