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.

Many thanks, David. So let's move to the outlook here. As for the past two years, the key topic for the outlook is market environment. What could we expect for 2026? When we analyze some key customer comments or feelings about the demand, plus all the market intelligence we have, it invites us to be cautious. We could see some positive expectation for non-alcoholic beverage and food, but stability is slightly down for the other segments. So all of that is pointing to market stability in 2026. And to be more specific, we expect a continued soft-end consumption backdrop in Europe, with LATAM likely to outperform, Geopolitical and trade uncertainties will persist and drive volatility for sure. The price carryover effect from prior reductions will gradually phase out, which will ease pressure on inflation spread. And the European fairness closures continue is pointing to industry overcapacity reduction, just as a reminder. We know that since the end of 2023, 22 furnace closures have been announced. Overall, stability rather than an upturn is our best case for 2026. Therefore, for 2026, with this market environment we have just described, we aim to deliver an adjusted EBITDA around 700 million euros. and the free cash flow around €220 million, excluding the plan for structuring cash out. I want to tell you that we do enter in 2026 with discipline and confidence, with strong focus on our competitiveness, cash generation, and delivery rating. We plan to strengthen our competitiveness by implementing our capacity adaptation plan, delivering enhanced PAP savings and keeping CapEx under strict control around 8% of sales. Thanks a lot for your attention, and now let's open the Q&A session.

If you wish to ask a question, you may do so 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. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Francisco Ruiz from BNP Paribas. Please go ahead.

Hello. Good morning, and thank you for taking my questions. I have three, if I may. The first one is on the outlook. I mean, with volumes more or less stable and stability in prices, with more than 50 million euros or around 50 million euros coming from PAP, why are you still expecting a flabby EBITDA this year? Second, on the restructuring plan. We would appreciate if you could give more detail or tell us when you are going to release this detail in terms of the savings that you're expecting, the cost of this, how it's going to be mainly performed during this year and the followings. We need more information on this because it's a substantial plan. Last but not least is on the inflation, on the cost inflation. On Q4, we have seen a 4% cost inflation versus last year, when we have seen a decline in energy. And theoretically, your energy bill should be lower than in previous quarter as a result of the rolling forward of the hedges that you got. So I don't know if you have an explanation for this, and if you could give us what's your expectation for energy for 2026. Thank you.

OK, thanks a lot, Francisco, for these three paramount questions. So about the outlook, I think you made a quite clear analysis. But first of all, let me tell you that lessons learned from 2025, I want to be cautious. I want to be cautious taking the lessons learned on the volatility of the environment. So on the activity, I have explained our case. case of 2026, flat in Europe, so up in Latin America in a much more dynamic market. About spread, so we're going to still have some carryover effect, but light carryover effect from 2025 to 2026. And we are planning to have a spread normalizing towards zero with still a big question, which is a mixed impact. Because you know that in our spread, we have mixed plus price and inflation. And we have seen lately that the mix was quite negative. And this was the case in 2025. About PAP. So we are going to deliver and push for higher delivery. And we have the Forex in front of that, which is always... down and pushing down the EBDA compared to last year. So again, we want to be quite realistic, and we want to really focus on self-help measure, what we do really control, and then if we can get additional upside, we'll see. But as we speak, this is what we are proposing as a commitment, to be around 200 million euro. For the restructuring plan, So I think we'll be back to you in Q2 for our Q2 results with much more details. What I can tell you as we speak, the intent is to have this plan implemented in H1 to take about 50% of the positive impact in our numbers this year and 100% of the impact next year for 27. Obviously, we have negotiations which are starting both in France and Germany, and we need to let go of this properly and according to the social responsibility we want to clearly have with our people there in Germany and in France to finalize and commence definitively. Cost inflation, maybe David, you want to comment?

Patrick, just one thing. You said that 50% of the plan will be, the savings of the plan will be this year. This is included in the 700 million euros guidance?

It is about, yeah.

Okay, okay, thank you.

