Increase in revenue to €1.052 billion (+40.2%, of which 34.7%
organic growth) Growth in adjusted EBITDA to €307
million Credit rating upgraded to Investment Grade
Regulatory News:
Verallia (Paris:VRLA):
HIGHLIGHTS
- A substantial increase in revenue in Q1 2023 to €1.052
billion, i.e. +40.2% (+34.7% at constant scope and exchange
rates)1
- Growth in adjusted EBITDA2 to €307 million, from €183
million in Q1 2022
- An improvement in the adjusted EBITDA margin to 29.2%,
from 24.4% in Q1 2022
- Integration of Verallia UK in line with our
expectations
- Now Investment Grade after Moody’s upgraded the credit
rating to Baa3
- Banking refinancing in the amount of €1.1 billion, based
on environmental and social key performance indicators
(Sustainability Linked Loan)
- Net debt ratio reduced to 1.3x adjusted EBITDA for the last
12 months, compared to 1.7x at 31 March 2022 and 1.6x at 31
December 2022
“Verallia has very well begun 2023. The Group is on track to
meet its full-year revenue growth target. The strong profitability
achieved over the quarter was boosted by a positive inflation
spread and quality work by the Group’s industrial teams in the
Performance Action Plan deployment. In addition, Verallia
successfully refinanced part of its debt on attractive terms. The
Group also benefited from an upgrade to its credit rating assigned
by Moody’s, thereby being promoted to Investment Grade. All this is
testament to Verallia’s high-quality operating and financial
profile. We anticipate an adjusted EBITDA of more than €1 billion
in 2023 and pursue our decarbonisation trajectory”, commented
Patrice Lucas, CEO of Verallia.
REVENUE
Breakdown of revenue
In € million
Q1 2023
Q1 2022
Revenue
1,051.6
749.9
Reported growth
+40.2%
Organic growth
+34.7% (+31.3% excluding
Argentina)
Revenue in the first quarter of 2023 totalled €1.052 billion,
a strong 40.2% increase on a reported basis compared with last
year.
The foreign exchange impact was negative at -2.9%, i.e. -€22
million. This was attributable to a sharp depreciation in the
Argentinian peso and Ukrainian hryvnia.
Scope effects stemming from the acquisition of Allied
Glass (since renamed Verallia UK) in November 2022 were positive at
€63 million, i.e. +8.4%, boosting Group spirits’ sales
growth in Q1 2023.
At constant scope and exchange rates, revenue increased by
+34.7% (and by +31.3% excluding Argentina). Sales volumes fell
slightly over the quarter in Europe but continued to grow in Latin
America. The year got off to a weak start in Europe in the beer
segment.
The Group introduced further selling price hikes in Europe to
counter the production cost inflation. Prices were raised in Latin
America as well following high inflation in the region.
The product mix remained positive in the first quarter.
Revenue breakdown by region:
- Southern and Western Europe saw
volumes fall slightly over the quarter. Italy was held back by
insufficient production capacity (due to a scheduled furnace
stoppage for partial renovation work) while facing strong demand in
the market, but the mix proved very positive. France was penalised
by strikes, mostly due to a social climate disrupted by the
country’s pension reforms.
- Northern and Eastern Europe
experienced decreasing volumes, primarily because of a weak demand
in the beer segment in Germany. Volumes increased in Ukraine. The
second furnace started up again thanks to the efforts of the local
staff and improved supply chain and market conditions. The
integration of Verallia UK, meanwhile, is going very well.
- Latin America reported an increase
in volumes over the quarter in Brazil and Argentina. The Brazilian
market remains vibrant and the ramp up of the Jacutinga new furnace
is excellent. Our activities in Argentina are penalised by the
current political uncertainty and economic instability in the
country. Volumes in Chile decreased over the quarter as
distributors and clients hold large amounts of inventory and
exports by our local clients have fallen.
ADJUSTED EBITDA
Breakdown of adjusted EBITDA
In € million
Q1 2023
Q1 2022
Adjusted EBITDA
307.4
182.7
Adjusted EBITDA margin
29.2%
24.4%
Adjusted EBITDA increased to €307 million in the first
quarter of 2023. The unfavourable effect of exchange rates,
attributable to the depreciation of the Argentinian peso and
Ukrainian hryvnia, reached -€13.4 million. Those negative change
impacts have been partially compensated by the newly acquired
Verallia UK business’ contribution.
