Earnings call transcript: Verallia reports Q4 2024 revenue decline

Verallia reported a slight decline in its Q4 2024 revenue to €821 million, a 1% decrease year-over-year. The company’s stock saw a 3.03% drop in after-hours trading, closing at €28.38. Despite the revenue decline, Verallia’s Q4 adjusted EBITDA increased by 4.3% to €201 million, indicating improved operational efficiency. According to InvestingPro data, the company maintains a healthy dividend yield of 7.58% and has increased its dividend for five consecutive years, demonstrating strong shareholder returns despite market challenges.

Key Takeaways

• Q4 2024 revenue decreased by 1% year-over-year to €821 million.
• Adjusted EBITDA for Q4 rose by 4.3% to €201 million.
• The stock fell by 3.03% in after-hours trading.
• The company maintained a strong EBITDA margin of 24.5% in Q4.
• Verallia proposed a dividend of €1.7 per share.

Company Performance

Verallia’s performance in Q4 2024 showed resilience amidst challenging market conditions. The company’s revenue for the full year 2024 was €3,456 million, marking an 11.5% decline from the previous year. Despite this, the company managed to increase its Q4 adjusted EBITDA by 4.3%, reflecting successful cost control and productivity measures. InvestingPro analysis suggests the stock is currently undervalued, with a P/E ratio of 9.88 and an EV/EBITDA of 5.49, indicating potential upside opportunity. The company maintains a "GREAT" overall financial health score, supported by strong profitability metrics.

Financial Highlights

• Revenue: €821 million in Q4 2024, down 1% YoY.
• Full Year Revenue: €3,456 million, down 11.5% YoY.
• Adjusted EBITDA: €201 million in Q4, up 4.3% YoY.
• EBITDA Margin: 24.5% in Q4, 24.4% for the full year.
• Net Debt Leverage: 2.1x as of December 2024.

Outlook & Guidance

Looking ahead, Verallia expects its 2025 adjusted EBITDA to remain close to 2024 levels, with low to mid-single-digit volume growth anticipated. The company is targeting €200 million in free cash flow and plans to commission new furnaces in Brazil and Italy as part of its ongoing decarbonization efforts. Analysts tracked by InvestingPro forecast EPS of €2.34 for FY2025, suggesting continued profitability. Get access to 12+ additional exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.

Executive Commentary

CEO Patrice highlighted the company’s adaptability, stating, "Delivering a result in 2024, close to 2022 under a bearish market with adverse micro conditions is a clear demonstration of our agility." Patrice also emphasized the strategic importance of Latin America, noting, "Latin America remains a strategic region for us."

Risks and Challenges

• European market softness and slower-than-expected destocking.
• Trade tensions contributing to market uncertainty.
• Potential impacts of furnace closures in Europe.
• Price reductions anticipated in 2025 could pressure margins.
• Ongoing decarbonization efforts require substantial investment.

Q&A

During the earnings call, analysts inquired about potential unsolicited offers for Verallia’s Argentine business and shareholder tender offers. Management also addressed pricing negotiations and market conditions, providing insights into their energy hedging strategy and capacity utilization plans.

Full transcript - Verallia (VRLA) Q4 2024:

Patrice, CEO, Veralia: Good morning, everyone, and welcome to our call for our Q4 and full year twenty twenty four financial results. As usual, Nathalie and I will go through our presentation and we’ll have a Q and A session at the end. I will share with you some key highlights, and Nathalie will present in details our numbers. And then I will come back on our guidance. So to start with, just to remind you that Veralia is a global leader in glass packaging.

We are number one in Europe, number two in Latin America and number three worldwide. On this chart, you have our IV card. You have on the left the 24 split of our sales by segment. As a reminder as well, one of our strong assets is our customer base, more than 10,000 and the diversified end market in which we are operating. In 2024, steel wine represented 32% of our sales and sparkling wine, 12% spirits, 16% beer, 12% soft drinks, 11% and food, 17%.

We do operate in 12 countries with 35 plants with 64 pharmacies after the closing of one furnace in Essen and the acquisition of two pharmacies in Italy. Please note as well that we are running 19 toilet recycling centers, allowing us to control about 50% of our needs for external collet. Let’s now move to some key highlights of 2024. Despite the market context, we have continued to invest and innovate through 2024, all of that to prepare our future. One, in July, we completed the acquisitions of Virdara Italian activity, confirming our strategy of investment in key markets.

The integration is going on and as expected with many synergies already in place. Two, we commissioned the first electric furnace in Cognac dedicated to flint production. This launch is a success. We confirmed CO2 emission reduction by 60% compared to a traditional furnace. This is a key milestone confirming the robustness of our decarbonation on that.

Free, light weighting is a trend. And in 2024, we launched a new standard of 300 grams for a 75 centi liter borderless bottle with our so called Air Range offer. This offer is getting a global recognition from our customers and from the glass industry. We will keep on pushing the limits with our Air Range. Four, people being the most important resource to do our business, we have structured in 2024 our Employer Brand strategy, and it is now a key pillar within our strategy.

And finally, five, we successfully issued a new euro senior bond for a total amount of EUR 600,000,000, reflecting the confidence in their area. And as a result, we have no significant debt maturity before 2028. On the CO2 emission fronts, we are progressing towards our 02/1930 target of a reduction of 46% compared to 2019. Scope one and two are down by 9.4% compared to 2023, meaning that compared to 2019, emissions are down by 2323.7%. The efficiency of our actions are clearly demonstrated with a reduction of our emissions in intensity, 0.44 tonne of CO2 per tonne of glass in ’24 compared to 0.47, which is a reduction in intensity in 2024 compared to 2023 by 6.4%.

Our QL external QL usage has reached 56.7% in 2024 plus 2.6 points compared to 2023. Obviously, our acquisition of EcoSan treatment collect activity in Spain has supported this performance. And finally, our low carbon electricity share went up to 64% in 2024. To make it simple, we are on track with our decarbonation roadmap implementation. Let’s move now with some 2024 business insights.

About 2024 market, As we presented and anticipated in July with our H1 results, market conditions in 2024 were not as good as the expected one beginning of 20 20 four. Consumption in Europe was soft through the year and recovery through destocking much slower than initial assumptions. Destocking was at play for most of the year, in our view still active in spirits and on some other products significantly exposed to export share. In addition, the growing trade tensions have created and are creating uncertainty impacting export oriented end markets, leading to cautious positions of many customers. In Latin America, on the opposite, market was very supportive.

And last but not least, about capacity, we saw some acceleration in capacity shutdown across Europe and North America, everybody being cautious with capacity management. And if we just take Europe compiling the official public announcements, since end of twenty twenty three, we count 11 furnace shutdowns. About our mitigation action plan, a quick update of what we have presented in our latest calls. One, on pricing. We have continued a disciplined pricing policy, taking into account the context of demand and available capacity, but we will focus on value based pricing.