Okay, so it's your question on cost inflation. I think in Q4 we had a, Some positive items in Q4, 24, like I mentioned in the form, I think of of of tax credits, which didn't happen again this year. And I think that mostly explains the indeed the slight increase in the, in the cost base. Otherwise it would be, I think, broadly, broadly flat. Having said that, two items worth keeping in mind. As usual, we did indeed have some relief in 25, including on collect and to some extent on energy. But we also had some inflationary pressures, I mean, as usual, from personal costs in particular. And as a reminder, too, I think we still had some of our 22 hedges valid up until the end of the year. And so we'd only see, let's say, the benefit from the end of these starting 26th.

And about the guidance for energy in 26th, please? Sorry?

Guidance for energy?

Energy cost, I mean, on the rolling forward of your hedges, I mean, how much do you expect the energy bill to be reduced in 26?

This is not a number we are going to provide. What we could tell you is that, you know, It was a headwind for us in 24 and in 25, based on our aging policy. What I can tell you is that the penalty we had in 25 is behind us when we are entering in 26. So we have our energy costs which are coming down. And if I want to be a little bit more precise, we're going to be at market level for 26. Obviously, depending on the volatility, you know, we see a lot of volatility, but as we speak, probably we are there.

So that means how much versus this year? I mean, a gross figure in terms of variation, is it 10%, 15% lower?

I think we really want to speak more, you know, think in terms more of a spread, to be honest. At the end of the day or the year, that's what's going to matter. Okay.

Thank you very much.

Thank you.

The next question comes from Jean-Francois Grandjean from Otto BHF. Please go ahead.

Yes, good morning. Four questions from my side. The first one, could you give us some more color regarding the negotiation you have currently for the pricing with your customers? Can you implement some new price increase or not? The second question concerns the spot effect. So I understand that the carrier should be lower compared to the previous year, but do you expect a negative price mixed effect? The third question concerns the cash out expected coming from the restructurations. This should impact, I think, the free cash flow. So could you give us the amount of the cash out expected this year on the last questions? So you can see the capex level at 8% of the sales. So do you expect minus 300 million rows capex or all capex in 2026? Thank you.

Okay. So about negotiation and pricing, I mean, obviously we are not commenting in detail the pricing evolution and what we are negotiating with our customers. So what I can tell you is that compared to 2025, we still have some slight carryover effect. We're going to have, depending on the geographies and depending on the segments, some slight price decreases. But what is much more important for us, we do expect a normalization in our spread towards zero. The big uncertainty we have is mix. As you know, it's quite complicated to estimate the mix. And what we have seen in 25, it was always the case in 24, is that mix is pulling down the financial numbers. It was negative. About cash out for our adaptation plan, industrial adaptation plan. Obviously, negotiation is going on, and it's going to take a few weeks and even a few months for France. What we do expect, I can use the order of magnitude, is going to be a restructuring cost, most of it being social costs, between 40 to 50 million euros, and most of this impact in 2026. Some will come in 2027, but most of it in 2026. CAPEX, yes, we do confirm CAPEX that due to the market environment, due as well to some CAPEX deflation and negotiation we are able to do, we do see our CAPEX maintaining the level around 8% of ourselves. This is what we see for 2026 and certainly onwards

Thank you. Just an added question regarding the mix effect. Could you just remind us the main difference in terms of mix between the different segments with sparkling, wine, non-alcohol, beverage, etc.?

That's a tricky one, to be honest, because, you know, there's a I mean, some segments are inherently better priced than others, but it has also enhanced complexity in certain products. So I'm not sure we can have a generic answer to this one, unfortunately.

Okay, thank you.

The next question comes from Saul Casadio from M&G PLC. Please go ahead.

Hi, thanks for taking my question. Just have a couple. The first one with regards to the restructuring plan that you are considering, what is approximately the capacity as a percentage of your capacity that will be taken out as a result of this plan if it's implemented in full? That's my first one. Thanks.

The capacity we're speaking about here, so meaning SN, one furnace in Cognac, is around 200 kilotons per year. 200 kilotons per year. So to our full capacity, it's about 200, it's 3%?

3%. It's around 3%. As a reminder, we have around 60 furnaces in Europe, and we're going to be shutting down these three.

