Verallia,Courbevoie

Hello and welcome to Verilya Q1 2025 Financial Results Analyst Call. My name is Trish Dey and I'll be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call where we will begin with the audio questions and move on to the web questions. For the audio participants, this can be done by pressing star 1 on your telephone keypad. I will now hand you over to your host, Mr. Patrice Luca, to begin today's conference. Thank you.

Good morning, everyone, and welcome to our call for Q1 financial results. As usual, Nathalie and I will go through our presentation and we'll have the Q&A session. I will share with you some key highlights, and Nathalie will present in detail our numbers, and then I will be back for our guidance. So to start with, just to remind you that Veralia is a global leader in glass packaging. We are number one in Europe, number two in Latin America, and number three worldwide. On this chart, you have our ID card. You have on the left the two 2024 split of our sales by segment. And as you already know, one of our strong assets is our customer base, more than 10,000 customers, and the diversified and balanced end markets in which we operate. We do operate in 12 countries with 35 plants with 64 furnaces. And please note also that we are running 19 pellet recycling centers, allowing us to control about 50% of our needs for external pellets. So let's move to some key highlights of our Q1. The key highlight I want to share with you is about a new innovative initiative. A few weeks ago, we started to use hydrogen as a combustion energy source for two furnaces in Essen in Germany. This hydrogen is coming from a nearby ArcelorMittal coking plant and made from a byproduct of coke production. We have signed with ArcelorMittal a five-year contract of partnership And after many tests and now weeks of production, it is a success. And we are operating the largest hydrogen-powered melting capacity in the glass industry with 6 megawatts. This will allow a CO2 emission reduction by 8% to 10%. And on top of this reduction, it is cost-effective compared to natural gas. This solution is an alternative to our electric and hybrid furnace technologies that we are deploying, meaning each time locally we would have access to an alternative bioenergy source, we will look at it to support our decarbonization roadmap. The second key highlight is to share with you the confirmation of our additional capacity launch in Brazil at Campo Bombo. The heat-up of the furnace will be done in a few weeks for first production by the end of H1. This additional capacity will allow us to pursue our growth in the dynamic Brazilian market. And this new furnace, a new advanced oxy-combustion technology, will operate with 18% CO2 emission reduction compared to a traditional furnace. This additional capacity will feed our growth in Brazil in H2. The third highlight is about product innovation. Glass is the perfect material to enhance and magnify the product offer of our customers. Developing customer intimacy and proposing premium and tailored solutions is the level we want to push. Here you have four good illustrations of what we lately accomplished. One new rosé bottle, which was one of the output of our French design awards. In UK, this new gin bottle. In Italy, a nice single-serve proposal for a non-alcoholic beverage, San Benedetto. And last in Brazil, a 600-millimeter returnable beer bottle for Abendez. By doing so, we are leveraging the full capability of glass as a packaging solution and demonstrating our ability to support our customers. Let's move now. Let's move now on some Q1 business insights. So about 2025 market situation, we can say that the stocking impact in most markets is now ending. And we can say that the growth is now directly linked with end consumption growth. In Europe, market is slightly up. And in LATAM, we are still facing a supportive market. Obviously, geopolitical and trade tensions are creating a very volatile and uncertain environment, which is leading to cautious and kind of wait-and-see position of many customers. In Q1, as Veralia, we experienced volume growth impacted with negative year-on-year inflation spread due to carryover from 2024 selling price and some inflationary pressure, mainly on energy in Q1. And finally, about capacity, we continue to see permanent capacity shutdown across Europe, and especially with the latest official public information with some significant adaptation in France in the past weeks. Facing this overall environment, we keep our focus on self-help measures and cash flow generation. One, we want to focus on customer innovation and product innovation to support our customers. And I believe that we can do much more with this level. Two, except in the UK and Germany, In Q2, we are planning a gradual back-to-normal use of our capacity in Europe, but ready to adapt again with agility if necessary, especially being vigilant of the real output conclusions of the tariff between US and Europe. In Germany, we have decided to launch an additional project to adapt our workforce for a restoring cost of about €10 million. And as usual, number four, productivity and cost control are at play as part of our DNA with PAP delivering again into one 2.3% of cash cost reduction. Finally, as we commented during our beginning of this year, our priority is cash generation with tight control over capex and working capital. Before giving the floor to Natalie, a quick overview of our Q1 results. So the positive news is our volume recovery. In a difficult market environment, our Q1 revenue is down by 2.2% year-over-year to 818 million euros, with organic growth at minus 3.6% year-over-year. Q1 adjusted PDA is 147 million euros, minus 27.9% year-over-year. with a margin of 18% minus 641 bits versus 2124. And about net debt leverage is at 2.3 at the end of March compared to 2.1 at the end of last year. So let's see now with Nathalie's vision of our numbers.

