Earnings call transcript: Verallia Q2 2025 sees revenue miss, slight stock dip

Verallia’s Q2 2025 earnings call revealed a revenue miss, with actual revenue of €905 million falling short of the €916.2 million forecast. This resulted in a revenue surprise of -1.27%. Despite this, the company’s stock saw only a minor decline of 0.07%, closing at €28.3, indicating a cautious market reaction. According to InvestingPro analysis, Verallia appears undervalued based on its Fair Value metrics, with the stock showing historically low price volatility (Beta: 0.87).

Key Takeaways

• Verallia missed its revenue forecast by 1.27%, reporting €905 million.
• The company’s stock experienced a slight 0.07% decline post-earnings.
• Improved Q2 EBITDA margin to 22.5% from Q1’s 18.8%.
• New product launches and furnace investments signal future growth potential.
• Market sentiment remains cautious amid economic uncertainties.

Company Performance

Verallia reported a 2.5% year-over-year decline in Q2 revenue to €905 million, reflecting challenges in the current market environment. Despite the revenue shortfall, the company saw an improvement in its EBITDA margin to 22.5%, up from 18.8% in Q1, indicating enhanced operational efficiency. The company maintains strong profitability metrics, with InvestingPro data showing an attractive EV/EBITDA ratio of 5.8x and a P/E ratio of 13.55x. Net income fell by 45.6% to €68 million, though the company continues to generate significant free cash flow with an 8% yield.

Financial Highlights

• Revenue: €905 million, down 2.5% year-over-year.
• Earnings per share: €0.76, excluding PPA.
• Adjusted EBITDA: €351 million for H1 2025, down 18.7%.
• Net debt leverage increased to 2.6x from 2.1x in December.

Earnings vs. Forecast

Verallia’s Q2 2025 revenue of €905 million missed the forecast of €916.2 million by 1.27%, indicating potential challenges in demand or market conditions. This miss is significant compared to previous quarters and may impact investor confidence.

Market Reaction

Following the earnings announcement, Verallia’s stock experienced a slight decline of 0.07%, closing at €28.3. This movement reflects a cautious market response to the revenue miss, although the stock remains within its 52-week range. Notable for income investors, Verallia maintains a robust 6.01% dividend yield and has raised its dividend for five consecutive years. Get access to more valuable insights and 6 additional ProTips with InvestingPro, including detailed analysis of the company’s financial health score of 2.97 (GOOD).

Outlook & Guidance

Verallia maintains its full-year 2025 guidance, projecting an adjusted EBITDA of around €800 million and free cash flow of over €200 million. The company anticipates a volume pickup in the second half of the year and expects a lower negative price-cost spread. For comprehensive analysis of Verallia’s future prospects, including exclusive Fair Value calculations and peer comparisons, explore the detailed Pro Research Report available on InvestingPro, part of their coverage of 1,400+ top stocks.

Executive Commentary

CEO Patrice Luka emphasized Verallia’s strong market position and focus on operational improvements: "We are number one in Europe, number two in Latin America, and number three worldwide." He also highlighted the company’s commitment to sustainability: "We continue preparing the future, rolling out our decarbonization."

Risks and Challenges

• Sub-consumption in Europe could impact future demand.
• Geopolitical and trade tensions may create market volatility.
• Increased net debt leverage raises concerns about financial stability.
• Ongoing restructuring and cost management efforts in Germany.
• Economic uncertainties could affect global performance.

Q&A

During the earnings call, analysts inquired about capacity utilization and the impact of US-Europe trade tariffs. The company expressed caution regarding tariffs but noted positive signals from China’s duty-free sales. Verallia remains focused on restructuring and cost management to navigate these challenges.

Full transcript - Verallia (VRLA) Q2 2025:

Laura, Conference Coordinator: Hello, and welcome to Virelia First Half twenty twenty five Financial Results Analyst Call. My name is Laura, and I will 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 mode. However, you will have the opportunity to ask questions at the end of the call.

This can be done by pressing 1 on your telephone keypad to register your question. If you require assistance at any point, please press 0 and you will be connected to an operator. I will now hand you over to your host, Patrice Luka, CEO, to begin today’s conference. Thank you.