I think what is important to mention on top of this adaptation plan, you do remember that, obviously, market is down since the end of 2023. And at the point of time, there was a big question about the market recovery. And we are expecting, to be honest, a quicker recovery of the market. and we were working on making adaptations, short-term adaptations, temporary adaptations, to better try to understand if we were facing some conjunctural market situation versus structural market situation. Now, it's clear that we came up with the conclusion that in Germany, due to the overcapacity we observed on the market dynamics, it's no more conjunctural, but it's much more structural. And for us, it's really to redeploy the business in Germany on three sides, six policies for better qualitative and contributive business. This is really the strategy. When we speak about France, it's about the same. You know that in France, we had some conjunctural, cold-stop, temporary shutdown and all of that. But here, we came up to the conclusion as well that what we have seen in Cognac, after booming volumes in 22, 21, 22, is that it was not really structural as well, and we are much more normalizing, and we are back to 18, 19 volumes. So this is why we decided as well to make a structural decision to adapt there, and as the furnace is coming to the end of life, there is no rational to reinvest on this furnace for this market.

Okay, thanks. Just to clarify that I have understood correctly, so if we put together the capacity of the French, German, sorry, sorry, I have the fire drill. Sorry, if we put all together the UK, the French, and the German, that represents roughly 5% of your total capacity.

Three percent.

Three percent, okay, okay, okay.

And the capacity reduction is in Germany and France. If I want to be precise, in the UK, it's not a capacity reduction. It's a closure of one furnace and the reopening of another one, but which is much more efficient in terms of competitiveness, in terms of cost, and in terms of CO2 emissions? Is it clear?

Yeah, no, it is clear. Will you consider more actions? Your competitors have done more on the supply side in terms of taking out capacities. Are we likely to see more on this side?

so it's all about the geographies and the segments we are in uh obviously uh so the geography which is suffering much more and which really has over capacity is northeast europe and especially germany so this is why we have taken measures there and and if i'm back to what we had in 22 in 22 we are operating 10 furnaces And here we are planning to move to six. It means we have done already part of a job in 24 and in 25. So in Germany, moving from 10 to six furnishes. So the job has been done, I would say. And in France, so we are making this decision for cognac, which is really a specific segment in which, I mean, we need to face reality. And then for south of Europe, I mean, Italy, And Iberia, Spain, and Portugal, we don't need to adapt capacity there. And I'm not speaking about Latin America. We are on the opposite. I mean, we are facing a much more dynamic market, and we have opened for the past two years two additional furnaces in Brazil, putting our Jacutinga in comparable facility from one to two furnaces.

And this move, I mean, just to reiterate what Tristan said earlier, This move is really consistent with what's been happening in the market. If you look at the, I think, 20 or so furnace closure announcements that have taken place over the last two years, most of them relate to, let's say, Northern Europe, so Germany and Benelux in particular.

Just a quick follow-up on this one. In terms of the industry, considering all the closures that you have mentioned, how much do they represent of the European capacity? How much capacity has been taken out in the industry over that period of time, roughly speaking?

Sure. So the European market, I mean, if you really look like a broad scope, the definition is around 20 million tons. And we estimate, and so a furnace on average tends to be around 100 K tons. There's been, so including ours, I think we're now at 22 furnace closure announcements, so around 20. Yeah, so basically 10% of European capacity.

Okay, that's good. And my last one, if I may, is on your IG commitment, and clearly noted what you have done on the dividend in terms of reduction and the option to take it in a share form, so reducing the cash out. Question is, do you think that will be enough to stay IG, or do you need to do more to maintain your rating? Thanks.

Yes, this is our plan, and this is why we have proposed with full responsibility this dividend option. And according to what we see, where it could put our leverage at the end of the year if we do the job. I mean, this is a nice trajectory which will keep our investment well. Yeah, for sure. This is the plan. This is one of the commitments.

Okay, thank you. I appreciate it.

Especially working on the cache as well. For sure.

Thank you.

There are no more oral questions at this time. So I hand the conference back to the speakers for the written questions.

All right. Well, thanks a lot. So we have quite a few written questions. Having said this, as is often the case, some are pretty much the same as the one we had on the call. So let me just have a look. Let's start. OK, so let's start maybe with the first question from two questions. So first one is, with the closures, Will you be able to restore the EBDA margin with increased capacity utilization, or is this a preventive move from you to stop the decline going forward? Second question, on the demand side, do you see a changing mix in the past couple of quarters? It could affect the profitability in the future.