Two, we made the appropriate decisions on capacity adjustment. The utilization rate of our installed capacity averaged 90% over the year, leaving 10% of our capacity unused. And as a reminder, we closed one furnace in Essen, Germany, with a voluntary departure plan of 90 people. Three, our productivity and cost control action plan delivered strong results with PAP savings at 2.8% of cash cost and SG and A down compared to 2023. Finally, focus to support cash generation was key, adapting CapEx to the context and keeping working capital under control.

Before giving the floor to Nathalie, a quick overview of our Q4 and full year 2024 results. So despite the challenging market, we are delivering a robust profitability above 24% and organic volume growth in Q4 is confirmed. Q4 revenue is down by 1% year over year. Full year 2024 revenue is down by 11.5%. Adjusted EBITDA in Q4 is EUR201 million, plus 4.3% compared to Q4 twenty twenty three, with a margin of 24.5%, plus 125 bps versus Q4 twenty twenty three.

And for the full year, adjusted EBITDA is EUR $842,000,000, minus 24% compared to full year 2023, with a margin at 24.4%, minus four zero one bps compared to last year. Net income is million, minus 49.8% versus 23%, giving an EPS excluding PPA of About net debt, leverage is at 2.1% at the December compared to 2.3% at the September and compared to EUR 1 point 2 at the end of twenty twenty three. And please note that at the next annual shareholder meeting, a dividend of EUR 1.7 per share will be proposed. I do not comment the extra financial indicators as I just did previously. For now, let’s see the details of our financial numbers with Nathalie.

Nathalie, CFO, Veralia: Thank you, Patrice. Good morning and good afternoon, everybody. So let me lead you through the usual sales and EBITDA and cash for the year 2024. So we’ll start with Q4 twenty twenty four consolidated revenue bridge. So you see that we moved from EUR $829,000,000 sales in Q4 twenty twenty three to EUR $821,000,000 in Q4 twenty twenty four, so pretty stable numbers with different pillars.

So the volume pillar is positive in the fourth quarter. We have volumes that are up organically in Q4, low single digit growth. And basically, the comment here is that we saw in Q4 for volumes very similar organic growth versus Q3, so in the full H2. And on top of that, we benefited from the positive contribution of the Viddler Italy operations that we acquired in July 2024. These are to be seen in the perimeter pillar on the bridge.

Then the price mix, as you can see, is significantly negative with minus EUR 94,400,000.0. We have growth based price declines in Europe, and the impact was mainly in H1 for negotiations. So we have the effect of these H1 negotiations in Q4. Mix remains slightly negative across all regions, and the negative pricemix impact is mainly in the South And Western Europe region. The exchange rate impact is also slightly negative with EUR 11,000,000.

And one very important comment about Argentina in Q4. Let’s remember that in December 2023, there was a significant devaluation of the IRS in Argentina, Fifty Percent devaluation. And then because of the high inflation country, we had to revalue the full sales and EBITDA of the year in December in 2023. So that’s why, by comparison, you will see both in EBITDA and in sales for Q4, big positive numbers in Argentina. It’s more that the Q4 twenty twenty three numbers were very low for Argentina, even leading to negative sales for the quarter three.

If we move to the full year, so the revenue bridge is showing that we are moving from EUR 3,904,000,000.000 to EUR 3,456,000,000.000. The organic growth, as Patrice mentioned, is minus 11.5% for the full year, and this is minus 14% for if we exclude Argentina. We have volume down in the full year, but again, organically, we are up in H2, which is showing signs of recovery. So you can see that the volume pillar here is negative even if, again, we have seen that in Q4, it was positive. Volumes are down year on year, mainly in Europe, so mostly in spirits and wine.

And we see positive contribution again in H2. And in Latin America, we have a strong positive contribution with solid beer and still wine performance. And if you remember, we have additional capacity, one furnace more in Brazil, supporting this trend. The pricemix pillar is negative EUR 366,300,000.0. We have again here negative contributions from the price reductions in Europe, mainly in H1, and we have a slight negative mix impact over the year.

The FX perimeter effect is negative with minus EUR 32,400,000.0. You can see the perimeter that is mainly Vittrala Italian glass business, but also our Collette treatment centers in Iberia that were acquired in Q4 twenty twenty three and the Argentina as a separate pillar. So moving by region, you can see that we have so this decline in revenue for the regions for SWE and you will see for North And Eastern Europe. So in South And Western Europe, at constant exchange rates and scope, the decrease is minus 12.7%. So we have here a combined effect of what I commented on the volumes and also on the prices with some negative contribution of mix despite a better H2 here.

And in Southern Western Europe, of course, we have the impact of the acquisition of Hydra La Italy in July 2024 as a scope change. If we move to North And Eastern Europe, this is where we see the most significant decline, minus 21.6% at constant exchange rates and scope. Revenue declined mainly in Germany and in The UK. So Germany, you know that we adapted capacity

: on

Nathalie, CFO, Veralia: a permanent basis with one furnace in Essen to adapt to the situation. So main impact coming from beer. We have seen though a good pickup, especially in foodjoys in Q4. And UK is mainly you know that it is very much focused on spirits, high end spirits, so that are hurt significantly in the market with destocking still ongoing in the segment. If we look at Latin America, we are back to positive numbers with plus 21.1% at constant exchange rates and scopes.

And here again, I already commented that we are enjoying good volumes, especially in Brazil, and we are we have the support of our new Jacutinga furnace. Chile is also with a positive momentum, especially in Q4. Then the price and mix effect overall for the region is positive. You know that we are pushing the inflation to our customers in the regions. So how does that convert into adjusted EBITDA?

Let’s look now at the fourth quarter, Q4. So our EBITDA margin first on the top right is 24.5% in the quarter. That is better than Q4 twenty twenty three. That was 23.3%. If we look to the left, so we moved from EUR 193,000,000 to EUR $2.00 1,000,000 EBITDA in the quarter, so a better quarter.

And you can see on the pillars that the activity pillar is positive, plus EUR 35,600,000.0. So we already commented the organic volume effect. And we also have the effect of inventory variation. Again, let’s remember that in Q4 twenty twenty three, we were adapting very significantly our capacity slowing down in order to reduce our inventories, while in 2024, we are more maintaining our inventories. If we look at the spread, we see a negative spread, so minus $63,700,000 This is driven mainly by lower selling prices that are not offset by lower cost.

And again, here is more the effect of the price adaptations that were made throughout H1 that are still running in the fourth quarter. If we look at the net PAP, we have a very strong performance as commented by Patrice, and this is for the full year you will see as well. We are well above the 2% that are our target with 3.1 cash production cost reduction in the quarter. So very strong performance here. In the other, you have the effect of the perimeter, so the contribution of Virdralla Italy operations and also some SG and A cost reduction leading to a positive number of EUR 6,300,000.0.