Thank you, Patrice, and good morning to you all. So let me lead you into this Q1 results. So you see here our revenue variance analysis for the first quarter. So we delivered a sales of 818 million euro to be compared to 836 million euro in Q1 2024. So the organic growth in the quarter is negative, minus 3.6%. If we exclude Argentina, it's minus 4.3%. You can see here in the usual pillars of our bridge that volumes contribute positively, as Patrice just commented, plus 24.1 million euros. So we have an improving demand context, especially in Latin America. And we've seen organic volume growth in Q1 again, with most segments improving. We have, and again, this growth is more dynamic in LATAM, but even in Europe, we've seen volume growth in this quarter. In the price mix, we have a negative impact as expected, so minus 59 million euros. We have a decrease in average selling prices year over year and some mixed impact in these figures. And if you remember, we had anticipated this negative impact in the beginning of the year. We have a negative exchange rate with minus 6.5 million euros. Here it's mainly coming from Brazil. The perimeter, in fact, 24.5 million is mainly linked to the new plant in Italy acquired in July 2024. And you have separate the Argentina variation of minus 1.4 million euros. So all in all, good momentum in volumes, but not sufficient to offset the negative price mix. So how does this translate into adjusted EBITDA? We have an adjusted EBITDA for the quarter of €147 million to be compared to €204 million. And that leads, as you can see on the top right, to an EBITDA margin of 18% to be compared to 24.4% one year ago. Here again, the usual pillars to explain this variation. We have a positive activity pillar, plus €18.5 million. We have here a positive impact from the organic state volumes that we were commenting before. Now, we'll come back to that, but in finished goods inventory, usually in Q1, we do prepare and build up inventories to enter the higher quarters that are Q2 and, of course, after Q3, which is not what happened in this first quarter where our inventories remained stable. The spread is strongly negative with minus 86.2 million euro. So we have seen we have lower selling prices and mixed, negative mixed impact. But we also have cost inflation and especially in this first quarter, we had some stronger than expected cost inflation mainly on energy from the spot element. On the net productivity, we deliver, as usual, more than 2% cash production cost reduction at 2.3%, that leads to plus €12.5 million additional APPA. The other pillar is the combination of perimetre effect, some SG&A reduction, at 2.3 million euros, the effects you have again mainly Brazil and Argentina as a separate pillar for minus 1.3 million euros. So as a conclusion, the decrease in our APCA compared to Q1 2024 is mainly driven by spread. At the end of the quarter, so our debt is pretty stable versus end of December 2024. We have a decrease in the last 12 months adjusted EBITDA, so our leverage is a bit higher than end of December at 2.3 times. But we have in the quarter almost neutral free cash flow when one year ago we had a very negative one, if you remember. And here, as usual, our financial structure, no specific change compared to end of December. We have a comfortable available liquidity at 927.9 million euros at the end of March.

Okay. So thanks, Nathalie. So about our guidance. So 2025 has started with uncertainty and volatility, marked with subdued European consumption and rising global tensions. As we speak, we still see a demand slightly up in Europe and remaining strong in Latin America. However, market conditions are much tougher due to the global environment. And in this context, so we do update our adjusted MDA target. So now we expect to be around 800 million euros from a level close to that of 24, which was 842 million euros initially. And we are confident to generate free cash flow of more than 200 million euros compared to around 200 million euros initially. Free cash flow again being our key focus for 2025. So thanks a lot for your attention and let's now move to our Q&A session.

Thank you, Mr. Luca. As mentioned, we will begin with the Q&A with the audio questions. As a reminder for the audio participants, it's star one to ask a question. We'll start off with Louise Weiser from UBS. Your line is open.