As expected, the inflation spread3 was well into positive
territory at €135 million, boosted by particularly favourable base
effects: the inflation spread in Q1 2022 was negative (at -€34
million) due to a time-lag between the effects of production cost
inflation and the introduction of price hikes in Europe throughout
2022.
Meanwhile, cash production costs fell sharply (PAP), in line
with the Group’s objective, and resulted in a €13 million
improvement in EBITDA (i.e. 2.0% of cash production costs).
Adjusted EBITDA was buoyed up by exceptional income in the
amount of €10 million relating to insurance compensation received
for damage caused by a fire in Argentina in Q4 2021.
The adjusted EBITDA margin increased to 29.2% from 24.4%
in Q1 2022.
A VERY SOLID BALANCE SHEET, UPGRADED BY MOODY’S TO INVESTMENT
GRADE
Verallia’s net debt at end-March 2023 totalled €1,304
million, bringing its debt ratio to 1.3x adjusted EBITDA for
the last 12 months, compared to 1.7x at 31 March 2022 and 1.6x
at 31 December 2022.
The Group had liquidity4 of €838 million at 31 March
2023.
Verallia announced on 4 April 2023 that rating agency
Moody's had upgraded the Group’s long-term credit rating to
Baa3 with a stable outlook, so it is now
Investment Grade. This upgrade fully acknowledges the
Group’s financial strength and the robustness of its business model
geared towards profitable growth. Verallia now has a Baa3 rating
from Moody’s with a stable outlook and a BB+ rating from Standard
& Poor’s with a positive outlook.
€1.1 billion REFINANCING AGREEMENT FOR A TERM LOAN AND
RCF
Amid highly volatile financial markets, Verallia was able to
secure the refinancing of his €1 billion debt that was maturing in
October 2024. The Group signed an agreement with a pool of
international banks on April 17th 2023 for a €1.1 billion
syndicated credit facility based on environmental and social key
performance indicators (Sustainability Linked Loan). This facility
is in the form of a €550 million term loan and a €550 million
revolving credit facility (RCF) and will be used to refinance in
advance the Group’s existing syndicated credit facility. The new
term loan has a 4-year maturity with a one-year extension option,
while the new RCF has a 5-year maturity with two one-year extension
options. The RCF will not be drawn at the closing of the
operation.
The terms and conditions applied to this new facility are linked
to the achievement of ambitious ESG targets reflecting current
environment and social challenges. These targets can impact the
margin upwards or downwards and are linked to the three following
indicators: the reduction of Group’s CO2 emissions (Scopes 1 &
2), optimization of water consumption in our plants, and the
promotion of diversity.
Materially oversubscribed, this facility allows the Group to
secure its long-term liquidity while continuing to optimize the
average cost of its debt.
PROGRESS REPORT ON THE INTEGRATION OF VERALLIA UK
The integration of Allied Glass, which was renamed Verallia UK
on January 1st 2023, is on track: deployment of IT systems,
roll-out of PAP methodology underway with plans to launch the first
actions in the second half, procurement contracts incorporated into
the Group’s contracts and policies, ...
2023 OUTLOOK
Despite the uncertainty surrounding global macroeconomic
conditions, the glass market in Europe and Latin America should
remain supportive in 2023. The Group will continue to invest in
developing its production capacity and in deploying its
decarbonisation technologies for the coming years.
Verallia intends to pursue its profitable growth strategy based
on regular organic growth, a positive inflation spread and an
annual reduction in cash production costs (PAP) of 2%.
On the strength of all these success factors, Verallia confirms
its objective of achieving revenue growth of more than 20% and
anticipates an adjusted EBITDA of more than €1 billion in 2023.
In addition, Verallia will continue tirelessly to implement its
ESG roadmap.
An analysts’ conference call will be held on 20 April 2023 at
9.00am (CET) via an audio webcast service (live and replay)
and the results presentation will be available on
www.verallia.com.
FINANCIAL CALENDAR
- 25 April 2023: Annual General Shareholders' Meeting.
- 4 July 2023: start of the quiet period.
- 25 July 2023: results for H1 2023 - Press release after market
close and conference call/presentation the next day at 9.00am
CET.