So the first question about restoring the BDA margin, obviously it's part of the objective, improving competitiveness and over time restoring and improving our margin, BDA and margin. This is part of it. I do believe that, I mean, since 24 and with the market downturn in 23, we are in a kind of low cycle. Frankly speaking, we are expecting a much more quicker recovery. But what we are quite confidently, this cycle will go up. So we move from a low cycle to a better cycle. When we see the overcapacity being reduced over time, especially in the main countries, we do believe that it's going to support a better asset use. And all of that with one key objective, which is restoring and improving margins. And this is what we want to do. On the demand side, so this is what we have explained, and we are part of that. What we see globally is that we see that non-alcoholic beverage and food are much more segments which are showing opportunity of growth. And we see that on the over, it's much more flattish. Or even on still wine, it's declining, depending on the country. So, obviously, important for us is to make sure that we are focusing as well our sales effort, our product offers, our innovations on this growing segment. And food is clearly one. And this is why, by the way, in Italy last year, we did open additional capacity dedicated to food, which will bring some upside starting in 26 and in the years to come. So this is what we see here.

Thank you, Patrice. Another question from Claudio De Ranieri. You talked about a normalization of the spread towards zero in 26. Is this common-made looking at a full year, or does it mean that you plan to be towards zero at the end of the year, for example, Q4 26?

Our ambition here is to full year, speaking full year, and again, with the caveat of a mixed for which the mix is difficult to control. But the full year is our objective, towards zero.

Thank you. Two questions from Andrea. Can you provide a guidance for leverage by end of year and for 27? So question about IG, I think that one was answered already. And one question about visibility on the margin in Q126. Is it sequentially stable, up, or weaker? I think on leverage, frankly, I think you have, you know, you can, we clearly expect it to come down. I think you can, you know, fairly easily do the math. We're planning for around 220 in free cash flow minus the restructuring cash outs that Patrice referred to. On the other hand, we have a maximum cash out of $20 million on dividend. So that gives you an idea, basically, of the deleveraging prospect. And I think on the margin in Q1 26, I don't think we want to comment necessarily on that one. Maybe just keeping in mind that last year was quite a low point in the year. In Q1, I think we're at 18%, so there's clearly room for improvement there. Okay. Just to see whether there's a few questions, but I think, yeah. Question from Inigo Egusquiza. Pricing and volumes in 2026 by a region, I think. We're not sure we want to go much further on this one. The cost of the capacity shutdown we've covered. And indeed, I confirm that the 220 million free cash flow target excludes the restructuring cash out. With that, we have no further written questions. I don't know if there's anything back on the phone. Okay.

The next question comes from Jean-Francois Grandjean from AutoBHF. Please go ahead.

Yes, thank you. Just one last question from my side. You mentioned the target to come back to a more normative level for the BDM margin. What is this level? I see on the past, on the low end, you have reached 20, 21% EBITDA margin. After that, you are more on the magnitude between 24, 25, with an exceptional year in 23 to reach more than 28. So what is, for you, the normative level for the group? I would say 24, 25, or lower than that?

Jean-Francois, so this is a very good question, and you're going to have to be patient a little bit. We'll be back to you with your capital market day at the end. Yes, for sure. No, but I mean, this is the name of the game, how we can improve the efficiency of our business step by step, and normalizing the situation after it's quite volatile and difficult to manage a top-line level. So obviously, 26%. And this is why, again, we want to be cautious with the top line, self-concentrated on making our job on what we do control. And then, so obviously improving the margin, and then moving towards step-by-step and incremental improvements. And we will be back to you for the Capital Market Day with more details. Yes. Okay. Okay, thank you. Thank you. Okay, so I think we are done. So thanks a lot for your attention and for your continued engagement with Eralia. So again, we are entering in 26 with clear priorities, competitiveness, cash generation, deleveraging, and the implementation of our industrial footprint adaptation in Europe. And all of that with disciplined capital allocation. So thanks a lot. Have a good day and speak to you quite soon for Q1 results. Thanks a lot. Thank you.