The negative FX impact is due mainly to Brazilian real And then you have Argentina with the comment I already made about the devaluation in Q4 twenty twenty three. So for the full year, the bridge, we are back to negative numbers in activity. But again, you have seen the positive momentum for Q4 with minus EUR 165,700,000.0 in activity. For the spread, it’s the main negative driver, minus EUR 200,400,000.0. So here, again, same comments, mainly driven by selling prices.

And even if we had some deflation in cost in 2024, it was to a lesser extent and some small negative mix impact. The PAP is strongly positive, EUR 61,900,000.0 positive. That is a 2.8% cash production cost reduction. The other, again, includes mainly SG and A reductions and contribution from Vidala Italy operations. You have the FX mainly driven by Brazil and Argentina back to more normal numbers for the full year.

So by regions, very quick, we have South And West Europe adjusted EBITDA evolution, so down by 24.5%, so leading to EUR $548,000,000. You can see on the top right that the margin keeps in the group average at 24.1%, of course, decreasing versus previous year. And here, as commented, I mean, the pillars are exactly as I commented because they are mainly in Europe. And you can see that the industrial performance PPE was strong. And here, of course, we have the impact of the perimeter from Vindralla, Italia mainly.

North And Eastern Europe, we have here a lower contribution with an adjusted EBITDA of EUR 147,000,000, so declining by 39.7%. And the margin is 19.4% compared to 24.9%. So here we are accumulating, of course, the lesser news on Germany and UK, which I already commented to you. And even if PPE was extremely strong, 3.8 with UK joining and fully deploying PAP and Germany doing a very good job. This is, of course, not sufficient to compensate.

Latin America is showing a very nice increase. So adjusted EBITDA of EUR 147,000,000 increases increasing by 6.418.9% excluding FX impact. And the margin, if you see on the top right, is keeps very strong at 34.4%. Moving to cash elements. So CapEx has been contained significantly down versus last year and below 10%.

So at 9.4. You have here the split between recurring and strategic. So all in all, in the year 2024, we have maintained a strict control on CapEx and on spend in general, but not renouncing any of the strategic investments. So you can see in the comments the two new furnaces, one in Campobo in Brazil, One in Peixa in Italy, are under construction. And of course, Patrice already widely commented the CO2 CapEx that will lead to decarbonation.

So cognac started this year in 2024, sorry, and Saragossa hybrid furnace being under construction and coming this year. So the cash flow generation for the full year was ended up positive with EUR 82,600,000.0. Of course, if we compare to previous year, the main impact here is the gap in the EBITDA that you can see in the first line. We have, again, controlled our CapEx. So this leads to a cash conversion that stays well above 60% at 61.6%.

In the operating working capital, we see a negative number. And remember that our CapEx ECR, especially in Q1, was very negative with high investments in Q4 twenty twenty three, so minus EUR 65,000,000. On the other impact other operating impacts include IFRS 16 adjustments and EBITDA impact without cash effect. Interest paid are very much contained at EUR 80,400,000.0. And the cash tax is heavy in the year, EUR 148,000,000 linked to some that we are paying in 2024 taxes related to 2023.

So you’ve seen the leverage, 2.1 times improving versus September. Both adjusted EBITDA are is improving and the net debt is reducing, thanks to the cash flow generation in the quarter. And in the year, let’s remember that we paid EUR $252,000,000 dividends and made the acquisition of Coricu for EUR $250,000,000. Here you have the finance structure and liquidity. So in main comment here since last call is the bond issued in November 2024 that Patrice mentioned, EUR 600,000,000 with a nominal rate of EUR 3 point 8 6 70 5 percent.

And we have a new revolving credit facility of EUR $250,000,000 that you can see here. So that leads to a comfortable liquidity of EUR 952,700,000.0 at the end of the year.

Patrice, CEO, Veralia: Okay. Thanks, Nathalie. Before speaking about our guidance, I would like us to step back a few seconds about our performance and our track record since IPO. Obviously, one year ago, we are more ambitious with our initial guidance for 2024. We are expecting a much more supportive market in Europe and a stronger recovery with a faster destocking.

And we know now the reality of the market and that 2025 will still be a year of normalization with still some uncertainties. So if we consider the market conditions we face in 2024, a soft end market, available capacity, premiumization being challenged, hedging weighing on our cost. So if we put that into perspective, we can admit that our 2024 EBITDA is a robust and a very positive result after the two outstanding performance in 2022 and 2024. Delivering a result in 2024, close to 2022 under a bearish market with adverse micro conditions in a so called fixed industry is a clear demonstration of our agility and ability to adapt. It’s a clear demonstration of our fundamentals.

And all of that is very positive for our future. And between 2019 and 2024, finally, the company has delivered an EBITDA CAGR of plus 7%. And at the same time, with our proposal of dividend of EUR 1.7 to the annual general shareholders meeting, Since IPO ed, the cumulative return to shareholders will be a dividend of per share. And including the share buyback done over the period, the cumulative total return amount of more than EUR 1,100,000,000.0, which is in our view good value creation for our shareholders. For 2025, we still see a market normalization at play before structural trends and fundamentals taking over again.

And as already mentioned, through the last comments of our customers, we see everybody being cautious with 2025. And the key words are demand normalizing, stable consumer environment, uncertainty, some are even removing their mid term guidance due to lack of predictability. So therefore, for 2025, we expect consumption and glass demand to normalize in most segments, but end demand still soft and potential negative effect impact from tariffs for the export oriented market. We expect a negative spread variation to wait on EBITDA due to carryover from 2024 price decrease and that mainly in H1. We expect business to keep running below food capacity.

We’ll keep on adapting production when necessary, but we will launch in Brazil in Q2 a new furnace and a new furnace at Peixa in Italy before the end of the year. This last furnace in Italy will be dedicated to food segment with production of jars. We still expect a positive momentum in Latin America, and we are still we’ll still be active in implementing our ELG roadmap. Our first hybrid furnace will be commissioned in Saragossa in Spain in the second part of the year. And finally, we’ll seize any EMEA M and A opportunity.

And beyond ’25, we see consumption recovering as fundamentals are still positive. We foresee spread being neutral as inflation normalize and entire price variations and installed capacity being adopted, we expect business to gradually get back to full capacity usage. In other words, solid fundamentals for glass packaging are still on. So for our 2025 guidance. Despite uncertain environment, with still soft European consumption and carryover effect for from ’24 price.

We aim to achieve an adjusted EBITDA close to the one delivered in ’24 and to more than double our free cash flow generation to be around EUR 200,000,000. This free cash flow generation will be supported by a CapEx leverage that will normalize around 9% compared to the 10% in the previous period. Focus will be clearly put on free cash flow generation. And finally, we want to inform you that we are planning to present our strategy, our midterm outlook as well as our capital allocation policy during the Capital Markets Day in September. Thanks a lot for your attention.

And now let’s move to our Q and A session.

Moderator/Operator: Thank you, Patrice. Our first question comes from Louise Weiser from UBS. Your line is open. Please go ahead.