- 28 September 2023: start of the quiet period.
- 19 October 2023: financial results for Q3 2023 - 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 joining forces with our customers,
suppliers and other partners across the value chain to develop
beneficial and sustainable new 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: 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 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 4 “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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access via the website https://www.verallia.com/investisseurs.
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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 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 CNIL (Commission nationale de
l'informatique et des libertés — French regulatory body).
APPENDICES - Key figures
In € million
Q1 2023
Q1 2022
Revenue
1,051.6
749.9
Reported growth
+40.2%
Organic growth
+34.7%
Adjusted EBITDA5
307.4
182.7
Group margin
29.2%
24.4%
Net borrowings
at end of period
1,304.4
1,221.8
Last 12
months adjusted EBITDA
990.3
709.1
Net debt/last 12 months adjusted
EBITDA
1.3x
1.7x
Growth in revenue by nature in € million during the first
quarter
In € million
Q1 2022 revenue
749.9
Volume effect
-39.2
Price/Mix
+299.6
Exchange rates
-21.8
Scope
+63.1
Q1 2023 revenue
1,051.6
Growth in adjusted EBITDA by nature in € million during the
first quarter
In € million
Q1 2022 adjusted EBITDA
182.7
Activity contribution
-16.6
Price-mix/Cost spread
+135.0
Net productivity
+12.8
Exchange rates
-13.4
Other
+6.8
Q1 2023 adjusted EBITDA
307.4
Reconciliation of operating profit to adjusted EBITDA
In € million
Q1 2023
Q1 2022
Operating profit
224.7
109.1
Depreciation and amortisation6
79.0
69.9
Restructuring expenses
0.5
0.6
Company acquisition costs and
earn-outs
0.1
0.1
IAS 29: hyperinflation (Argentina)7
0.3
0.0
Management share ownership plan and
associated costs
2.8
2.5
Other
-
0.5
Adjusted EBITDA
307.4
182.7
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 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 2023, the net impact on revenue was
-0.3 million. The hyperinflation impact has been excluded from
Group adjusted EBITDA as shown in the table "Reconciliation of
operating profit to adjusted EBITDA".
Financial structure
In € million
Nominal amount
or max. amount drawable
Nominal rate
Final maturity
31 March 2023
Sustainability-linked bond May
20218
500
1.625%
May 2028
504.8
Sustainability-linked bond
November 20218
500
1.875%
Nov. 2031
496.3
Term loan A – TLA8
500
Euribor +1.25%
Oct. 2024
501.4
Revolving Credit Facility RCF1
500
Euribor +0.85%
Oct. 2024
-
Negotiable Commercial Papers (NEU CP)8
400
189.3
Other liabilities9
140.2
Total
borrowings
1,832.0
Cash and cash equivalents
527.7
Net debt
1,304.4
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 exchange rates and scope. Revenue growth at constant
exchange rates is calculated by applying the same exchange rates to
financial indicators presented in the two comparative periods (by
applying the exchange rates of the previous period to the
indicators of the current period).
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 represents
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 renovations 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 associated
with the implementation of the CO2 emissions reduction plan.
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 Operating Cash Flow -
Other operating impacts - Interest paid & other financing costs
- Cash Tax.
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, UK, 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. And one
sales office in the US.
Liquidity: calculated as 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 €740m over a useful life of 12 years).
--------------------------
1 Growth in revenue at constant scope and exchange rates
excluding Argentina of +31.3% in the first quarter of 2023 compared
with the first quarter of 2022. 2 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. 3 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
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 the
production gap and the impact of the Performance Action Plan (PAP).
4 Calculated as Cash + Undrawn Revolving Credit Facilities –
Outstanding NEU Commercial Paper. 5 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. 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 (Financial Reporting
in Hyperinflationary Economies) since 2018. 8 Including accrued
interest. 9 o/w IFRS16 leasing (€53.3m), Collateral Engie (€50.0m),
local debts (€15.8m), factoring recourse and double cash
(€22.3m).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230419005756/en/
Verallia press service Annabel Fuder &
Stéphanie Piere verallia@wellcom.fr | +33 (0)1 46 34 60 60
Verallia investor relations contact
Alexandra Baubigeat Boucheron |
alexandra.baubigeat-boucheron@verallia.com
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