Good morning. I've got a few questions, please. So firstly, on the guidance 2025, what drove the cut to the adjusted EBITDA guidance? Is it linked to the strong negative price-cost spread in Q1 or the outlook on tariffs or something else? And what does your new guidance assume in terms of scenarios for the current year? Is there any indirect impact from tariffs on the volumes included in there? Then secondly, on volume and price for full year 2025, you said in the past on volumes probably low to mid single digit growth in 2025 and on price low single digit decline from the carryover and again low single digit decline from the additional price cuts. How do you see volume in price for full year 25 now in light of your new guidance? And the last one is around the price-cost spread in 2025. Strong negative impact on EBITDA in Q1 from the price-cost spread. Can you give more color on what happened? I think you mentioned more inflation costs. How much negative could this be for the full year, please?

Okay. Thanks a lot for your question. About our guidance and the slight adjustment we did on the ABDA level, it's mainly due to the market conditions, but we see much tougher than expected. Again, we have the good news on the volume side. But on the price mix, and especially on the mix, we see some negative impact that we had in Q1, especially I would say in January and February, but even again a little bit in March. The good news is that we see March, we had a March which was quite supportive in terms of volume. We see that again in the poll. So on the volume side, we are quite, let's say, confident with the different initiatives we have taken, but with some impact on price and mix. And you're right, we were expecting to make it simple. terms of volume with a mid-single digit impact in terms of price and mix. And now we see much more volume to be for the earlier high single digit and a few additional points negative in terms of price and mix compared to our initial expectation. And your questions about the tariff and the trade tension between US and the rest of the world, I mean, frankly, nothing has been really taken, just what we observe as we speak today, because the first difficulty we have is to understand what is the assumptions to be taken. You can go to bed with one information and wake up in the morning with a different information or even having something which seems to be clear on Monday and you have the opposite on Friday. And with our customers, it's about the same. So the main keyword is really agility and adaptation. This is why, by the way, we are cautious in production in Q1, and we are paying that with some less production contribution to our results in Q1 compared to what we do usually. As Natalie explained, in Q1, normally, We built some inventory for the high seasons to come in Q2 and Q3. Being cautious, we did not do that. And we see some production upside to come in Q2 as we are going to restart, except UK and Germany, as I mentioned. We are back to normal everywhere to face what we see as a peak season in Q2 and Q3. For the cost, Nathalie?

Yes, for the price, for the cost element in the spread, you're right, in Q1, we had a negative, what we had inflation in our cost, and we had some, I would say, one-off effects with the Especially energy, if you recall, the spot energy prices have been pretty high in Q1 and are now down. So we are back to normal level even reduced ones. But in Q1, we had a negative impact from the energy mainly. And also, in the cost inflation that we see for the full year, that should be close to neutral or slight inflation. But again, not the same as in Q1. We will benefit from collecting deflation, and we But again, back to the more surprise, I would say the spot energy prices were higher than expected in the first quarter. But that's not what we see going forward. As we speak today, energy is again lower, so that's good news for the rest of the year.

We now go to the line of Lars Kelberg from Stifel. Please go ahead.

Yeah, thank you. I just want to get back again to Q1. Again, we appreciate the energy costs went up, of course, right? But again, with your hedge portfolio, et cetera, it's still very puzzling to see that extreme margin contraction of 650 basis points sequentially. You've got to be able to provide some more color on that, and it's so... of that 650 basis points drop, because it did speak to most of the prices. Of course, price declines happened in the first half of 24 and some incremental, but you didn't have a top line problem here. So this is really a cost issue, it appears. So if you can provide some color, how do you expect that to reverse in Q2? And considering that, of course, the your guidance around 800 million, you need to have a real step up in margins for the balance of the year on the current revenue base to get there. And in the context then of uncertainty around the tariffs, how are we comfortable with that? And then the final, could you just put some color on that inventory variance, what it normally would have been as a positive contribution and also CapEx guidance in absolute number for the year, if you could. Thank you.