Louise Weiser, Analyst, UBS: Good morning. Just wondering two questions, please. So the first one is around the guidance for 2025. I was wondering what does that imply for volume like for like volume and price on the top line, please? The second one is with regards to the price cost price for 2025.

You mentioned it would be negative. Are you able to quantify a bit more? And the last one is with regards to tariffs. So I understand that it will be hard to quantify, but is there any more comments that you can make around how you think about the potential impact on your business of tariffs from China and cognac and tariffs from The U. S.

On European imports, please? Thank you.

Patrice, CEO, Veralia: Thanks a lot, Ruizant. So for guidance 25% for the volumes, So we do expect a slight pickup in activity compared to twenty four percent as we see consumption being up, but very low single digit, let’s say. And in terms of volume for us, we see something between low to mid single digit growth in volumes. And I’m answering directly the DIVE topic because as you said, I mean, it’s quite very complicated and difficult for us to estimate that. Obviously, we are not we do not have a diet impact, the impact if we export of our customers, mainly in spirits and still wine.

So much more difficult to look at that, but we are to qualify that. We are much more vigilant. We do believe it could be embedded already in what every customer is saying about it and in what we are seeing for our activity being low to mid single digit growth in volume.

Nathalie, CFO, Veralia: Regarding the spread, Luisa, I can comment a bit more. So we’ve been saying for a while now that we will have negative carryover effect from the selling prices having been lowered throughout the year in 2024. So that’s why we know for a long time that we have this negative impact entering into 2025. As for the costs, what we see is that inflation in Europe is coming to lower levels everywhere. We also we anticipate some still a bit of improvement in some lines like Collette, a bit of deflation.

So all in all, we should have a pretty flattish evolution of cost. And moving into prices in 2025, maybe some selective price cuts, but everything moderates. So the main impact again is coming from the carryover effect from 2024 entering into 2025.

Louise Weiser, Analyst, UBS: Thank you. And sorry, what did you say for the price on the top line? What is your expectation on the price on the top line?

Nathalie, CFO, Veralia: So prices, I said some selective cuts maybe on prices. And then otherwise, you know that our strategy is to ensure a neutral spread entering into the year, meaning we look at cost evolution and this gives us what we need to push or what we can keep with customers. So we try to ensure a neutral spread entering into I mean, from January onwards. But again, we anticipate to have to make some selective cuts in prices due to the environment.

Louise Weiser, Analyst, UBS: Thank you.

Moderator/Operator: Thank you. We’re now taking our next questions from Lars Jellberg from Stifel. Your line is open. Please go ahead.

Lars Jellberg, Analyst, Stifel: Thank you. Just coming back to the price cost spreads, and if you look back a bit on 2024, I mean, your hedge programs, I think you’ve commented it before that there was sort of a net negative as you had some higher priced hedges versus where spot markets were. And as we trend move into ’twenty five, the earlier talk to broadly speaking a sort of equal energy cost in totality. So what I’m trying to understand now, if you can comment again how you see specifically the energy cost inflation for you. And at the same time, of course, we’ve seen a significant price increases for natural gas.

How do you think that’s going to impact overall market prices? And as such, I was a bit surprised to see you still talking about selected price declines. So putting that into context with the surge we’ve seen in gas prices, any color on that would be helpful. Thank you.

Patrice, CEO, Veralia: Thanks a lot, Lars, for your question. So you remember that so we have an aging policy, which is for 25%, where we covered ourselves at the end of last year for 80% to 85% of our estimated needs for energy for 25%. So it means that you’re right, based on our coverage and our hedging, we are well positioned, let’s say, compared to 24%. But as you mentioned, for the remaining part, which is not covered, which is between 10% to 15%, let’s say, of our needs. You see the volatility of the gas.

And it’s quite amazing the volatility we have seen in the last weeks, going up to EUR 58 per megawatt hour and then now down below EUR 50 So this part obviously will impact us. You can guess that it will less impact us than some competitors who do not have some aging policy. But this is how it’s going to wait or not for this non engine part on our path. About pricing, I mean, obviously, as it has been mentioned by Nathalie, we want to be disciplined, we’ll be disciplined, but we have to consider as well the market reality and this gap between market and available capacity. So we’ll be a geological site specific And it’s not at all the same configuration as the one we had in 2022 and 2023.

So difficult to make a direct relation and difficult to comment what the others are going to do, but we are going to defend ourselves in a disciplined way.

Lars Jellberg, Analyst, Stifel: No, it sounds perfectly clear. Thank you. Apologies, it sounded like I interrupted you. Were you going to say anything more? Apologies.

Patrice, CEO, Veralia: No, no, sorry. No, no.

Lars Jellberg, Analyst, Stifel: Okay. And then when you are now looking into the outlook, I appreciate all the uncertainties that you’re seeing. But can you give us any sort of flare of how much capacity were actually taken out from Europe in 2024? You talked about the 11 furnaces. How does that compare to the demand decline when it comes to the supply side?

Patrice, CEO, Veralia: So you’re right. So all of that is obviously the compilation of the data we are doing through our business intelligence. And you’re right, so since the end of twenty twenty three, it’s 11 furnaces which have been shut down or to come in the months to come, let’s say. And this 11 furnace does represent about 1,000,000 of tons, I’d say, which is about 5% of capacity in Europe. So difficult to say what is the remaining overcapacity.

But from in our case, this is what I mentioned for 25%, we still see us not using 10% of our capacity as an average over the year. So it’s participating to the reduction of the gap between the demand and the capacity. We can estimate that it could be half, let’s say, what we got. Excellent.

Lars Jellberg, Analyst, Stifel: Final question from me. Activity was a pillar that was very negative last year and obviously you built inventory in 2023 and you’ve normalized it, I guess, in 2024. And you spoke to sort of low to mid single digit volumes in your system, which of course has been positive for activity. Can you at all anticipate any given the guidance on what you think about inventory variance in 2025?

Nathalie, CFO, Veralia: Yes. So inventory, I’ll take this one, Tay. You very well understood the dynamics in 2024 for the inventories. And what we see for 2025 is more stable inventories because as you very well reminded, in 2023, we had to rebuild inventory. Then from now, we are maintaining the inventory at the current level.

So in 2025, the variation coming from inventory should be much smaller. There is always a variation and there is a bit of seasonality between H1 and H2, but for the full year, we won’t have the same changes.

Lars Jellberg, Analyst, Stifel: And do you want to comment positive or negative or just neutral? Yes. Just based on more safety or being exposed? Yes. Okay.

Thank you. Absolutely.

Moderator/Operator: Thank you. We will take our next question from Francisco Ruiz from BNP Paribas (OTC:BNPQY). Your line is open. Please go ahead.

Francisco Ruiz, Analyst, BNP Paribas: Hi, good morning. I have three questions. The first one is on the spread, but mainly on the coal side. We have seen costs risen significantly in the last two quarters. And my question is, first, if you could explain what has driven this, if it’s just Germany closure or it’s something else?

