+3.4% increase in revenue
Growth in adjusted EBITDA to €528 million
(+11.2%) and in adjusted EBITDA margin to 26.1% (+183 bps)
2021 targets confirmed despite the current
inflationary tension
Regulatory News:
Verallia (Paris:VRLA):
Highlights
- Revenue increased by +3.4% over nine months to €2,022
million (+5.8% at constant exchange rates and
scope)(1)
- Revenue growth of +2.0% to €695 million in Q3
(+2.1% at constant exchange rates and scope)(1), despite a
high comparative basis in Q3 2020
- Adjusted EBITDA of €528 million over nine months, up
+11.2% over the previous year
- Increase in adjusted EBITDA margin to 26.1% over nine months
(+183 bps)
- Reduction in the net debt ratio to 1.8x adjusted
EBITDA for the last 12 months, compared with 2.2x at the end of
September 2020
- Sales and adjusted EBITDA targets confirmed for 2021 despite
the current inflationary tension
(1) The revenue growth at constant exchange rates and scope,
excluding Argentina, was +3.6% over nine months 2021 compared with
nine months 2020, and -0.2% in Q3 2021 compared with Q3 2020.
"Despite a high comparative basis created by a very dynamic
third quarter last year, Verallia posted a solid growth in revenue
over the third quarter and over the first nine months of the year.
Adjusted EBITDA and its margin also improved substantially over the
nine months, driven by the Group's three strategic pillars: the
operational leverage related to the increase in volumes, a positive
mix and inflation spread, and improved operational efficiency
(Performance Action Plan (PAP)). We thus confirm our targets for
2021, despite the strong inflationary tensions currently observed.
In addition, on October 7th, we presented our strategic roadmap for
2022-2024 with ambitious new financial and environmental targets,
reflecting our determination to reinforce our global leadership and
our commitment to meaningfully contribute to the limitation of
global warming", commented Michel Giannuzzi, Chairman and
CEO of Verallia.
Revenue
In € million
9M 2021
9M 2020
Revenue
2,022.2
1,955.8
Reported growth
+3.4%
Organic growth
+5.8%
In € million
Q3 2021
Q3 2020
Revenue
694.5
681.2
Reported growth
+2.0%
Organic growth
+2.1%
Over the first nine months of the year, Verallia recorded
revenue of €2,022 million, compared with €1,956
million over the same period in 2020, and thus posted an
increase of +3.4% on a reported basis.
The impact of exchange rates was -2.4% over the first
nine months (-€46 million), primarily concentrated in the first
half. It was in large part linked to the depreciation of the
Argentine peso and the Brazilian real and, to a lesser extent, the
depreciation of the Ukrainian hryvnia and the Russian rouble.
At constant exchange rates and scope, revenue increased
by +5.8% over the first nine months of the year (+3.6%
excluding Argentina).
The third quarter posted organic growth of
+2.1% at Group level, despite the very strong comparative
basis of the third quarter of 2020 (organic growth of +8.9% in Q3
2020 vs. Q3 2019). By product family, sales of wine (still and
sparkling) and beer continued to grow, while sales of non-alcoholic
beverages and food jars normalised after a particularly dynamic
third quarter in 2020.
An increase in sales prices at the start of the year and a
product mix that remained positive in the third quarter at Group
level also contributed to the revenue improvement over the first
nine months of the year.
Revenue breakdown by region:
- In Southern and Western Europe,
sales were up over the first nine months of the year, despite a
slight slowdown in the third quarter because of the strong
comparative basis of Q3 2020.
- In Northern and Eastern Europe,
the downturn observed in the first half was reduced over the nine
months thanks to a solid revenue growth in the third quarter. This
improvement is particularly notable in Germany in food jars and
beer.
- In Latin America, the strong
momentum in volumes recorded in the first half continued over the
third quarter in all countries, while increases in sales prices
further contributed to revenue growth.
Adjusted EBITDA
In € million
9M 2021
9M 2020
Adjusted EBITDA
527.6
474.4
Adjusted EBITDA margin
26.1%
24.3%
In € million
Q3 2021
Q3 2020
Adjusted EBITDA
182.9
175.7
Adjusted EBITDA margin
26.3%
25.8%
Adjusted EBITDA rose by +11.2% over the first nine
months of the year to €528 million. Over the third
quarter, adjusted EBITDA increased by +4.1%, reaching €183
million, versus €176 million in Q3 2020.
The unfavourable exchange rate effect amounted to -€16
million, mainly due to the depreciation of Latin American
currencies, the Ukrainian hryvnia and the Russian rouble in the
first half.