Yes, so you're right. We are so energy cost of question again. We are ahead as you very well know for a large part, but we always have. 15 to 20 percent, you know, open to spot large. So this is this element that was impacting our spread in the first quarter. So we always have an open position and, in fact, We have a bit more open position, but again, normal in our policy than one year ago, because one year ago we had lower production than anticipated. Here we are really well adjusted, so we have this open element, again, between 15 And that was impacted by the spot. And again, as we speak today, energy prices are down. So this portion that is open to spot, we are not penalized anymore in this first quarter. On the margin contraction, it's not only the spread impact, I would say. Again, we did not produce with a full production. We had a slow start in Jan and Feb and in March we had good sales, dynamic sales. but production was still pretty low. So again, we did not build the inventories that we usually would build in the first quarter. And so this has an impact on our margin, because basically you absorb less fixed cost than what you would normally do by running and building up a bit of inventory in the first quarter. One year ago, in Q1 2024, we were building some inventories. So again, this fixed cost absorption is also weighing on your EBITDA margin. So again, moving to Q2, Q3, and later in the year, as Patrice said, we are back with higher production. And so this will lead, you're absolutely right, to an improvement also in the adjusted EBITDA margin. So this is also answering, I think, your question on the inventory variation.

If you could just quantify that, help us to understand what that means, because you did have quite a meaningful positive on the activity pillar, which was 16 million positive. So how would that... then had you had a normal production.

I'm not going to give you a precise number here, Lars. Just again, it's a specific impact in this first quarter. And again, we will be improving in the second quarter and moving forward. Your question on the CAPEX?

About CAPEX, Lars, so what we see and what you could consider forecast for this year is that we're going to be below 300 million euros. So tightening, obviously, we see some depletion as well compared to the overall plan we have. So below 300 million euros, which will put us in the range of 8% plus of our revenue.

Thank you.

We will now move on to the line of Francisco Ruiz from BNP Paribas.

Hi, good morning. I have two questions. The first one, I'm sorry to insist on this. On the cost side, I mean, Natalie, you mentioned that you are almost 85% hedged in energy, but you are also working at a lower utilization capacity. So, as it happened last year, this has brought acquisition of energy is much lower right now than it should be. So how is it possible to have a 5% cost inflation with such a exposure? And I don't know if you could detail on this cost if there is also a negative effect on mix and you could quantify this. The second question is on capacity utilization. If you could remind what's the level right now and how much of your capacity is curtailed. And give a little more detail on Germany self-help measures, if this will come with a lower capacity for the future. And given that one of your main competitors has made a big restructuring in France, as you commented, I don't know if you are planning further movement on that side. Thank you. Okay.

So for this question, so just to clarify on the cost inflation, so the energy has quite significant impact to what we were expecting to run. And compared to last year, you know that we are edging. In our edging, facing some uncertainty on volume for 25, we are slightly reducing. We did 80%. So the non-edge part was much more 20% rather than 15%. And if you compare the gas price spot level in Q1, and especially it was very high in Jan and Feb, compared to last year. Compared to last year, we had significant impact here. And what we see as a good news to come, since that, at the end of March, it has started to release. If you look at the number, Jan and Feb, the megawater was around 50 euros. And as we speak, we are much more around 35 euros. And based on what is happening on the geopolitical and market environment. For capacity, as I commented, we are back to normal as we speak. In every country in Europe, except UK and Germany. So UK, we are still suffering from spirit markets, which is quite low and with all the uncertainties with US tariffs. So in UK, we are still one furnace which is not running on four. And in Germany, we have one furnace in Bad Dordrecht, which is not running, and we are making here a temporary adaptation. That means we have not made any decision for a definitive closure, as the opposite of what we did last year in Essen. So Germany and UK are really the two countries where we are still suffering from non-use capacity. For the rest of the countries, we are back to normal. In Germany, again, so we have decided not to do definitive capacity shutdown, but we have decided to adapt some cost base, especially on the workforce side. And as I mentioned, we plan for about 100 people for 10 million euros, and this will take place at Essen in Germany, manufacturing site, and some adaptation of the headquarters in Germany. For France, as you see, we don't plan any capacity adjustment. We see, again, in France, we are back to normal. We have relaunched the furnaces. We have some maintenance, which is business as usual, but we are not planning, as you speak, for an additional plan.

Okay, so correct me if I'm wrong, so two furnaces out of the 50-something that you got is only a 4%, 5% production curtailed right now?