And what should we expect for 2025? And if you could detail some of the initiatives? The second question is on your expectation from production curtail for 2025. I would like to know what’s your current situation and what do you expect to be at the end of the year? And finally, on Argentina, so you mentioned that you have a bid.

I understand that you can’t disclose the racial buyer. Could you give us an idea of what’s the profitability of Argentina if it’s above or below, at least, Latin American business? Thank you.

Nathalie, CFO, Veralia: Sorry, Francisco, can you repeat the first question? Because frankly, we are not sure we understood.

Francisco Ruiz, Analyst, BNP Paribas: Okay, sorry. So the first question is on the spread, but more on the cost side than in the price. So there has been a big reduction of cost in Q3 and Q4.

: So I

Francisco Ruiz, Analyst, BNP Paribas: would like to know what are the reason for this? It’s just the closure of Germany. And what are your expectations for 2025 and the initiatives that you are taking in order to reduce costs? Because it’s part of your guidance of offsetting part of the negative pricing with the cost initiatives.

Nathalie, CFO, Veralia: All right. Okay. Thank you. So what you have in the spread now, Pilar, is the inflation or deflation in costs. When we are having initiatives to reduce the run rate of costs, you will find that in the PAP pillar.

So that’s and I commented that our PAP performance in 2024 has been very strong and well above the 2% that we are targeting. So when we present the spread pillar, we are really looking at the unit cost inflation or deflation for costs. So what the deflation that we had in 2024 is lead to deflation overall on energy, on raw material that we all that we commented throughout the year. And moving into 2025, as I said, what we see is more a flattish inflation because we will have still inflation on, for example, labor cost. You know labor cost is about 20% of our total cost, and we have we are following the country inflations.

So even if inflation in Europe is lower, there is still some inflation. And in other categories like raw materials, we anticipate a bit of deflation mainly coming from the collet, the normalization, I would say,

Lars Jellberg, Analyst, Stifel: or

Nathalie, CFO, Veralia: at least the decrease in coallet prices mainly in South And Western Europe. So the combination of all of that is showing something pretty neutral for 2025, Francisco.

Patrice, CEO, Veralia: Okay. And Francisco, so for your second question about capacity. So 04/25, we see an average group level of 10% curtailment. And this is what we see as an average for the year, obviously, which will be adapted according to market conditions.

Francisco Ruiz, Analyst, BNP Paribas: Sorry to interrupt you. So you do not expect volume to jump so much and you expect to have two furnaces during the year, one in Brazil and Cortellus continue to be at 10%?

Patrice, CEO, Veralia: Yes. So Brazil, it’s a total different story, obviously. There is no curtailment topic in Brazil and we will run at full capacity. So the 10% I’m giving is an average at group level with no impact in with no curtailment at all in Brazil. And the furnace in Asia, in Italy, we are planning to build to start, sorry, to commission is really at the end of the year.

It’s really at the end of the year with some business to come and to be ready for 2016 impact.

Philippe Laurent, Analyst, Bernstein: Okay. Okay.

Patrice, CEO, Veralia: Okay. And about Argentina, so as you have seen and as we have mentioned in our PR, so we have received an unsolicited proposal for the acquisition of our 60% stake in the Argentine company. So we are going to our duty is to investigate if it makes sense for the company or not to sell. If we have good value for it, we’ll see if we make a decision, a positive decision or not. This is under investigation.

And as we speak, we do not reveal the detailed profitability. We have just mentioned that it’s a business which is generating EUR $444,000,000 at the condition of the pesos euro at the end of last year. So we are doing the our duty in the secreting this solicitation.

Francisco Ruiz, Analyst, BNP Paribas: And do you have any timing for this decision?

Patrice, CEO, Veralia: It’s going to take a few months. I mean, as usual in this kind of process. Once we’ll be once obviously we’ll have more information and we’ll come back to you on that.

Philippe Laurent, Analyst, Bernstein: Thank you.

Moderator/Operator: Thank you. We will take our next questions from Philippe Laurent from Bernstein. Your line is open. Please go ahead.

Philippe Laurent, Analyst, Bernstein: Hey, good morning. Thanks for taking my question. So I would like to come back a little bit on your comment on volumes for the year overall in 2024. Do I understand correctly that throughout the year, volumes were down by only 1% roughly?

Patrice, CEO, Veralia: Full year, yes. This is what we commented and this was our last guidance, which volumes globally to be flattish to low single digit down.

Philippe Laurent, Analyst, Bernstein: Yes. And could you walk us again through the different quarters what the effect was at global level?

Patrice, CEO, Veralia: So for Q3, if you remember, we confirm that of first time the volumes were up compared to previous year, mid single digit. Finally, the Q4 is in the same trend, about the same. So we had an H2, which is up. Obviously, with the impact of our acquisition of Vibala, But even organic way, we are up compared to last year. And all of that leading to, again, the flattish to low single digit down in 2024.

Philippe Laurent, Analyst, Bernstein: Okay. Perfect. And then I have like a couple of questions regarding the other unsolicited offer that you might receive or that shareholders might actually receive. The bid from BWSA or BWGI. I was just wondering because in your statutes, you have no voting rights for shareholders holding shares nominatively for a period of two years.

I was wondering whether you could comment on maybe the number of shares that BWSA or BWGI holds now nominatively and since when? Because if I look at the number of working rights that they have and I compare it to the number of shares that they hold, some of them must have doubling working rights already. And I’m wondering when the rest might actually double. So that’s the first question. And the second question also regarding the bid from the Brazilians would be regarding the financing.

If I’m not mistaken, the two oldest bonds that you have, EUR 500,000,000 each, they have change of control clause in the prospectus, meaning that if there is a change of control, maybe the noteholders would come back to you and seek repayment anticipated repayment. What’s the plan in case has somebody had thoughts about that, especially on the side of the Brazilian? And maybe you can update us as well on the most recent bonds regarding potential change of control clauses there as well.

Patrice, CEO, Veralia: Okay. Thanks for these two questions. To be honest, your first one is very technical. But so just to remind you that you’re right, as we speak, BWGI holds around 28.84% of the company’s share capital and 27.9% of the voting in the voting rights, which is making it the Alia reference shareholder. About just about this project, because it’s just a project I just want to remind that it’s just a project as we speak.

We have not received any formal proposal from BWGI. Everything has been said through a different press release. So we may receive one offer. If it is the case, obviously, we’ll inform immediately the market if such a tender offer is confirmed. And as a reminder as well, the company Board of Directors has set up an ad hoc committee composed exclusively of independent directors within the meaning of the AFFECT MEDEF code and to monitor the work of the company’s Board of Director in connection with this potential tender offer.

So the Board is going this independent committee is going to work if it’s confirmed, submitting an IV recommendation to the board. And the question you are mentioning about financing is obviously one of the question, which will have to be to be deal with. So nothing really more to say at this stage. And if you just allow me maybe to anticipate some other questions we could have. BWSA for BWGI knows obviously the company, we know them.