Patrice Luka, CEO, Veradia: Good morning, everyone. Thanks for joining us, and welcome to our H1 financial results call. So as usual, Natalie and I will go through our presentation, and we’ll have the Q and A session. I will share with you some key highlights, and Natalie will present in detail our numbers, and then I will come back on our guidance. As an introduction, just to remind you that Veradia is the 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 24 split of our sales by segment. And as you may already know, one of our strongest sets 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 toilet recycling centers, allowing us to control about 50% of our needs for external toilet. Let’s now move to some key highlights. First, I would like to share with you the completion of two key investments in two new furnaces, two brownfields, one in Brazil and the other one in Italy. Both projects have been completed and production has started. In Brazil, incomparable, the furnace was commissioned in May and is bringing an additional capacity of three thirty tons per day.

The objective here is clearly to develop ourselves in a sustained Brazilian market growth. In Italy, in Pecha, the second furnace was commissioned beginning of the month, providing an additional capacity of 300 tons per day. This additional market capacity will be dedicated to the growing segment food for food. Both furnaces are using an ETOX plus oxycondition technology, which is providing a reduction of c o two emissions by 18% compared to a traditional furnace. So these two furnaces are taking two boxes They will support our objective of both organic growth and decarbonization.

Next key highlight is about our confirmation of the launch of our first hybrid furnace in Spain, Saragossa. In this case, it is not an additional capacity, but the replacement of an existing furnace. We do expect to operate up to 70% electricity and using oxygen instead of air for combustion. This furnace will bring you 55% reduction of CO two emission compared to a traditional furnace. Plan is to heat it up in a few weeks from now, let’s say, in Q3.

And clearly, our full electric furnace launch in Cognac last year, this is clearly an additional step forward of the carbonation or not. We will take some time for this one, and if needed optimization, and then we will enter in the step by step deployment fail aligned with our carbonation or not to reduce our scope one and scope two by 46% in 2013 compared to 02/2019. The third key highlight is about product innovation. You know that we have launched our air range product offer. We started with our 300 gram bottle less bottle and then with a new jar offer.

Objective of this range is to offer best in class light weighting products. And lately, we have completed the range with MyAir. MyAir is a new standard for single serve solution for 20 centimeter beverage with a descriptive weight of 105 grams. This product is aiming to address the ready to drink, non alcoholic beverage, or still wine segments. With this new proposal, we are leveraging the full capability of glass as a packaging solution and demonstrating our ability to innovate and support our customers.

Last key highlight is about BWGI tender offer for the Alias shelf. So as announced last Monday, the offer is successful, passing the 50% threshold, and BWGI is owning now 70.31% of Veradia shares and 62.81% of its voting rights. The threshold of 50% being passed, as planned, the offer will be reopened at the same price of €28.30. IMF issued yesterday a notice formally announcing the reopening from July 31 to August 13, and final results will be known just after the closing of this second window. The settlement delivery offer of the initial offer of the initial window, first window, will take place on August 1, so at the end of this week.

This step being completed, we continue rolling out our strategic format, focusing on creating value for our customers, employee, and shareholders. Before moving to before giving the floor to Natalie, a quick overview on q two and h one results. The positive news are: one, as seen in Q1, our volume trajectory still in the difficult market environment, but we keep on seeing volume recovery quarter after quarter Two, our stronger cash generation compared to last year, which is one of the key objective for 2025. And last, a rebound in profitability in Q2 of four fifty seven bps compared to Q1. So in detail, so Q2 revenue is down by 2.5% year over year with an organic growth of minus 3%, giving an H1 revenue down by 2.4% with organic growth at minus 3.3% year over year.

Q2 adjusted EBITDA is EUR $2.00 4,000,000, minus 10.4% versus last year, with a margin at 22.5, giving an H1 adjusted EBITDA of €351,000,000 minus 18.7% last year with a margin at 20.4%. About debt, net debt, our leverage is at 2.6 at the June compared to 2.1 at the end of last December. And finally, our net income is at €68,000,000, minus 45.6 compared to h one, giving an EPS of €0.76 excluding PPA. So let’s now see in details with Natalie the the details of this results.

Natalie, CFO, Veradia: Thank you, Patrice, and good morning, everyone. Let me do as usual throughout our second quarter and half year results. So let’s start with the Q2 consolidated revenue variance analysis. So you can see here the bridge between our Q2 twenty twenty four sales that were EUR $928,000,000 and our Q2 twenty twenty five sales that are EUR $9.00 5,000,000. So as said by Patrice, our organic growth is minus 3% in the second quarter and minus 3.6% excluding Argentina.