Yes, globally for the group it's about that. Obviously with much more impact in the UK and Germany.

Okay, thank you.

And just to come back on your question on the cost side, so we talked about energy, but there is not only energy. We have also inflation on labor costs, for example. So here, nothing that is not anticipated, but as I commented, this is partially mitigated by some expected deflation on collect. And again, in Q1, we don't yet have the full impact of that. just to give some further light on the cost.

Okay, good. Thank you very much, Anthony.

We will now take from Mr. James Perry from Citi. Please go ahead.

Good morning. Thanks for the presentation. I'd just like to ask about the global consumption trends and trade flows. I know you talked about improving European volumes and obviously a direct exposure is Europe and Latam, but Would you be able to comment a bit more on any changes in customer behavior in light of the US tariff uncertainty? What are you hearing from customers regarding the export trends? And to what extent could a weak US consumer hold back your volume growth in 2025, do you think?

This is the question. The assumptions we have, as we speak, is consumption being slightly up, globally speaking, in Europe. What we see through the different strategy initiatives we have taken in different countries and different segments is We see for the area a good momentum in terms of volume. We see volumes picking up in beer and non-alcoholic beverage. The only segment which is suffering is much more sparkling. For discussing with the customers, frankly speaking, most of them are very cautious. They are a little bit of blind. What we may see is some tactical and strategic behavior with this 90-day pause, I would say. But it's really difficult to be definitive and to have a standard pattern to BMS. We don't know. So again, here what is key is agility and adaptation, being cautious in everything we plan, ready to adapt if necessary. Again, the good news is that we see we had a good march. We see a strong April, which is giving us a good momentum for Q2, and we'll see. And then you know as well that the weather conditions in Europe will be quite significant on Q3 and Q4 sales, so we'll see. But we are not pushing for or making an assumption of a high conception or even a pushy conception in Europe. We are quite cautious on that. And the results of our volume growth is much more related to the initiatives as we explain during the full year results of the new year. OK, thank you.

We will now take the question from Philip Lorin from Bernstein.

Please go ahead. Good morning. I just wanted to come back a little bit on your comments on the volume, so maybe it's just me, but you mentioned that volume seemed to play out the way you wanted, but you indicate as well that you would now expect a high single-digit growth versus mid-single-digit before, and at the same time, you mentioned that you had the negative effects from finished goods inventory in Q1. and that you will restart more capacity in Q2, except in Germany and the UK. So that strikes me as maybe the visibility has moved a lot or fluctuated a lot during the first quarter. Maybe you can shed some more light here. And also, when you speak about the volume trends, can you confirm whether this high single-digit growth that you now expect for Viradia as a whole includes Corsico or not? Is it in organic terms or not? Thank you.

Yes, so quite easy answer. Yes, Corsico is embedded in that. And you know that about Corsico, compared to last year, it's 4% growth coming from this scope of perinatal effects with a good momentum, especially on beer. This is what we have just said. good volume progression compared to last year. So obviously in H1 with the perimetral effect from Corsico. Keep in mind that in H2 we get the positive impact in Brazil as well with our additional capacity in Corcombo. And keep in mind as well that we have in our plan to start our pressure furnace in Italy. with Q4 impact with some good opportunity we see on the food segment. So this is a plan we have as we speak. But probably volumes are quite at a good level in terms of growth for us, but with a tougher market condition to get this growth. Make it simple.

Okay, and that led you basically to still not pile up that much finished goods inventories at the end of Q1 because you expect to be able to catch up on that production in future quarters. Yeah, yeah.

Okay. And it's also linked to the fact that it's really March that was very dynamic. Yes.

Okay, thank you.

You're welcome. As a reminder for the audio participants, star one to ask a question. We'll now move on to Jean-Pierre from OdoBHF. Please go ahead. We'll now take the line from Jean-Pierre de Jong from OdoBHF. Jean-François Grosjean speaking from OdoBHF.

Hello, Jean-François.