And what they have mentioned through their PR is that for the business, it’s the keyword is continuity. It’s continuity of the management, it’s continuity of the strategy and supporting everything which has been done so far.

Philippe Laurent, Analyst, Bernstein: I understand that. I was hoping maybe slightly more precise answer regarding these shares held nominatively because that’s probably going to be decisive in PWPI reaching what they want, which is actually like achieving control on the company. Because doing the math, they would probably need to raise just like high single digit percentage from their offer. And that could be from existing big shareholders or just like on the market, but guess where you’re going to see that. But yes, I understand that you might not have any precedence or to

Patrice, CEO, Veralia: No. At this stage, and to be honest and to be clear on that matter, the board is managing that and myself and the management team is really to be focused on the execution of all our action plans being short term to deliver our numbers and being medium term to prepare the future.

Nathalie, CFO, Veralia: Yes. And we can confirm that they have no double voting rights. They are open source, so there is no double voting rights. So as Patrick said, they are they have as per today, a 27.9% voting rights.

Fraser Donlon, Analyst, Berenberg: Yes. Okay.

Philippe Laurent, Analyst, Bernstein: That’s a good precision. And maybe just a quick follow-up as well if you allow me. You’re mentioning that for 2025, you will run at utilization rates of roughly 90% and I think it was what you had as well for more or less for 2024. So what’s the historical normal level, so to say? And what’s going to be the aim going forward like after 2025?

Patrice, CEO, Veralia: In normal condition, we are full speed, so full rate, except the maintenance and the total repair we are doing. So it depends on the calendar of them. On a regular basis, I mean, that represents 2% to 3% of our total capacity.

Meng Shansun, Analyst, Deutsche Bank (ETR:DBKGn): Yes. Okay, perfect.

Philippe Laurent, Analyst, Bernstein: Thank you very much. I’m back in the queue. Thank you.

Moderator/Operator: Thank you. We will take our next questions from Manuel Laurent from Santander (BME:SAN). Your line is open. Please go ahead.

: Yes. Hi, good morning. Just a quick follow-up first on the 1MA approach. Whether you can give us a sense of timing through the process that will be helpful. Regarding the approach of the main shareholders, whether you can give us a reference in terms of timing.

You mentioned that there has been independent Board of Director that has already set up some meetings to analyze the potential deal. So do you are we moving to a weeks or months scenario regarding any consideration of the potential deal?

Patrice, CEO, Veralia: Well, I mean, so first of all, again, this timetable and this timing you are referring to, first, we need to receive the offer again, and I do insist on that. And two, it will depend on the work to be done and it’s a board decision and the board and their respective advisor will have to analyze in detail the offer. And at that time, there will be a communication of the time table of the transaction. Obviously, all of that being compliant with the applicable regulations, etcetera. But I mean, I can anticipate and tell you that it’s not a question of weeks, but much more a question of points.

: And that is the case, how that might affect your upcoming Capital Markets Day? I mean, because I believe that it might be complex to set up a Capital Markets Day in September, if we are moving to a potential choppiest scenario in term of shareholders in the coming months.

Patrice, CEO, Veralia: Yes. So we see why we put it in September according to the latest information and this potential project, let’s say. And two, let’s keep in mind as well what we see what I mentioned, BWSA is already part of the board. They are part supporting the company since day one. So it’s I would say, seen from the company, the strategy and what we have to do and all the challenges we have to face, it’s a new brand new.

So this is much more we are much more in the continuous process.

: Okay. And a question probably for Natalie. Can you be a little bit more precise regarding the impact of the PIP plan for 2025? Whether the 2% over cash cost is still valid? Or you are thinking more to the 2.8% of this year or even north 3% as it has been the case on the second part of twenty twenty four?

Thank you.

Nathalie, CFO, Veralia: Yes. So our target remains to be above 2% of production cash costs, which is already a minimum of EUR 50,000,000, EUR 5 hundred million. So between EUR 50,000,000 and EUR 50,000,000 is our target, and it will be it is a target for 2025. So you know that for us, this is an ongoing process, an occurring process. It’s not a one shot effort.

So we have that in 2025, ’20 ’20 ’6, etcetera. Of course, if we can do the more we can do, the better for sure. In our forecast, we are we do not forecast such high numbers as the 3% that were delivered in 4% in Q4, sorry. But of course, if we can do better, we will do. So let’s say that in our guidance, we embed more above 2% to come to the conclusion.

: I see. And just my final question on the free cash flow guidance for this year, the EUR 200,000,000. That implies a positive delta of roughly EUR120 million versus twenty twenty four free cash flow. Given the fact that you are going to have the limited benefits from cash earnings in the sense that EBITDA this year is going to be similar to last year. And you mentioned that CapEx over sales will be close to 9% versus the 9.4% this year.

So that that implies a 20%, let’s say, positive impact in free cash flow. Where is the rest of the EUR 100,000,000 coming? It’s just pure working capital, it’s the, let’s say, less leakage from the other line that has been dragging down free cash flow this year? Yes.

Nathalie, CFO, Veralia: It’s a very good question, of course. So you are right. Working capital is a key driver. Remember that in the so first, the PCR on CapEx is very negative in 2024, minus EUR 75,000,000. And as we plan to keep the same level of CapEx, we’ll be very vigilant on this year.

So that’s one driver that we do not anticipate as negative in 2025. On the rest, I mean, on the operating working cap, there is also improvement planned in 2025. And we have one driver that is significant under cash tax as well. As I commented, in 2024, we have EUR 148,000,000 cash tax, which is heavy for the year because basically, you are paying with one year delay. For next year, we see a lower significantly lower cash tax.

So the combination of these three drivers help us mitigate the fact that the EBITDA, as you very well said, is planned to be at best at the same level.

: Okay. Thank you.

Nathalie, CFO, Veralia: Thank you.

Moderator/Operator: Thank you. We will take our next question from Jean Francois Panchon from Odo Bercetcheff. Your line is open. Please go ahead.

Nathalie, CFO, Veralia0: Yes. Thank you. Good morning. First question, just coming back on the pricing. Currently, you have some negotiation with your clients, I think.

So could you give us some color about what’s happened? Can you increase the pricing or not or limited the decrease? What’s happened? Can we explain or give us more color about the trend of the negotiation you have currently with your main clients?

Patrice, CEO, Veralia: Okay. Jean Francois, thanks for this question. So a big part of the negotiation is on, some is already concluded. We are going to conclude all of that, let’s say, by the end of Q1. As usual, we still some remaining but small ones, which will be in dry depending on the different contracts.

