Verallia,Courbevoie

Ladies and gentlemen, welcome to the Viralia 2025 Third Quarter Financial Results Analyst Call. The call will be structured in two parts. First, a presentation by the Viralia Group Management Team, represented by Patrice Luca, CEO, and Natalie Delbrove, CFO. Afterwards, there will be a Q&A session. During this session, you may ask questions in two ways, by submitting a written question in the box below the player or by joining the conference call and dial pound key 5 on your telephone keypad to enter the queue. I will now hand over to the management team. Please go ahead.

Good morning, everyone. Thanks for joining us and welcome to our Q3 financial results call. As usual, Nathalie and I will go through our presentation and then we'll have our Q&A session. I will share with you some key highlights of our quarter, and Nathalie will present in detail our numbers, and then I will come back on the outlook for 2025. As an introduction, just to remind 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 2024 split of our sales by segment. 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. Please note also that we are running 19 QLED recycling centers, allowing us to control about 50% of our needs for external QLEDs. Let's now move to some key highlights of our Q3. First one, the first part of the year was marked by DWGI's voluntary tender offer. This process ended mid-August and was successful. You have on this chart the new shareholding structure at the end of September. BWGIs went up and has now 77% of Veralia's share. BPI went down and has now 3.8%. Employees still have 4.1% of the share capital, and the floating part is now 12.6%. This step being completed, we will continue rolling out our strategic roadmap, focusing on creating value for our customers, employees, and shareholders. Second key highlight is about our decarbonization roadmap. A few weeks ago, we got the certification by SBTI on our net zero 2040 target. We are the first glass packaging manufacturer to commit to such a target by 2040. We have a robust plan to do so. By 2030, we plan to reduce our scope one and scope two by 46.2% compared to 2019, and by 90% in 2040. For scope 3, the plan is to reduce by 27.5% in 2030 compared to 2019, and by 90% by 2050. Some of our customers have committed to achieving net zero by 2040, and they need our contribution. This commitment is paramount and demonstrates how glass packaging is well positioned as a sustainable solution for the future. This strategic lever is paramount and key for future value creation. Last highlight is about the confirmation of the commissioning of our first high-grid furnace in Spain, Saragossa, as a substitution of an old traditional furnace technology. As of today, we do operate with 30% of electricity and will ramp up in the weeks to come with the objective to reach 70%. This furnace will bring a 55% reduction of CO2 emissions compared to a traditional furnace. After our full electric furnace launch in Konya-Klasio, this is clearly an additional step forward in our decarbonation roadmap. We will take some time for lessons learned, and if needed, for optimization, and then we will enter in a step-by-step, in a step-by-step pragmatic deployment phase aligned with our decarbonation roadmap towards 2014. Before giving the floor to Nathalie, a quick overview of our results, Q3 results and the nine-month results. As seen in Q1 and Q2, the positive news is that we are recovering volumes compared to last year. But in a much difficult market, that's what we plan. Q3 revenues is down by 2.8% year-over-year to 846 million euros. with organic growth at minus 0.6% year-over-year, giving a nine-month revenue result down by 2.5% year-over-year to 2,565,000,000 euros, with organic growth at minus 2.4% year-over-year. About EBITDA, Q3 is at 181 million euros, minus 14% versus last year, with a margin at 21.3%, minus 279 bps versus Q3 last year, giving a nine-month adjusted EBITDA of €531 million, minus 17.1% versus last year, with a margin at 20.7%, minus 365 bps compared to last year, 24%. About net debt, our leverage is maintained at 2.6 at the end of September compared to last June. Let's see now the details of our numbers with Natalie.