You can see on this bridge that the volumes are contributing positively, plus EUR 19,500,000.0, broadly in line with the first quarter. And knowing that in the first quarter, we had a low comp base, which is less the case in Q2. So again, this is one of the positive highlights of the quarter, this positive volume growth. We have a strong performance in Food and Year, and all segments are showing positive organic volume growth. The price and mix is negative, minus EUR 52,000,000.

This is primarily reflecting the carryover from 2024 price reduction still in the second quarter, and we have some negative mix impact. The ForEx is negative mainly linked to Brazil as Argentina is shown as a separate. And we have in this first half a very little impact that you will see because of the acquisition of the Italian business of Hydrala that took place in July 2025. So this leads for the full half year to this bridge. So an organic growth of minus 3.3% for the full half year and minus 3.9% excluding Argentina.

Again, you can see a continued organic growth in volume. We had a targeted commercial policy, and nearly all segments contribute positively here with a specific outperformance in Latin America, and we’ll come back to that. The price and mix is still strongly negative. So we see a bit the same shape as what we saw for q two. So same comments with the carryover effect from 2024 price reduction and the negative mix impact.

And again, here, the perimeter is about CONSICO, so the fidrila plant business in Italy. So looking per region, so as usual, South And Western Europe, North And Eastern Europe, and Latin America. So here you have the revenue. So the reported revenue in South And Western Europe declined by minus 0.3%, but with a scope impact. So at the constant scope, we have a decline of minus 4.5%.

We have higher volumes even excluding the the contribution of CORSICO. So organic lower higher volumes. And again, here, most segments record positive volume growth with a little exception with starting line that are slightly down. If we move to North And Eastern Europe, we can see here, so we have some ForEx impact. That is why you will see two charts that is quite limited.

We have reported revenues declining declining by 6.4%. We have lower selling price in the market that is showing still some moderate signs of recovery. But again, recovery, we have volumes up slightly in H1 in most segments. And in this region, as two specific mentioned about premium spirits in UK that continue to be quite soft and first year and still one in Germany in a frequent market environment. When we move to Latin America, so we have reported revenue declining in €1,000,000 which is really linked to ForEx.

So you can see a nice growth if you exclude the ForEx impact. We have a strong revenue growth in H1, especially in Brazil, with a good momentum in all segments and a strong performance in food jars non alcoholic beverage and beer. So how does this translate into adjusted EBITDA? So let’s start with the second quarter. You can see on the top right, the adjusted EBITDA margin.

So for Q2, it’s 22.5%. Let’s remind that we were at 18.8% in Q1. So we have a nice improvement sequentially in the adjusted EBITDA margin Q2 versus Q1. Even if, as you can see also, we are still behind 2024, that was at 24.5%. But again, a nice sequential evolution.

We have here, you can see the pillars, usual pillars, bringing us from EUR $227,000,001 year ago in Q2 to an EBITDA of EUR $2.00 4,000,000 in the second quarter twenty twenty five. So the activity is contributing positively by EUR 15,700,000.0. We have the effect of the volumes that we just commented, volume growth. We have a negative spread price mix cost in the quarter by EUR 56,400,000.0. But even if still negative and unexpected, we have less negative spread in the second quarter compared to Q1.

And this includes unfavorable mix impact in this quarter again. You can see that the net productivity, so the PEP program continues to contribute nicely above the target of 2% cash production cost reduction. We are at 2.3% in this quarter and at least to EUR 11,900,000.0. In the other pillar, EUR 11,000,000, you have perimeter effects to contribution of in Italy, plus nice contribution of SG and A reduction in this quarter. And you have negative ForEx for minus 2.6 and some decline, a slight decline in the APF Argentina by 3,300,000.

So, again, as a takeaway, still a nice result in the margin versus the Q1. So looking now at the full semester, we have an adjusted EBITDA margin on the top right at 20.4%. And, again, a compound of the 18 and the 22.4 that I just saw. In the pillars, you have the activity contributing positively, 34.2. The spread is negative by minus €142,600,000 So you can see that Q1 was more negative than Q2.

The net productivity contributing on target, 2.3% decrease in cash cost production, so we gained 24.4 million euros, sorry. And the other Pillar that is also contributing positively, and then that leads us to the with the ForEx and Argentina being slightly negative. So a positive impact from volume recovery even if we are still, of course, suffering from the negative spread base. So by region, let’s look at the adjusted EBITDA and the margin. So in South And West Europe, we are at 20.6% adjusted EBITDA margin.