What we see is that due to the market situation, we have as an average and obviously, you have to go in details, country, come by country, it could be different and then even segment by segment. But as we see and this is what we commented with our spread in 2025, we have to give some low single digit price reduction compared to what we did in 2024. In some cases, we are able to delay 24% to 25%. So to make it simple, we have a carryover effect on 24% to 25% and we see an additional low single digit down. And roughly, we are there, but still a path to be done till the end of Q1, sorry.

Nathalie, CFO, Veralia0: Okay. Thank you. The second question so I just want to come back on the spread effect. The spread was quite huge negative, huge in last year, EUR 200. So you confirm a negative spread effect for this for 2025.

And in which magnitude compared to the huge level to 100 last year, Do you expect a huge decrease regarding this level? So also, could you have some more color about the impact the huge impact last year?

Patrice, CEO, Veralia: We are not willing to give such information at this stage. What is clear is that the magnitude of this negative will be not as assured. It has nothing to compare. Because if you remember in 2024, we are comparing to 2023 where we had price increase. So it has nothing to compare, nothing at all to compare.

But it will be negative again because we actually looked off we still have some carryover effect from 24% to 25%.

Nathalie, CFO, Veralia0: Okay. And last two questions from my side. Regarding the Argentina, so you mentioned the interest for the acquisition or your subsidiaries. But regarding the strategy, what is your position? Do you expect to do you consider that Argentina will remain an interesting and attractive market for you?

When we see the huge contribution for the earnings from the LATAM, so could we consider that Argentina remains a strategic country for you or not?

Patrice, CEO, Veralia: I mean, what I can say, I can say that LatAm remain the strategic region for us. As I mean, as in every company at a point of time, you can make a review of your portfolio or geographic deployment. And then here, we have this unsolicited offer. Clearly, we are not willing to sell. But as a duty, we need to do our job and to see if it makes sense at a point of time.

And if we have a good financial deal, we may sell the off stakes at this Argentinian company to do I mentioned that we’ll still be active on M and A if we have nice and good targets creating value. And this will redeploy at the point of time in over Jovavi’s own or consolidating, if it makes sense, in one of the countries we are. So this is all about that. This is the life of the company. We’re doing a portfolio, we’re doing geography and all of that.

So it was important for us to mention that, but we have this, which is again unsolicited. There is no decision made at this stage. And if we do it, it’s because it will create value for the company and our shareholders. This is all about that. And obviously, I must say, obviously, we’ll consider as well our people in Argentina.

And if we do it, it’s because we believe it makes sense as well and it is not negative impact on our Argentinian people there as well.

Nathalie, CFO, Veralia0: Okay. And my last question concerned the guidance. I’m a little bit surprised by the moderate guidance mentioned for 2025. If we take into account some little bit some little increase for the volume or better volume compared to last year, I understand that we expect some strong KAP impact effects and a more limited negative spread impact. Why are you not more optimistic or yes, for 2025?

Regarding the model guidance mentioned for 2025.

Patrice, CEO, Veralia: I mean, again, the context is quite complex to read with all these uncertainties. We see our customers being cautious. So on the activity pillar, we are making an hypothesis, which we believe is realistic, but let’s see. So we bottom line, we see a slight pickup in activity. We have our PAP, which we’ll deliver as usual, let’s say, and then our 2% minimum cash cost reduction.

And then as a negative impact, we’ll have this negative spread, as we explained. And we still see as well some additional risk on ForEx, especially coming from Brazil. So all of that, when you make the balance, you are close to your in our view, we are close to $20.24 level.

Nathalie, CFO, Veralia0: Okay, understood. Thank you.

Moderator/Operator: Thank you. We will take our next questions from Fraser Donlon from Berenberg. Your line is open. Please go ahead.

Fraser Donlon, Analyst, Berenberg: Good morning, Patrice and Natali. Fraser from Berenberg. I just had three questions. So the first is on Germany. You called out, I think, globally quite positive trends in beer, but seems Germany is still very weak.

So could you maybe just help me understand what’s kind of, I’d say, structurally going on in Germany? The second question is about the you kind of mentioned there’s 11 furnaces closed in Europe, and I think you only closed one in Essen. So kind of quite a low number relative to your market share. So I guess is there kind of a risk that you might need to take further actions on the asset base this year, especially if you open Pesha at the year end? And then the final question was about the Ukraine.

Could you just remind me kind of how your site there is operating and kind of in terms of the number of furnaces which are operational, etcetera? Thank you very much.

Patrice, CEO, Veralia: Thank you, Fraser. So you’re right. So Germany is one of the market which is seeing more difficulties, I would say. So this is why we decided there to make a structural decision last year, linked with some delocalization of bottling from Northern Europe to other countries, South America, South Africa and all of that. We see that globally, the Germany economy is quite down as well, a two year recession.

So globally, it’s a real Jewish market there. In our view, 4.25%, we still see the consumption, especially in Germany, being down slightly down compared to other countries in Europe, which is going to be slightly up. So Germany is we do not see Germany recovering in 2025. About furnaces closure, you’re right. So 11 in Europe, only one for Veralia, the one in Essen.

And as we have always mentioned, if we need to do some additional structural capacity adjustment, we’ll do it. As we speak, we are much more on top of the shutdown because we do believe that it will recover. But if we have to do additional ones, we’ll do additional ones. This is not what we have in mind. But again, we are vigilant.

We are monitoring that on a regular basis based on the market condition and based on the capacity and the products we are using. For Ukraine so for Ukraine, as we speak, we have one furnace running, and we are making a maintenance operation on the second one, and we are planning to restart final decision to be made, but we are planning to restart the second one during the year and I guess before the summer. So this is what we are doing.

Fraser Donlon, Analyst, Berenberg: Really helpful. Thank you very much.

Patrice, CEO, Veralia: You’re welcome.

Moderator/Operator: We will take our next questions from Meng Shansun from Deutsche Bank. Your line is open. Please go ahead.

Meng Shansun, Analyst, Deutsche Bank: Hi. Thank you very much for taking my questions. So three questions from my side. For the first one is free cash flow guidance. So the SEK 200,000,000 guidance seems somewhat lower to me if we compare the financial performance in 2022 where you generate a similar level of EBITDA.

So can you walk through the bridge between EBITDA and free cash flow? And what is preventing you to generate the 300,000,000 free cash flow in next year? And the second question is on the spread contribution for Q4. So if we look at the breakdown on the spread contribution, so in Q4, the spread has a much negative contribution, which is 90,000,000 on the adjusted EBITDA and compared to Q3, which is EUR 21,000,000. So what are the reasons for that?

And the last question is, can you give us some colors on the volume development in January and February? Thank you very much.

Nathalie, CFO, Veralia: Okay. So thank you for your question. So in 2022, when we compare 2025 hopefully with 2022, let’s remember that in 2022, we had low inventory. We were reducing inventory with a very strong demand. So the main variation, even if EBITDA are quite comparable, is coming from working capital variation.