Verallia generated a positive inflation spread1 in all
regions, with prices remaining stable in Europe and increasing in
Latin America to offset cost inflation. The product mix remained
favourable and the net reduction in production cash costs of €29
million (or 2.4% of production cash costs) also contributed to the
improvement in adjusted EBITDA.
The adjusted EBITDA margin rose over the first nine
months of the year to 26.1% versus 24.3% over the same
period in 2020. In the third quarter, the margin reached
26.3%.
Very solid balance sheet
In the first nine months of the year, Verallia continued to
improve its net debt ratio, with net debt amounting to
€1,213 million at the end of September 2021, after two share
buybacks by the Group for €109 million and the payment of €114
million in dividends in July. The net debt ratio was 1.8x
adjusted EBITDA for the last 12 months, compared with 2.2x at
the end of September 2020 and 1.9x at the end of June 2021.
Building on the success of the bond issue tied to two
environmental criteria (Sustainability-Linked Bond) last May, the
Group plans to continue its policy to diversify its financing
sources.
2021 targets
Despite the strong inflationary tensions currently observed on
costs, Verallia is confirming for 2021 the targets announced at the
publication of its half-year results on 29 July of this year and
will achieve the medium-term targets communicated at the time of
its IPO in 2019 a year ahead.
Thus, for the year ending 31 December 2021, the Group
anticipates:
- Revenue of around €2.6 billion;
- A level of volumes at the same level as those reached
in 2019;
- Adjusted EBITDA of around €675
million.
Restatement of the medium-term targets
announced at the Capital Markets Day on 7 October
2021:
Verallia went a step further on October 7th, 2021 by setting new
goals aligned with the objective of limiting global warming to
1.5°C:
- 46% reduction in Scope 1 and 2 emissionsby 2030 in
absolute terms (base year 2019)1
- Scope 3 emissions maintained below 40% of total
emissions in 2030
- Net Zero in 2050 for Scope 1 and 2 emissions
The Group has also set new Medium-Term Financial Targets for
2022–2024:
2022–2023–2024
Assumptions
Organic Sales Growth2
+4-6% CAGR
- From ca half volume and half price/mix
- Moderate inflation in raw material and energy costs after
2022
Adj. EBITDA margin
28%-30% in 2024
- Positive price/cost spread
- Net PAP > 2% of production cash cost (i.e. > €35m per
annum)
Cum. Free Cash Flow3
ca €900m over 3 years
- Recurring and strategic Capex @ ca 10% of sales,
- Including CO2-related capex and 3 new furnaces by 2024
Earnings per Share
(excl. PPA4)
ca €3 in 2024
- Average cost of financing (pre-tax) @ ca 2%
- Effective tax rate @ ca 27%
Shareholder Return
Policy
Dividend / share growth > 10%
per annum +
Accretive share buy-backs
- Net income growth > 10% per annum
- Investment grade trajectory (leverage < 2x)
An analysts' conference call will be held on Thursday, 28
October 2021 at 9.00 am (CET) via an audio webcast service (live
and replay) and the results presentation will be available on
www.verallia.com.
Financial calendar
- 16 February 2022: financial
results for Q4 and financial year 2021 – Press release
after market close and
conference call/presentation the following morning at 9.00 am
CET.
- 20 April 2022: financial results
for Q1 2022 – Press release after
market close and conference call/presentation the following
morning at 9.00 am CET.
- 11 May 2022: 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.
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 2020, Verallia produced more than 16 billion glass bottles
and jars and posted revenue of €2.5 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
Disclaimer
Certain information included in this press release does not
constitute historical data but constitutes 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.
Personal data protection
You can unsubscribe from our press release distribution list at
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investors@verallia.com. Press releases will still be available to
access via the website https://www.verallia.com/en/investors/.
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purpose of implementing and managing its internal and external
communication. This processing is based on legitimate interests.
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 of the Verallia
group and, where applicable, 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 conditions defined by the applicable regulations
for the protection of personal data, you may access and obtain a
copy of the data concerning you, object to the processing of this
data and request for it to be rectified or erased. You also have a
right to restrict the processing of your data. To exercise one 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 CNIL (Commission nationale de
l'informatique et des libertés — French regulatory body).