That is €243,000,000 adjusted EBITDA, so it’s increasing versus last year by 15.7%. So the same key out in South And West Europe, so positive activity EDT contribution, negative spread, and positive PAP. And in addition, we have the very little effect of cost equal acquisition here. North And Eastern Europe, adjusted EBITDA evolution, we are at €49,000,000 adjusted EBITDA in this half year. That is a decrease, significant decrease by 76.6% in versus last year.

And you can see that the adjusted EBITDA margin is at 13.6% to be compared to 20% last year. So in terms of PR sale, we have a positive activity contribution, especially in Germany that is slightly and slowly recovering. But we have a strong negative spread, again, lower selling prices and negative mix that is quite significant in the region. In H1 in Latin America, so we had we posted EUR 59,000,000 adjusted EBITDA, and the decrease versus previous year is linked to foreign exchange. And you can see on the top right that the adjusted EBITDA margin is nice 32.2%, so a strong performance, even slightly behind last year.

So again, especially in Brazil, that it is up, and the spread is negative, but not yet negative. So we have a very nice performance in the future. If we move to cash elements. CapEx, we keep CapEx to be under control at 6% of total sales. So it’s quite new compared to previous year.

It’s a mix of, you know, a different planning in furnace repairs. So we have a less busy planning in especially in h one compared to previous year. And we’re also at the end of our new capacity, new furnaces, so comparable in Brazil and Asia, you can see that Patrick mentioned to you. In this CapEx, they include, of course, the rollout of Saragossa hybrid furnace that we just presented to you as well. Really embedded in two years period.

Cash flow generation, clearly, news and positive amount in the positive performance in the first half. We have generated a free cash flow of EUR 66,200,000.0. That is a significant improvement compared to previous year, where we started the year with a negative free cash flow of minus EUR 49,200,000.0. So we have EUR 150,000,000 improvement here. And you can see the cash conversion is high at 70.5%.

We have a lower operating working capital outflow, not only coming from CapEx this year that you see here. And we also enjoy lower interest paid and financing costs and lower cash tax. So all these converts again to a positive free cash flow generation. The leverage as a result of what we saw previously is at 2.6x at the June. Let’s remember that after a dividend payment that is that occurs every year in May, and that was $2.00 €2,000,000.

So explaining partly the mainly the deleveraging versus December 21. Now here, the structure, our financial structure and liquidity. So basically pointing to the tender offer from VW GI, We have here, you can see one line of EUR 1,600,000,000.0 certain funds bridge loan. So as already published and communicated, we have entered into a bridge to cover potential put exercise on the first two bonds that you see on this page. So the sustainability linked bonds, the €500,000,000 one from May 21 and the second one from November 21 two bonds are mean, the change of control that just occurred, that will occur on August 1, which we can proceed for the bondholders to to exercise their put.

So it’s fully covered, as you can see, by the bridge of 1.6 and even more. Let’s remind that the third one, the one of November twenty twenty four, is not under the change of control or close. So it it doesn’t need to be covered by the bridge. And just sorry, the available liquid liquidity of the group is still at the nice is at the nice level of €810,000,000.

Patrice Luka, CEO, Veradia: Thanks, Natalie. So about our guidance, let let’s start with some market insight situation, what we see today. We still see a sub consumption in Europe, still an uncertain environment with slow global economy, with geopolitical and trade tensions. And, obviously, these geopolitical and trade tensions are creating a very volatile environment. Nothing really new compared to what we commented in short.

An insight which is leading to cautious and kind of weight and position of many consumers and customers. Nevertheless, we we believe in some support to glass demand from the end of destocking in most segments. We still see a market environment in that being supportive. And finally, about capacity, we continue to see permanent capacity shutdowns across Europe with regular announcement from the industry. So facing this situation, what is key for us is to keep our focus on self help measures and cash flow generation.

And to be more specific, what I can say for our outlook for H2 is, one, we expect to continue the pickup in activity supported by our furnace openings, so our two new additional capacity in Brazil and Italy, and as well as the reopening of our second furnace in Ukraine. Two, except in UK and Germany, in h two, as expected, we are back to normal use of our installed capacity. But to be clear, we’re ready to adapt again with agility if necessary. Three, we do expect in h two, as it has been commented already for q two by Natalie, a lower negative carryover and spread impact compared to h one. Four, you may have seen that for any of the profitability of h one, it it it is not at the only group, and we are suffering in in Northeastern Europe and to to be much more specific in Germany.