And also, if we go below pure operating free cash flow, we had less cash tax. There is some delay again here in the cash tax. So if you take back the 2022 free cash flow, we had less below the pure operating free cash flow the operating cash flow, sorry. So in the other line, in the interest paid and in the cash tax. So all in all, this is adding to make the difference in the generation of cash.

But the VCR was more supportive in 2022. Your second question about the difference in spread in Q4 and Q3, You know we are always comparing costs. So it’s pretty it’s really quarter by quarter, it’s more difficult to follow. What I can tell you is that on the if we take the price elements, we had most of the price decrease done in H1. So sequentially, there was not so much more evolution.

And on the cost, it can really be impacted in quarters by the energy variation. So Q4 to Q3, it’s a bit tough to compare, frankly. Regarding volumes for the beginning of the year, we are pretty much in the same trend as Q4, I would say. So a soft start, but a normal start, I would say. And so I’m talking here Europe.

And if we go back to Latin America, sorry, maybe it’s important to make the comment because in Latin America, it’s a high season. So we have we still, as in Q4, have a very good momentum in Latin America for volume.

Meng Shansun, Analyst, Deutsche Bank: That’s very clear. Thank you.

Moderator/Operator: Thank you. We have no further questions in the queue. I will now hand over to the webcast question. Please go ahead.

Nathalie, CFO, Veralia1: Really? Okay. Yes. So hello. Hi, all.

This is David Plessey, Head of IR. Well, good news is we’ve had many questions over the phone. So I think we only have a few written questions that have not been covered. So I’ll try and stick to the questions, which I believe haven’t been addressed already. So one is from Atanas Angelov with BBVA (BME:BBVA).

Question is, can you please give us more color on cash flow generation, specifically on other impact and working CapEx?

Nathalie, CFO, Veralia: Okay. So in the other impact, so

Moderator/Operator: if

Nathalie, CFO, Veralia: we look at the way we present the free cash flow, so you have operating cash flow. And then below, you have three lines other operating impact, interest paid and cash tax. So in the other operating impact, basically, what you have is elements in the EBITDA that do not have a cash impact because then you need to bridge through cash. So that’s why, for example, you have the IFRS 16 element that is a bit below $20,000,000 Here, it is in the EBITDA, but in the end, this is pure accounting, so it has no cash impact. It’s a very stable amount every year, but we have to deduct it from the EBITDA to reach the free cash flow.

If you have, for example, also some variation in accruals that are in the EBITDA and again noncash elements, you will see them on this operating other operating impact. And you also have a bit of unrealized ForEx impact again here to go back to the cash pure cash that is to be seen on the free cash flow line.

Nathalie, CFO, Veralia1: Yes. That’s great. No, thank you, Nathalie. Next (LON:NXT) question, there’s a few of them from Inigo Agustinha with Kepler. Four questions, I think, five actually.

Well, at least two have been answered already, one regarding the Argentinian business and unsolicited propanol, the other the PW of what perspective offer. So that’s done. The three more, one is in relation to the impact of Argentina in Q4, EUR ’1 hundred and ’50 million impact from currencies. I guess we’ve addressed that already, but Nathalie, I don’t know if there’s anything you want to

Nathalie, CFO, Veralia: Yes. I can repeat, we had a very specific impact in Q4 last year, so 2023, because there was a 50% devaluation in Argentina and after Mr. Millet was elected. And because Argentina is in hyperinflation, there is a specific accounting. You have to use the last the ForEx exchange rate of the last day of the period to value the full period.

So when such a devaluation happens in December, that this was the case, we had to revalue, so to cut or to reduce the full P and L of the year. And this was the full impact of that was in Q4. So of course, when we compare Q4 ’twenty four to Q4 ’twenty three, we have this as a distortion. If we look at the full year, it’s more normal, I would say.

Nathalie, CFO, Veralia1: Yes. Okay. Thanks, Natalie. Next question relates from Inigo relates to 2025 guidance. Three questions there.

One is, what can we expect in terms of EBITDA margin? And the second is, how do you see pricing coming down? And the last is, what about volumes? So in 2025, is Europe flattish and LatAm positive a fair assumption?

Patrice, CEO, Veralia: So on the last question, yes, it is a fair assumption. We see Europe flattish to slightly up, as we said, due to the consumption. And we see LatAm very supportive again. So you’re right in your assumption. But EBITDA margin, so we do not guide on this KPI.

We are guiding on this EBITDA in EUR 1,000,000, again, close to what we deliver in 2024. And on pricing, I think I did answer that already. So again, we’re going to get some impact of what we did in price reduction in twenty twenty four to ’20 ’20 ’5. And then we see a slight down price selling price evolution due to market conditions, due to the environment, due to some contract that we are working on. And I know that to be confirmed that this is our assumption as we speak.

Nathalie, CFO, Veralia1: Thank you, Patrice. And last question was about, so the CapEx in 2025, I think we mentioned 9% of the sales. And Inigo was also asking whether that would be our mid term goal.

Patrice, CEO, Veralia: Yes. Let me so depends on what you call mid term, but obviously, so our normalized level in the previous period was we always said around 10%. And around this 10%, there was obviously part of the current CapEx, part of strategy what we call strategic CapEx, which we have to make it simple, CO2 roadmap implementation plus additional capacities. And obviously, due to the market conditions and the way we see it, we have stopped all the additional capacities we are thinking about, except the one in Brazil, so which we are going to launch in Capobao in Q2 and the special one in Italy that is going to be launched at the end of this year. So obviously, it means that within our CapEx level compared to previous period, we will not see any more additional capacity.

And this is why we have reduced a net decision in 2024 to reduce our CapEx level, and you have seen that down the year. This is why for next year, we see that already also being done compared to 2024, let’s say. And we see that, you’re right, as a midterm normalized level, meaning that we are moving from around 10% to around 9%.

Nathalie, CFO, Veralia1: Thank you, Patrice. Last three questions. One is in relation to the price negotiation, so I think we addressed that already. Another is about glass containers demand in Europe, how much does it amount to in tons that’s slightly over 20,000,000? And the last question, which came in two slightly different forms is around share buybacks.

One question being, did you at some point consider suppressing the dividend to increase the amount of share buyback? And another being, what are your thoughts around share buyback for ’25? That will be the

Patrice, CEO, Veralia: last question. Okay. So for the dividends, so to answer clearly your question, no. Our priority was always dividend and plus share buyback if opportunity. And this was our clear capital allocation policy.

And by the way, what we are proposing, we are working the talk of the policy, which was in twenty twenty one year on year 10 increase of dividend. We are doing better than that. And so share buyback, no, we don’t see that for ’25. But again, we will come back at the end of the year in September and within our Capital Market Days, this will be the opportunity to define clearly our capital allocation policy for the midterm and the period to come.

Nathalie, CFO, Veralia1: Great. Thanks, Patrice. Thanks, Ali. Okay.

Patrice, CEO, Veralia: Thanks a lot to all of you. Have a good day. Take care. Bye bye. Thank you.

Bye bye.

Moderator/Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.

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