Verallia,Courbevoie

Ladies and gentlemen, welcome to the Veralia 2025 Full Year Results Analyst Call. The call will be structured in two parts. First, a presentation by the Veralia Group Management Team, represented by Patrice Luca, CEO, and David Place, Head of Investor Relations. Afterwards, there will be a Q&A session. During this session, you may ask question in two ways, by submitting a written question in the box below the player, or by joining the conference call and dial pound key five on your telephone keypad,

to enter the queue i will now hand over to the management team gentlemen please go ahead good morning everyone and thank you for joining us so welcome to our q425 and full year financial results today david placer our head of investor relation is with me and as usual we'll go through our presentation and then we'll have the q a session i will share with you some key highlights and David will present in detail our numbers, and then I will come back on our outlook for 2026. As an introduction, 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 On the left, the update of our 2025 split of sales by segment. Compared to 2024 split, still wine and spirits have lost one point each. Still wine and sparkling have lost one point each. Spirits and beer have kept the same weight. And soft drink and food have won one point each. One of our strong assets is our customer base and the diversified and balanced end markets in which we operate. We operate in 12 countries with 35 glass plants and 67 furnaces, serving around 11,000 customers and producing around 18 billion bottles and jars annually. Please note also that we are running 19 collect recycling centers, allowing us to control about 50% of our needs for external collect. Let's now move to some key highlights. And I would like to come back on four of them, which have been key milestones in 2025. One, our net zero 2040 trajectory was validated by SBTI. making Veralia the first global food and beverage glass producer to commit to a 2040 pathway. This confirmed our decarbonization leadership, and we have a robust plan to do so. By 2030, we plan to reduce our scope one and two by 46.2 percent compared to 2019, and by 90 percent 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 is a strategic lever for future value creation. Number two, we added targeted capacity and progress in decarbonization. In 2025, we commissioned a second furnace in Campobon, Brazil, to support our organic growth in a dynamic market. And we also commissioned a second furnace in Pescia, in Italy, support the food growing segment. These two plants moving to two from one furnace are also improving their own competitiveness. And then we open our first hybrid furnace in Saragossa, in Spain, replacing a traditional furnace. It is a success. We are running now up to 60% electricity and getting the CO2 emission reduction. First key highlight, obviously, 2025 was marked by BWGI's voluntary tender offer. This process ended mid-August and was successful. BWGI went up and has now 77% of Veralia's share. BPI France went down and has now 3.8%. Employees still have 4.1% of the share capital, and the floating part is now at 2%. slightly above 12%. And last key highlight is our successful new bond issuance of 850 million euros, demonstrating the support and confidence in Veralia. About our CO2 emission reduction, we are on track to reduce absolute emissions by 46% by 2030 compared to 2019. In 2025, COP 1 and 2 emissions were slightly up by 0.7% year over year. Gains being offset by higher production level compared to 2024. We are now at minus 23.2% compared to 2019. What is very significant is the reduction of our intensity, meaning the CO2 by tons of packed glass which is down by 3.1% in 25 compared to 24. Please also note that external curate usage increased to 57.7% and that our renewable low-carbon electricity share rose to 69% from 64%. Next is about the communication we did last week about targeted industrial adaptation in Europe. After a strategic review conducted in each of our European countries, we are considering adapting our industrial footprint in Europe to align with the reality of the current demand. These actions respond to one weak demand in Germany, Benelux, without significant evolution at mid-term. Two, no material rebound expected in cognac and overcapacity in extra flint. And three, a market downturn in the UK, especially in spirits. Facing these market realities, in Germany, we are considering the closure of the Essen site, about 300 position, with production transfer to other Germany sites. In France, we are considering non-reconstruction of our furnace in Cognac, which is approaching end of line. And here we are speaking about 60 position. And in UK, we are considering shutting down one of our furnace in Nottingley and restart a more efficient furnace in Leeds. With this plan, we are moving from to structural adaptation. This plan is about adapting to volume context on a specific segment and a specific geography to better focus on growth opportunity. Our objective is all about competitiveness, cash generation, and asset efficiency. Before giving the floor to David, a quick overview on Q4 and full year results. As seen from a few quarters now, we are recovering volumes quarter after quarter. Q4 revenue is down by 7.1% year over year to 763 million euros, with an organic growth at minus 4.2% year over year, which is giving a full year revenue down by 3.6% year over year to 3,331,000,000 euros, with organic growth at minus 2.8% year over year. About EBITDA, Q4 adjusted EBITDA is 161 million euros, minus 20% versus last year, with a margin of 21.1%, minus 341 bits versus Q4 last year, giving a full year adjusted EBITDA of 692 million euros, minus 17.8% compared to last year, with a margin of 20.8%, which is minus 360 bps compared to last year. Net income is 93 million euros, reflecting a minus 7 million euros non-cash after tax impact of exceptional asset depreciation, mainly from Germany, and in line with the industrial adaptation we are planning. About net debt. Our leverage is ending at 2.7 versus 2.6 at the end of September and 2.1 end of 24. Subject to the approval of the General Assembly meeting of shareholders scheduled on April 24, the Board is proposing a dividend of 1 euro with options for payment in cash or new Veralia shares. Please note that BWGI and DPI have committed to opt for share payments, meaning that the maximum cash out will be of €20 million for the group. And finally, about our financial indicator, this is what I have just mentioned. So we are on track and especially with good progress on the external QLED usage. So let's see now in detail the numbers with David.