And this is why we are expecting a profitability improvement, thanks especially to the restructuring actions already taken. And five, we continue preparing the future, rolling out our decarning decarbonization on that with Saragrocyte, with Fermes launched in June. It’s all about focus on short term priority delivering what has to be delivered to secure the future, but at the same time to prepare for us the future and and the growth to come. That being said, so about our guidance, we maintain our full year ’25 guidance assuming geopolitical and macroeconomic environment does not deter you right further. So it means that we did want to deliver an adjusted EBITDA around €800,000,000 per year and a free cash flow of more than EUR 200,000,000.

Thanks a lot for your answer, and now we can move to the Q and A session.

Laura, Conference Coordinator: Thank you. Now take our first question from Louis Weiser of UBS. Your line is open. Please go ahead. Good morning, and thanks for taking my questions.

So the first one is with regards to your price cost spread in Q2. It seems that you still face some cost inflation in Q2 given the pricemix effect on the top line is lower than the pricemix effect on the EBITDA. Although, agree, it was an improvement versus Q1. Could you give us more color on this in Q2? You said last time that you expected cost inflation for the full year to be close to neutral or a slight inflation for the full year given you will benefit from COLIP deflation.

So how do you think about this now? And could you tell us about how you think about the pricecost price for the full year? Are you able to quantify the impact? And do you still expect it to be significantly less than in 2024? The second one is with regards to volumes.

The flow through of volumes from the top line to EBITDA was actually very strong in Q2. Is that how you think about it, for the rest of the year? And the last question, is with regards to the change in capacity in the market. You last mentioned I mean, last time you mentioned that there were 13 furnaces that closed in Europe since late twenty twenty three. Have you seen further changes?

And how do you how much does that represent as percentage of the total capacity in Europe on a net basis, I. E, including those who are actually adding capacity on the market? Thank you.

Patrice Luka, CEO, Veradia: Okay. Thanks a lot. So I will take maybe the last one, let Natalie, for the two the two first questions. So about about capacity, the main bulk of the adjustment, I believe, as you know, what you announced, and this is what we commented at the end of at the March. Seems that we have seen a few adjustment, especially additional ones in France, and that that that that’s about it.

So and and we’ll see if more is coming. So it is about similar to what we we commented in h one, and this is about, if I’m not wrong, an equivalent of 15 furnaces representing, what we can say, an adjustment of 7% of total capacity in Europe, to be specific. About the spread, Anthony, if you want to comment to that.

Natalie, CFO, Veradia: So in fact, we we we we are we expected the spread, I’m sorry, to be a bit less negative in in q two and and continue to have this trend moving into h two, mainly because of the carryover effect from 2024. If you remember, in 2024, we decreased prices throughout mainly the first half, but it was more spread in time that, again, what we see in 2025. So it means that when you compare yourself to ’24 to last year, you have your comparative prices in ’24 moving down. So the comparison becomes a bit easier in the second quarter. And again, in ’2, most of the most of this carryover effect is in h one this year.

On the cost elements, we commented to you in the first quarter that we have a specific, especially in the in the energy, quite strong inflation in the non hedge elements. If you remember, spot prices in energy were were quite high in the first quarter. We don’t have that in the second quarter. So we are back to a cost inflation that is pretty neutral in fact, and we don’t have this negative element on the cost side that we had in the 2025. And moving into the H2, I won’t give you exact number.

But, again, just as we said previously, we see this spread being less negative step by step throughout the year. In terms of volumes, so I think your question was on our view for the rest of the year, if I understood properly. Otherwise, please do not hesitate to raise a question. So we have received positive organic growth in volumes. This is what we project for the second half of the year.

Don’t forget that we have also additional capacity. We have component of furnace that we probably just started to produce in Brazil, where I know that momentum in the activities is good. We have so we have a supportive environment in Latin America, and we have also a Asia furnace. And step by step, as we commented, we also in the rest of the group, we run at a higher capacity percentage. The exception being, as we said, UK and Germany.

Laura, Conference Coordinator: Thanks. Just if I may add on the volumes. Also, flow through of your volumes from the top line to EBITDA was very strong. Is that how you think about for the rest of the year? Is that how should we think about a similar flow through for h two?

Natalie, CFO, Veradia: Okay. So sorry. I I was not sure I Yeah. Know. That’s alright.