Thank you, Patrice. So let's look at revenue and EBITDA as usual. So you can see here the third quarter consolidated revenue variance analysis. So we moved from 871 million euro as reported revenue one year ago in Q3 2024, and we are today at 846 million euro. As said by Patrice, the organic growth for the quarter is almost neutral at minus 0.6%, minus 0.7% excluding Argentina. You can see the volume pillar is up by 37.3 million euros year on year, despite still challenging market environment and more challenging than anticipated. We could see, in fact, in the quarter that the activity softened in August and September after a very good start with a good month of July. And looking at segments, sorry, most segments grew year on year and especially led by non-alcoholic beverages and spirits coming back to growth. The price mix impact on the top line is unfavorable with minus 43.4 million euro driven by lower prices than one year ago and still a negative mix. And then we have ethics. that continues to be negative. The perimeter impact is almost zero. Just as a reminder, I will come to the nine months. You will see perimeter impact with Corsico, so our additional entity and plant in Italy. It was acquired on the first of July, so in the Q3, doesn't show as a perimeter anymore. So continued volume growth in Q3. despite difficult market conditions. Looking at the nine-month consolidated revenue variance analysis now, we moved from 2,635,000,000 euros to 2,569,000,000 euros. The organic growth for the full nine months is lower than in the quarter, or to put it different, the quarter is better than the full nine months. Organic growth is minus 2.4%. minus 2.9% excluding Argentina. We have seen continuous organic growth on the nine months supported by commercial initiatives, and all of that despite the softer market environment, especially in the end of the Q3 as I just commented. Volumes are up in Europe and especially in South and West Europe, and LATAM is positive. despite a slower growth in the third quarter. The price mix is negative in the nine months, minus 154.4 million euro. So it's significant, but sequentially we see a decline in this negative impact, and we, step by step, we have to carry over a 24 price reduction softening. We continue to see a negative mix over the nine months, and you have here negative effects impact, but also the positive perimeter impact, so from the sixth first month for 50.5 million euros. So how does this translate into adjusted EBITDA? For the third quarter, you have here the adjusted EBITDA variance analysis, so we moved from 210 million euros in the third quarter 2024 down to 181 million Euro in this third quarter 2025. So we can see from the pillars that the spread impact is the main driver, the main negative driver with minus 40.6 million Euro. We have lower prices and negative mix as we explained since the beginning of the year. But as I was saying, it's gradually easing. It was minus 85 million euros in Q1, minus 60 in Q2, and as we just saw, minus 41 million in Q3. Then we, despite that, we benefit from the volume growth the solid Q3 performance in activity. We have 7.9 million euro positive impact of the activity, despite here startup cost and ramp-up cost from our two new plants, one in , sorry, one in in Brazil, and mainly for wine, and one in Italy, mainly on food. And also, as Patrice explained, the hybrid furnace in Saragossa in Spain. The net productivity continues to deliver 2% cash cost, cash production cost reduction and some negative other mainly due to some one-offs. Exchange rate is negative and as well. So the adjusted BDM margin that you see on the top right, is 21.3% for the quarter. So for the nine months, this leads us to 531 million Euro adjusted APTA. It was 641 million Euro in 2024. And you can see all the pillars, so the activity pillar being positive. We have growth across all regions with volume growth continuing despite a challenging summer, so bringing plus 42.1 million euro. The main negative pillar continues to be the spread for the nine months even if softening in Q3 again. The net productivity continues to deliver a positive number at 35.5 million euro and is 2.2% of cash production cost reduction. The other here is positive and includes the six first months of Corsico, so the perimeter impact. And then you have a six negative. A six negative is mainly coming from the Brazilian Real, and Argentina is presented aside. So we have a continued positive activity on the nine months, but offset by a mainly negative spread. So here you can see the group net debt evolution and the leverage. So the leverage is stable versus end of June at the end of September with 2.6 times. And the net debt is 1,920,004. Here you can see our financial structure and liquidity at the end of September. So several comments here. You can see the first two lines are the sustainability link bond that we issued in 2021. As a reminder, following the change of control There was a possibility for bondholders to ask for reimbursement of these bonds, but you can see that we still hold a nice amount on both of them, $100.7 million for the first one and $70.3 million for the second one. And as you can see, they have a very nice nominal rate, a low one. So this is very good news for the group and for the confidence that our bondholders have in the group. The rest was refinanced by a bridge loan that you can see at the end of this table, and you can see $838.4 million drawn on this bridge. And then, of course, we will prepare a refinancing of this bridge. At the end of September, we have available liquidity of 835 million euros.