Thank you, Patrice, and good morning, everyone. I will now walk you through our Q4 and Folio 25 results, following the same course as usual, i.e., starting with revenue, then EVTA, and then cash. So, first of all, revenue bridge for Q4, which, as a reminder, isolates Argentina, as we've now done for quite a few quarters. As you can see, Q4 revenue was 763 million euros, down from 821 in Q4 24, despite positive volume growth. Sales volumes were up again in Q4 for the sixth consecutive quarter, though at a slower pace than in Q3. You may be surprised to see a negative volume leg on the bridge. When volumes are actually up, this is due from a one-off in Q4-24 that did not happen again this year and accounted for slightly more than 10 million of decline or 1.5% of growth. Without this one-off, the volume lag would be positive. and organic growth would actually be, so rather than the 4.2% negative that we see here, would actually be in line with the organic growth for the full year of around minus 2.8%. Moving on to price mix, as has been the case through 2025, This price mix impact is the main negative driver of the bridge, and it amounted to a negative $36 million in Q4. However, it is worth noting that this impact has been phasing down through the year. as price mix was negative by 59 million in Q1, down to 52 in Q2, 43 in Q3, and now 36 in Q4. The only other material impact that we see here relates to Argentina, whose contribution was affected by the continued devaluation in the peso, and there was no other effects or perimeter movement in Q4. So what does that mean for the full year? The overall momentum was broadly similar in FY24 versus Q4, with positive organic volume growth contributing 78 million, but being offset by the negative price mix impact of minus 189. So revenue for the full year amounted to $3.3 billion, down 2.8% organically. Like we said, the volume impact was indeed positive, four quarters of positive volume growth, fueled in particular by strong activity in food and energy. The negative price mix was largely due to the carryover impact from the 2024 price reductions, but went actually down gradually through the year, as we highlighted earlier, minus 111 million in H1 and 78 million down in H2. As for other factors, effects mainly related to the Brazilian rail, parametric to the contribution of Corsico, which, as a reminder, affected H1 only. and Argentina was down on adverse effects. Now, going quickly region by region, so let's start with SWE. We actually had pretty strong and consistent activity of volumes through the year, fueled by strong performance in NAB, and I think all segments achieved positive like-for-like volume growth in the year, with the exception of sparkling wines. This was, however, more than offset by negative price mix developments, and that led to a negative 3.8 percent organic growth and full-year 25 revenue of 2.2 billion euros. Reported growth was 1.6 percent negative after factoring in the six months of extra revenue from . NEE. faced a difficult year with both lower volumes and selling prices, especially in Germany. Food jars performed well, but most other segments not so much, with a slowdown in activity in Q4, especially in Germany, mostly beer and sparkling. Spirits remained under pressure in the UK, but the reopening of our second Ukrainian furnace contributed positively towards year-end, especially in the food segment. Last but not least, Latam. As you can see, very positive organic growth of plus 8.5%, fueled by the volume growth that we saw, especially in Brazil. And as usual, pricing in Argentina, but being more than offset by the strongly negative effect in both Brazil and Argentina, leading to a 10% lower reported revenue at 384 million euros. And I just wanted to highlight before we move on, in Brazil, the strong contributions from spirits and wine, supported by the Campo Bonfones opening mid-year and that more than offset the slower beer demand that we saw in H2. Let's now move to EBDA, starting again with Q4. Q4 adjusted EBDA was down to €161 million. Margin was 21.1% down year-on-year, but higher than the nine months 25 margin, which stood at 20.7%. Activity impact was again positive in Q4, fueled by a combination of higher organic volumes and some inventory buildup that took place towards the end of the year. Spread remained negative in Q4 by 53 million euros, mainly driven by lower prices and mix But overall, as we said, spread again improved through full year 25. On the other legs, net productivity contributed 10 million. Argentina was down on negative FX. And the other leg was negative as the SG&A reduction was offset by the non-recurrence of a number of positive one-offs that we recorded in Q4 24. Moving on to full year. So the chart looks a bit the same here, with positive activity growth and productivity offset by negative spread and effects. Activity contributed strongly, plus 60 million euros, with growth-based growth, especially in food and NAB, and like we said, some positive inventory variation. Spread had a very strong impact, negative one through the year, for minus 236 million, but like we said, softened materially through the year, 143 million negative in H1, 94 million negative in H2. Net productivity contributed in line with our 2% cash cut reduction target, so here 2.1% or 45 million, so we've done the job