APPENDICES
Key figures for the first nine months
of the year
In € million
9M 2021
9M 2020
Revenue
2,022.2
1,955.8
Reported growth
+3.4%
Organic growth
+5.8%
Adjusted EBITDA
527.6
474.4
Adjusted EBITDA margin
26.1%
24.3%
Net debt at the end of
September
1,213.4
1,358.5
Last 12 months adjusted EBITDA
678.8
611.8
Net debt/last 12 months adjusted
EBITDA
1.8x
2.2x
Key figures for the third
quarter
In € million
Q3 2021
Q3 2020
Revenue
694.5
681.2
Reported growth
+2.0%
Organic growth
+2.1%
Adjusted EBITDA
182.9
175.7
Adjusted EBITDA margin
26.3%
25.8%
Evolution of revenue by nature in €
million during the first nine months
In € million
9M 2020 revenue
1,955.8
Volumes
+34.2
Price/Mix
+78.3
Exchange rates
(46.1)
9M 2021 revenue
2,022.2
Evolution of adjusted EBITDA by nature
in € million during the first nine months
In € million
9M 2020 Adjusted EBITDA (i)
474.4
Activity contribution
+0.2
Price-mix/costs spread
+44.5
Net productivity
+29.0
Exchange rates
(15.9)
Other
(4.5)
9M 2021 Adjusted EBITDA (i)
527.6
(i) Adjusted EBITDA is calculated on the basis of operating
profit 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.
Financial structure
In € million
Nominal amount or max. amount
drawable
Nominal rate
Final maturity
30 September 2021
Sustainability-Linked Bond (i)
500
1.625%
14 May 2028
500.1
Term loan A (i)
1,000
Euribor +1.25%
7 Oct. 2024
995.7
Revolving credit facility RCF 1
500
Euribor +0.85%
7 Oct. 2024
-
Negotiable debt securities (Neu CP)
400
150.2
Other borrowings (ii)
147.7
Total borrowings
1,793.7
Cash and cash equivalents
(580.3)
Net borrowings
1,213.4
(i) Including accrued interests. (ii) Including IFRS 16 lease
liabilities for €49.6 million, local borrowing for €29.4 million,
receivables assigned with recourse for €16.1 million and received
collateral on commodities derivatives for €50.0 million.
Reconciliation of operating profit to
adjusted EBITDA
In € million
9M 2021
9M 2020
Operating profit
317.0
238.4
Depreciation, amortisation and impairment
(i)
207.4
207.6
Restructuring costs (ii)
(1.8)
19.8
IAS 29 Hyperinflation (Argentina)
(iii)
(2.1)
1.7
Management share ownership plan and
associated costs
7.2
2.9
Other
(0.1)
4.1
Adjusted EBITDA
527.6
474.4
(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 for 2020 those linked to
the transformation plan implemented in France in 2020. (ii)
Corresponds mainly to the transformation plan in France for 2020.
(iii) The Group has applied IAS 29 (Hyperinflation) since the
second half of 2018.
IAS 29: Hyperinflation in
Argentina
Since the second half of 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 nine months of 2021, the net impact on revenue was
€6.3 million. The hyperinflation impact has been excluded from
Group adjusted EBITDA as shown in the table "Reconciliation of
operating profit 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 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. From 2021 onwards, they will also include
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.
The Southern and Western Europe
segment comprises production plants located in France, Spain,
Portugal and Italy. It is also designated by the abbreviation
"SWE".
The Northern and Eastern Europe
segment comprises production plants located in Germany, Russia,
Ukraine and Poland. It is also designated by the abbreviation
"NEE".
The Latin America segment comprises
production plants located in Brazil, Argentina and Chile.
Liquidity: calculated as the Cash +
Undrawn Revolving Credit Facilities – Outstanding Neu Commercial
Paper.
Amortisation of intangible assets acquired
through business combinations: Corresponds to the
amortisation of customer relations 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 applied by the Group after passing the
increase in its production costs on to these prices, if required,
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 and before production gap and the impact of the Performance
Action Plan (PAP).
1 Target to be validated by the SBT initiative. 2 At constant FX
and excluding changes in perimeter. 3 Defined as the Operating Cash
Flow - Other operating impact - Interest paid & other financing
costs - Cash Tax. 4 Earnings excl. amortization expense for
customer relations (PPA) recognized upon the acquisition from
Saint-Gobain, of ca €0.38 / share (net of taxes).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027005799/en/
Verallia Investor Relations
contact Alexandra Baubigeat Boucheron -
alexandra.baubigeat-boucheron@verallia.com
Press contacts Brunswick
– Benoit Grange, Hugues Boëton, Tristan Roquet Montegon -
verallia@brunswickgroup.com – +33 (0)1 53 96 83 83
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