Vidrala Sa

Good afternoon and welcome to the conference call organized by Vidrala to present its 2024 first half results. Vidrala will be represented in this meeting by Raúl Gómez, CFO, and Íñigo Mendieta, Head of IR. The presentation will be held in English. In the Q&A session, questions will be also answered in Spanish. Nevertheless, it is strongly recommended to post questions in English in order to facilitate understanding of everyone. In the company website, www.vidrala.com, you will find available a presentation that will be used as supporting material to cover this call, as well as a link to access the webcast. Mr. Mendieta, you now have the floor.

Good afternoon to everyone, and thank you for the time that you dedicate to attend this call. As announced, Vidrala has published this morning its 2024 first half results, and additionally we have also published the results presentation that will be used as supporting material to this conference call. Following this document, we will dedicate, as always, the first part of our exposition to briefly explain the figures released today, to devote afterwards as much time as necessary to discuss on the business performance in the Q&A session. So, starting with the main magnitudes, in the first half of 2024, we have achieved, as most relevant business figures, revenues above 830 million euros, an EBITDA of 225 million euros, and an end-income equivalent to an EPS of 3.75 euros. Net debt at the end of the reported period stood at 433 million euros, which is equivalent to a leverage ratio of 1.0 times the pro forma EBITDA, which considers the contribution of the last 12 months from Bidderport. Turning to slide four, we look at the top-line performance, analysing the annual variation of revenue broken down by concepts. We arrive at the reported figure of 830.4 million euros. As it is shown in the graph, This figure is the result of a 0.7% growth at constant currency and comparable scope. Volumes were up plus 9%, almost fully offset by negative price mix effect. Scope, which aggregates the combined effect of the incorporation of Vidro Porto's 2023 year-to-date results and the exclusion of Vidrala Italia since 1st of March of 2024, contributed an additional 2.8% to revenue growth. Following the order of key business figures referred to at the beginning, we analyze with the same breakdown the variation of operating income. 2024 first half EBITDA amounted to 225 million euros, reflecting an organic year-on-year variation of minus 2.4%, which was more than compensated by the scope contribution. These operating figures resulted in a solid margin EBITDA over sales of 27.1%, which remains roughly stable versus the previous year. In this slide, we present the distribution of sales and EBITDA by business units under the new perimeter that is including Vidro Porto in 2023 figures, and fully excluding the results of Idrar Italia in 2024. Although, as you know, it has contributed to reported sales and EBITDA in the first two months of 2024. And since March, it is reported as discontinued operations, contributing exclusively to net profit until the sale became effective at the start of July of 2024. So the graphs show still a weaker performance in Iberia, negatively affected by price adaptations and still soft demand context. Results in these divisions should progressively improve as comparison basis becomes easier towards the second half of the year. The UK continues to do well, supported by new demand for glass containers we are creating through the filling business and the integration of the park. And Brazil continues experiences the second round effects of the recent capacity expansion projects in the Southeast unit in operation since mid 2023. Finally, we analyze free cash flow generation in detail with the help of this chart that reconstructs the cash conversion accumulated year to date. So starting from an EBITDA margin of 27.1%, we have dedicated 9.1% of sales to investments and another 7.2% to the aggregate of working capital, financials and taxes. As a result, pre-cash flow generation stands around 11% of sales. NETEP at the end of June 2024 closed at 433.4 million euros. Nevertheless, on the 4th of July, we announced the closing of the sale of Vidral Italy. So after the proceeds from this transaction and the payment of the corresponding extraordinary dividend and the July complementary dividend, net debt should be around 320 million euros at the end of this month, at the end of July, considering also the cash generated across the month. And now before concluding, turning to the Q&A session, I pass the word to Raúl so that he can extract main conclusions or make some highlights or comments that he considered appropriate.

Thank you, Inigo, for your presentation. And thank you all for your time in attending this meeting today. You know, we really appreciate your interest, particularly today that we are in our traditional time. Well, our results published today are a good proof of the strong business profile that we have created. Under quite modest demand conditions, I mean, under a period where demand is not recovering as expected from last year's drop, our solid numbers prove the strong rationale behind our strategic actions and are mostly driven by our internal corporate movements. We are today not only stronger than ever, Israel is today a much more different company. Let me recap in that point that over the last five, six years, we have divested from our operations in Belgium. We have acquired a large boat in operations named The Park in the UK. We have entered Brazil, quite a relevant movement for us. We have finally completed the sale of Italy under the respective conditions. And all along this period, we are intensively investing in improving our manufacturing sites, our industrial footprint. Hope you can see as clearly as we do the strong focus and the solid rationale behind our strategy. Digitalize today a different company, more diversified. Diversified across three different strategic regions and units that creates a great business combination. And our financial position is today more solid than ever. This is the background behind these are the reasons why we are today reiterating our guidance for the two in the two more relevant indicators to monitor. Despite, as we said before, demand conditions are I would say globally softer than initially expected, we still do see our EBITDA for the year 2024 above €450 million and we see our free cash flow for the year 2024 above €180 million. More relevant, in conclusion, our financial position has improved and the business and we leading the company remain fully prepared to respond once our demand recovers, something that will happen soon. That means that in our conclusion, hope you agree with me, with us, that we are and we remain particularly well positioned for the future. Thank you.

Thank you very much. We now give way to the Q&A session. Ladies and gentlemen, the Q&A session starts now. Questions by telephone will be answered first. If you wish to ask a question, please dial star 5 on your telephone keypad. Our first question comes from the line of Francisco Ruiz from BNP Paribas. Please go ahead.

Hello, good afternoon. I have three questions. The first one is, Raúl, if you could comment a little bit on how you see the second half in terms of volumes in continental Europe mainly. Because you are regulating the guidance that... I mean, probably you agree with me that the visibility is still low. So, what's your visibility in order to be so firm, creating this VTA of 450 and of 1600 and in sales? The second question is a question that I made in Q1 as well. We've seen that Brazil is skyrocketing, or at least your numbers in Brazil. But you are working practically at full capacity. So are you taking any need to see time growth for next year? Or probably we should expect similar levels of growth in the resilience operation for 2025? And then it's more a modeling question. Working capital this semester is still growing 50 million euros. So you could give us an idea of what you see working capital at the end of the year as well as CapEx. Thank you.