Thank you. Just one question. Just one question regarding the pricing. You mentioned on the press release that there is some, for the negotiation this year, some decrease for the pricing with your discussion with clients, customers. So could you give us some more color? And does that mean that we should integrate some uh lower pricing on average uh for the full year but for sure for the coming quarters for the coming quarters and the other question is for the spread impact for the full year um how do you expect the level compared to the minus 200 million euros last year for the negative impact on the ebda should we consider that we could have the same magnitude or lower than that

So, Jean-François, we won't comment on pricing. We don't give color on prices versus evolution. In our spread, you have price and mix. So the comments won't go further in our comments on what Patrice already said in terms of both. So again, in the volumes and price mix, overall, we are a bit better than anticipated on volumes. and a bit less, a bit worse on the price mix as a whole. But no more detailed comment on this element. And overall on the spread, we see not the same magnitude of spread impact as last year.

Yes, sorry. Okay. But during the negotiation, you confirmed some decrease for the pricing. Sorry? I just mentioned during your negotiation with the customers at the beginning of this year, you confirmed some decrease for the pricing. When we negotiate the new tariff for 2025, there is some decrease for the pricing. That's right?

Yeah, sure. I mean, what we said about pricing is that obviously, and especially when you're looking at the spread, we have the carryover effect of what we did along the year in 24, plus the additional price reduction. giving in 25. So, this is about it. And obviously, the spread is significantly negative in Q1, as expected. I mean, a little bit more than what we expected due to the tougher market condition I mentioned. And obviously, it will reduce down the year.

And this is in Q1 where you have the largest gap between prices from 24 and 25, because if you remember, we had some price mix going down during 2024 throughout the year. So this is in the first quarter that we see the highest negative gap.

Okay, thank you. You're welcome.

We will now move on to the line of next gentleman from Deutsche Bank. Please go ahead.

Thank you very much for taking my question. So two questions from my side. The first one is on the 2025 guidance. So you basically reduced the adjusted EJDA guidance for 2025, but on the other side, you increased the free cash flow generation. So how shall we understand the bridge between these two elements? what are the drivers for the better cash generations for this year? And the second one is on a BSWI offer. Can you remind us what are the following procedures from here and the timeline of the tender offer from here, please? Thank you.

Thank you. On the cash, let me take this one. Well, in fact, indeed, we moved from around 200 million euros free cash flow generation to go. We see, again, in the first quarter, we were much, much, well, almost neutral in terms of free cash flow. When one year ago, we were significantly negative. And we know in the seasonality of our cash generation that Q1 is the lowest, and then Q2 and LH2 especially are much stronger, so we have a better visibility. And again, we commented on the CAPEX and the investments. We know that the additional capacity, the CAPEX link to additional capacity basically behind us and we have a lower capexpan and a better visibility today so we are again confident on delivering more than 200 million euros and we're also working and seeing some good effects on work to optimize our working capital especially on inventories other than finished products, because you have finished products, but you have also other inventories. So all these action plans plus the context of the cash bank leads us to this above 200 million euro free cash flow guidance.

About the voluntary tender offer from BWGI, so you may have seen that BWGI have just filed this morning to the French Financial Market Authority, the IMF. By the way, the information, all of the information will be available on our website today. So the next step is that we will have a board of directors this Sunday. to examine the offer and, as expected, the Board will have to issue a reasoned opinion of the offer, having considered the report of the independent expert and the recommendation of the Adhoc Committee. So this, with an opinion on the independent expert report, will be made public, and then we'll have to wait from the IMF, validating the offer, and then we'll enter in the standard process later on.

Okay, thank you very much. That's very clear.

You're welcome. We'll now open the line for Fraser Donlan from Berenberg.

Yeah, morning, Patrice and Natalie. Thanks for the presentation. It's Fraser here from Berenberg. I have four questions. So the first is quite an open one. I'd just be interested to understand your kind of view on, let's say, a more direct impact of tariffs on glass and aluminium and how those two substrates interact. For example, I think there was quite a lot of glass going from China to the US. So where could that land? um going forward um the second question was just on the uk um so i kind of be interested in how your customers are responding to um epr and kind of the increased cost of of glass effectively in in the uk and and whether there's any structural risk there for for um allied the third question um could you just clarify what are the kind of cost savings relative to non-recurring costs with this Germany kind of plan which you mentioned and then the fourth and final question was just on M&A I think it's obviously quite a dynamic environment in glass for various reasons and I just wondered kind of what's your willingness or interest to participate in this potentially quite rich M&A environment thank you very much