So you’re more on the focus. So in the activity pillar, you have the the the full completion of volumes, but you also have, you know, inventory validation and some concrete mix. So that that explains that you don’t have the the direct you have some some different elements moving here. You have some other moving parts than the pure organic growth in volume.

Laura, Conference Coordinator: Thank you. We will now take our next question from James Terry of Citigroup. Your line is open. Please go ahead.

James Terry, Analyst, Citigroup: Good morning. Thanks for the presentation. Just a couple of I’d like to start specifically on Northern And Eastern Europe. This seems to be underperforming other regions quite significantly with the all time low margin in H1. Does that mostly relate to the Q1 difficulties?

Or has there been much improvement in Q2 and even early Q3? And would you be able to talk a bit more about restructuring and what you think is needed for meaningful recovery here? Secondly, just on global consumption trends and trade flows, would you be able to comment a bit more on any changes in customer behavior and order patterns and how developing in early Q3? For example, what are you hearing about export trends? And have you seen any customers shifting supply chains at all that could lead to market share gains for you?

Patrice Luka, CEO, Veradia: Thanks a lot. So for any situation, you’re The margin at which we are doing is not a clear satisfaction for us. This is the result of a market difficulty. And, yes, q two is better than q one. In q one, we are impacted by lower market, lower volumes, let’s say, but q two is improving.

And in Germany, so as you as we have communicated, last year, we decided to definitively stop one furnace. We did the first restructuring plan of about 100%. And in ’25, based on the current situation we are facing, have decided, as announced in q one, the launch of an additional restructuring plan, which is about to be to be finished and which will impact which will impact positively starting in h two with expected full impact in in in ’26. And on top of that, we have decided to optimize our capacity for us for a period of time. It’s not definitive, but we have decided to to cold stop an additional furnace in in essence.

It means that in our SM plant, as we speak today, there is one furnace running instead of all of that, we need to size and to adapt to adapt to market reality and to get the best profitability we can get from this market. Plus additional traditional, I would say, cost cutting measures and especially focus focusing on on top. I hope that it does answer to your question. About the the global consumption and export trends and all of that, quite difficult to to to give a we we do not see any single pattern, I would say. What what we can see what we can say, may maybe some some of our customers did push a little bit sales in q two before the famous August 1 August 1 deadline for the tariff to be implemented between Europe and US.

We we have that. But we have others which have been waiting for to better understand what would be the situation. And as we speak, so in this in the last hour or so, there is this agreement. I’m not sure if we say agreement, potential agreement with this 15% tariff. And it’s not clear at all as we speak if wine and spirits are in or out with a kind of close of ex exclusion.

And we do understand that it still has to be negotiated. So we are still cautious about that. Obviously, focusing and ready to adapt if necessary. But let’s say, less concern to what was potentially announced beginning of a year for one and spirit for US. On the other side, we see some positive signal from China because especially on the product side where an agreement has been found duty free sales are restarting.

So this is much more positive news flow from China than from compare compared to before.

James Terry, Analyst, Citigroup: That’s very helpful. Thank you.

Laura, Conference Coordinator: Thank you. And we will now take our next question from Francisco Ruiz of BNP Paribas. Your line is open. Please go ahead.

Francisco Ruiz, Analyst, BNP Paribas: Hello. Good morning. I have a couple of questions as well, if I may. The the first one is let me understand why why you are still or why you are now increasing capacity when you already highlighted the current situation in terms of uncertainty, especially in Europe, where you are increasing volumes, but your main competitors are not in in this q ’2. So so what is the urgency to to put a new furnace in in Italy?

And and a follow-up on this as well is, if you could give us the the current situation of, capacity utilization. And you commented a new furnace stop in in Essen, also not full capacity in UK, so if you could give us a figure that we could play with. The second question is in regarding CapEx. So while I understand that the expansion CapEx is lower, but also the maintenance CapEx is well below. Should we see an improvement of that figure?

Because it’s really low compared to the solar calabre town. What is the average of the of the sector? Or we should say something like around 6% in this year. And if you could give us an idea of what is the calendar of furnace refresh for for the second half of next year. Thank you.

Patrice Luka, CEO, Veradia: Okay. Thanks a lot. So for capacity, additional capacity, as as as I have commented during the presentation, these additional capacity are really specific. The first one in Brazil. So it’s clearly because we see a supportive market in Brazil.