again on this item, focusing on what is within our control in a difficult market environment. The other leg was positive in full year, unlike Q4, with positive perimeter and SG&A reduction, partly offset by the negative impact in Q4 that I referred to earlier. Last, the effects weighed on EBITDA through the decline in both the Brazilian real and the Argentine peso, again Argentina being recorded separately. So the bottom line from this slide is profitability down year on year, but still solid, above 20%, and in line with our revised 25 target. Looking at our geographies, so let's start with SWE, and I think we'll move a bit faster here. Main message again, EBITDA down year on year to 461, but with a still solid margin over 20%. positive activity contribution, strongly negative but gradually moderating price mix, and productivity delivering in line. More challenging situation in NEE, with EBITDA down by 30 percent to 104 million euros, with margin down substantially as well. We did see the positive impact from the fixed-cost reduction plan implemented in Germany. But this was largely offset by lower volumes and negative spread, including some softer activity in H2, especially in Germany. Two bright spots that I think are worth highlighting. First is the improvement in Ukraine with the reopening of our second furnace, and then the very strong delivery on PAP, again focusing on what is within our control. Lastly, LATAM. So as we saw on revenue, we had a strongly negative impact from FX. And EBITDA was up 3% organically, but down 14% reported to 127 million euros. EBITDA was supported by strong activity, especially in Brazil. And again, productivity, those spread was slightly negative. I think we would like to reiterate the very strong profitability of our LATAM business, so 33.1% margin in 2025, close to the 2024 levels. This business keeps growing and it now accounts for nearly 20% of the group's EBDA. I think the exact number is 18, despite the FX headwinds. Now, moving to cash. Let's start with one of the key drivers, which is capex. So obviously, in a difficult market environment like the one we're facing, keeping capex under strict control is obviously key to protect our cash generation. So in this context, Beralia's total booked capex was down significantly in 2025 to 259 million, or 7.8% of sales. This was made possible by a strict control on our expenditures, as well as the light furnace repair schedule, which led to a lower recurring capex. At the same time, we continued to invest in our strategic capex, so the growth of our business and our decarbonization plan. Strategic capex remained close to 100 million euros, so 97, 2.9% of sales. And as a reminder, we commissioned two new furnaces in Brazil and Italy. We opened our first hybrid in Spain, in Zaragoza, and we're working on the second hybrid to be opened in France in 2016 in Sao Romano. Looking forward, let's keep in mind that we have no new capacity investments coming up, and more generally, we intend to keep our capex under strict control. How does that translate into cash flow generation? So the main highlight of the year on the free cash flow is basically doubled in 25 to 166 million, despite a substantially lower year-on-year EBDA. This was achieved through the tight capex that we just referred to, as well as a lower working cap outflow versus 24, despite some inventory buildup towards year-end. The capex conversion remained very high at 62.6%. It was actually up 100 bps year on year, and operating cash flow was close to that of 24. Free cash flow doubled eventually as interest paid was broadly in line with 24, and cash tax went down sharply. As a reminder, other operating impact mostly includes the IFRS 16 charge and some restructuring costs. We had, I think, 16 million euros of them in 25, mostly relating to Germany, and without which free cash flow would have been 182 million euros. Looking at our leverage now, net debt was broadly stable in full year 25, so up 63 million euros from year 24, after the payment of 200 million euros of dividends in May 25. Net debt was actually down in H2, with 100 million of free cash flow generated, and amounts to 1.86 billion euros at the end of 25. Leverage is up year-on-year to 2.7 times. This is mostly due to a lower LTM EBTA, and it is broadly flat against September 25. And lastly, turning to our financial structure and liquidity, I think you know this chart pretty well by now. There have been some changes this year on the back of PW's public tender offer. The bulk of our gross debt now revolves around five bonds. The first two are the SLBs issued in 2021. They were callable, as you know, following the change of control, but there are still 170 million of them outstanding at year-end, which is quite nice given their pretty low rates. The third one dates back to 24, for 600 million, and the last two bonds were issued, as Patrice mentioned in the introduction, in November 25 to refinance the bridge loan that itself helped refinance the SLBs that were called further to the tender. So two points to highlight as a bottom line. The first is we have very strong liquidity at 870 million, including nearly 400 million of cash at year end. And we also have a very strong maturity profile with no meaningful maturity until 28. With this, I'll hand over back to Patrice. Thanks for your attention.