OK, thanks a lot, Fraser. So frankly speaking, on your first question, again, about the tariff, the question, again, is what is the assumption? We are thinking to make some study and define what could be the impact. So, I mean, again, agility and adaptation is going to be the key word there. Let's wait to see what are going to be the definitive measure to understand our customer strategy and impact, and as a consequence, the impact we have. I do not believe when you're speaking about China impacted in the North American market that it has the consequence of traditional Chinese imports in Europe. Frankly speaking, I do not see that as realistic. The glass market is a local market. Obviously, you have a slight part of some imported products coming from faraway countries, let's say. But this is a small part, and this is most of the time on some very standard products and for some one-shot operation, I would say. Let's try to get a better understanding on what is going to be the reality at the end of this trade situation, trade war, to make a definitive understanding. About UK, so you're right, we have this EPR cost topic compared to other packagings. So this could be a concern for Glass in the UK. But here as well, we do not see any impact to limited, just started. And I would say that for Alive, especially, which is a platform dedicated to spirit, I do not see any switch or any impact to come here. So obviously, it could be a concern. customer to the B2C market. So it's much more how it's going to react in terms of competition. But I do not see for us any impact to come. Cost saving in Germany. So what we are planning to do with this cost structuration, it's a positive impact of a few million euros to come on the cost structure. And last, on M&A, so you're right, many potential topics to come. Here, what we are, as we have already said, we are on a permanent screening. trying to understand the opportunities, if they are. And again, if it's going to make sense, we'll have a look on it. But as we speak right now, it's clearly for us to focus on cash generation and to see what will be the next step in terms of M&A if value creation is secure.

Perfect. Thank you very much.

We now come to the last question for the audio participants from Louise Weiser from UBS. Please go ahead.

Just a follow-up, please, on the price. Can you quantify how much of the price drop in Q1 at group level, so the minus 6.3%, is due to the carryover of the 2024 price cuts, and how much is due to the additional price cuts made in 2025, please?

As Natalie said, we do not want to comment more than what we already said on price and mix effect. I think we expressed ourselves on that. Market conditions are tougher than expected. We see the good sign on volume, and we see the price and mix effect being slightly negative than what we are expecting.

And with that, we will move on for the web questions, which will be addressed by your host. Please proceed.

Okay. Hi, all. David Plessis speaking. I'm the head of IR. We'll have a short one this time around since we only had one contribution in terms of written question. Just a short set of questions from Inigo Aguskida with Kepler. I think most of them have been answered, starting with, there was one question on pricing trends, which I think we've addressed. Another regarding the impact of US tariffs, which we've tried to address to the best of our knowledge. Maybe just two more specific questions. One is in relation to the US tariffs, can you please remind us of how much of group sales are or could be affected directly or indirectly by US tariffs? That's the first question. And the second one relates to the BWGI offer. And the question is, can you please confirm that the opinion on the offer using the independent expert valuation will be given as soon as this Sunday? Or when will it be given? These are the two questions.

OK. So about, I would say, our exposure to US tariffs. What we can say on that, you know that 60% of our cells are made with spirits and still wine and sparkling wine. So this is mainly this part which is potentially exposed. We don't have direct exposure. we have indirect exposure for our customer exporting to the US. And what we do estimate is that within 60% of our sales, between 10% to 15% max is exported to the US. So if you made the math, it means that Total exposure of our sales is between six to nine percent. So total sales. So it means that after that is based on what is going to be the final output on the tariff imposed on the European market. What is the variation compared to this current six to nine percent? So this is what we can say on that. On the PWGI offer, yes, as I commented, so we're going to have a board of directors this Sunday to examine the offer. And then beginning of the week, after this Sunday, information will be released, and especially about the reasoned opinion coming from the conclusion of the board. So it will be available beginning of the week.

All right. Well, thanks, Patrice. I think that's it from my end. So I think we're good.

Okay. Again, thanks a lot for your attention and for this Q&A session. I wish you a good day. Take care. Bye-bye.

Thank you.

Bye-bye. This concludes today's conference. You may now disconnect. Thank you.