This was already part of our plans, and we are going to run full capacity in Brazil. So in Brazil, for us, it’s it’s a no brainer. So we need to keep on going along the market growth and and get and get our share there. So Brazil is is nice and I would say it’s a no brainer. Italy and Asia, it’s much more specific because in in in Europe, we do see potential growth of food segment.

Globally globally, this is a segment which is going to grow in the years to come. This is a segment where we believe that we have some opportunities, and this is why we decided to maintain this additional capacity in Peixa for food. You may know that when you want to do efficient business in food, you need a specific setup of your process. And really in Italy, this is what we wanted to do moving from our in our patient side one to two furnaces where two furnaces in the plant is a way to patient and with a good good setup setup. So we do not see any issue with that.

I would see that as a potential upside to it. About installed capacity globally in Europe as we speak and the plan for h two, and this is what we commented already, we plan to run, let’s say, normal capacity usage in France, in Spain, in Portugal, in and and and in Italy. Where we are still facing some difficulties, it’s in Germany, and I have just commented that before. And here, just for us, the question to one side and adapt to to to reality and market. One, this is what we are doing with some benefits to come in at least minutes too.

And in UK, it’s much more a temporary situation, where in UK, we are you know that we are much more dedicated to spirits. 75% of what we are doing is spirits. And in spirits, we are still quite low and below what we were used to do in in the past. So here, I mean, it’s just a question as well of to adapt and to be prepared to restart our some capacity when we’ll be when we see volumes picking up much more than what we see today. The bond CapEx.

Though you’re right, the 6% is a little bit low. It’s quite low, let’s say. So there is a calendar effect, and it has been said by Natalie. Let’s keep in mind as well that we are starting to get the benefit on the the CapEx depletion after this high period of inflation. We had in ’22 and ’23.

So we start to see some benefit of of that. And last, yes, you’re right. In h two, we will have much more CapEx. And if I have to give you number a for the full year, we should be around 8% full year full year, yeah, full year ’25.

Natalie, CFO, Veradia: Just to to to add, we have an email. We We want in in the first half. So we had this one started. So you know that we have planning different plannings from semester to semester and from year to year.

Patrice Luka, CEO, Veradia: Hope it does answer to your question to your questions, Francois.

Laura, Conference Coordinator: Thank you. We will now take our next question from Philippe Lorraine of Bernstein. Your line is open. Please go ahead.

Philippe Lorraine, Analyst, Bernstein: Yes, good morning. Just want to follow-up a little bit on volumes because I know that there’s a weaker contribution from the volumes to the sales bridge in the second quarter versus the first quarter, and we see the same effect on the activity contribution in the adjusted EBITDA bridge. So I just wanted to get like a bit of more detailed comment on like gradual development and so on. Thank you.

Natalie, CFO, Veradia: Okay. So in the FDA bridging the activity pillar, so we have the impact of the additional volumes. We have also, some, inventory variation impact. And we also have the impact of fixed cost that can be not absorbed when we are not running full capacity. So in fact, that explains that you don’t have a direct full direct country full full, I mean, from your volume or when I comment the volume evolution.

So in the first quarter, as we commented, we were running or let’s say, the second quarter, we are step by step coming back to full capacity in the countries as Patrick mentioned, except in Germany and and in The UK. So it means in the first quarter, we still had some we had more fixed cost not absorbed. In the second quarter, on the contrary, we have a few we have a part of cost for the start up, for example, of our two new furnaces, Compugu and BCR that are not yet will be absorbed and that will be they will be fully covered in the second half.

Philippe Lorraine, Analyst, Bernstein: Okay. No, I wanted more to comment maybe like on the one that you’ve seen in the top line because for Q2, the volumes contribution was EUR 19,500,000.0, but it was EUR 24,000,000 also like in Q1. So why is this that it’s getting like a little bit tougher, especially if I compare to the starting point of sales, which is like actually higher in Q2 twenty twenty four than it was in Q1?

Natalie, CFO, Veradia: Yes. It’s you have a slightly lower Q2 volume impact indeed in the bridge versus q one. It’s not massive. It’s more related to country mix here depending on which country is increasing more or But that’s that’s a minor minor impact here.

Philippe Lorraine, Analyst, Bernstein: Okay. So so so not just related to volumes, but also to the the the mix in ASPs across the countries?

Natalie, CFO, Veradia: It’s it’s volume impact, but, you know, country by country. So Okay. Yeah. The unit value per country, you also have some country mix impact in each of the lines. Yes.

Yeah.

James Terry, Analyst, Citigroup: Okay. Perfect. Thanks.

Natalie, CFO, Veradia: Okay. Thanks.

Laura, Conference Coordinator: Thank you. We have no further questions in the audio. Handing it back to the management for webcast questions. Thank you.

David Plessis, Head of IR, Veradia: All right. Okay. Good morning. This is David Plessis speaking. I’m the head of IR.

I think we got questions from, two participants, through the webcast. So first one is a set of questions from Inigo Agusquita with Kepler. First question is, like, four questions there. First question is what can we expect from the new shareholder in terms of impact on strategy or any other change? Anything you might tell us around your midterm strategy ahead of the upcoming Capital Markets Day?

So this is the first question. Second question is, can you please comment on the trends by region when it comes to q two volume? Third one is, how do you see, pricing for 2026? And the last one is, why did you decide not to sell your Argentinian subsidiary?

Patrice Luka, CEO, Veradia: Okay. Thanks, David, and thanks, Inigo, for for these questions. So about the impact on strategy, I mean, as as we’ve said, for us, it’s much more continuity. You know, at b w g b w g I, it it was about the shareholder of the company. They are sitting on the board, so they are support they were supporting already all the strategy and plans, which were ongoing, implementing, ongoing, and to go.

So for us, it’s much more business continuity. This is a way to secure and to be, again, a little bit much more long term oriented to support our strategy and the creation value creation of long term long term run. About the and this with a CMD to come in Jan, this would be an opportunity for us after this quite interesting period of inflation, destocking, and all of that to come back to some fundamentals of our business, and especially, this would be the opportunity to come back to some of the capital allocation topic and and all of that. But no big change or downturn or in stat strategy to to be expected. The the the keyword is continuity and continuity for value creation for the company, our employees, and the shareholders.

About q two volume trend by region, I mean, it’s quite similar to what we had in q one, I would say. In Europe, what we had is a low single digit organic growth, obviously boosted with our core SQL acquisition in h two last year. So all in, it’s much more mid single digit growth, I would say. On on in on the and in LatAm, so we have high single digit decrease. Again, as we commented during q q one, which is why we see a positive positive momentum.

For 02/2626 pricing, a little bit early to comment on that. This is obviously what we are going to begin after the summer break preparing ’26, and we are going to see what what what what are the markets the best market trends that the business is to come and all of that with, obviously, our first objective on our cost situation. We said they want that could be we could sell if it was a value creation again and if it was for a good good financial deal. After weeks of discussions, finally, we concluded that the proposal or the offer was not at the level we expected. And for us, Argentina is a good business, so no need to bargain and to give for a nice price with a nice business.

So this is why we decided to keep it, and this is clearly something we are going to enjoy. This is a really cheap of all the business, you know, our profitability. So this is why we’re saying to to keep it.

David Plessis, Head of IR, Veradia: I think I’ve answered the questions. Absolutely. Well, thanks a Patrice. And we have one last question, from Sophie Baumann, which is can you please elaborate on current capacity utilization levels in Europe?

Patrice Luka, CEO, Veradia: I mean, in Europe so, again, to make it simple, France, Iberia, let’s say that. This is what we said in such. Except UK and Germany, we are running as standard, meaning that we are we running full speed except the plan maintenance that we have to do, which is the standard of this business. So we are running full full full speed compared to last year where we are much more around 90%. So in h two, we are going to In UK and in Germany, we are below that, much below that.

As I explained, we have put some temporary measures to cold stops on premises, and we are not back to normal to make it simple. So we are still in the phase where we’re But the good news and what is what I do see positive is we are back to normal, big part of our business, and waiting for better days. But that team taking responsibility, the measures we have to take where it is necessary.

David Plessis, Head of IR, Veradia: Great. Well, thanks, Patrice. Thanks, Natalie. I think this is it from from my end. So thanks to you all.

Patrice Luka, CEO, Veradia: Okay. Thanks a lot. Thanks so much to all of you. I hope that most of us most of you, but us us as well, we take the benefit of the summer break to be fully energized to to face the second semester and prepare on 02/1926. So if it’s okay, I wish you a good summer break, please.

Natalie, CFO, Veradia: Thank you. Bye bye. Bye bye.

Laura, Conference Coordinator: Thank you. This concludes today’s call. Thank you for your participation. You may now disconnect.

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