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Vidrala SA (BME:VID) reported its financial results for the fourth quarter of 2024, highlighting a modest increase in revenue and significant growth in EBITDA. The company also announced strategic expansions, including entering the Brazilian market and integrating a new facility in the UK. Vidrala (LON:0NV7)’s stock saw a 2.48% increase following the announcement, reflecting positive investor sentiment. According to InvestingPro analysis, the company appears undervalued at current levels, with a strong track record of raising dividends for 22 consecutive years.
Key Takeaways
- Vidrala’s revenue grew by 0.2% at constant currency for the full year 2024.
- EBITDA saw a robust 15.3% year-on-year growth.
- The company expanded its operations into Brazil and integrated a large bottling facility in the UK.
- Vidrala’s stock price increased by 2.48% post-earnings announcement.
Company Performance
Vidrala demonstrated resilience in a challenging macroeconomic environment, achieving a slight revenue increase and substantial EBITDA growth for the full year 2024. The company’s strategic focus on expanding its footprint in key markets, such as the UK and Brazil, has bolstered its competitive position. Vidrala’s unique 360-degree business model continues to provide a competitive edge in the glass packaging market, despite facing competition from alternative materials like aluminum cans.
Financial Highlights
- Revenue: €1.59 billion (0.2% increase at constant currency)
- EBITDA: €454 million (15.3% year-on-year growth)
- Earnings per share: €8.85
- EBITDA Margin: 28.6% (expanded by 30 basis points)
- Net Debt: €248.3 million (0.6x leverage ratio)
- Free Cash Flow: €206 million (13% of sales)
Outlook & Guidance
Looking forward, Vidrala expects EBITDA to remain at similar or higher levels in 2025. The company plans to continue its investments with a focus on customer satisfaction, cost management, and capital efficiency. Vidrala is also exploring potential mergers and acquisitions in its core regions of Iberia, the UK, and Brazil. InvestingPro analysts maintain a positive outlook, with consensus recommendations leaning towards buy and multiple additional ProTips available for subscribers looking to dive deeper into the company’s prospects.
Executive Commentary
Raul Gomez, CEO, emphasized the company’s long-term vision, stating, "We are moving forward with our view on the long term, strictly fit to our industrial principles." Inigo Mendieta, Corporate Finance Director, reassured investors about the company’s cash flow, noting, "Our free cash flow generation of around €200 million for 2025 is safe."
Risks and Challenges
- Global consumption remains soft, posing a risk to demand.
- The packaging industry faces shifting competitive dynamics.
- Vidrala’s minimal exposure to US and Asian markets could limit growth opportunities.
- Regulatory changes in packaging, such as EPR in the UK, could impact operations.
- Economic uncertainties may affect consumer spending patterns.
Q&A
During the earnings call, analysts inquired about Vidrala’s pricing strategies and potential M&A transactions. The company addressed these concerns by highlighting its focus on strategic growth and financial discipline. Vidrala also discussed the impact of packaging regulations in the UK and its minimal exposure to US and Asian export markets.
Full transcript - Vidrala SA (VID) Q4 2024:
Conference Moderator: Good morning, and welcome to the conference call organized by Virdrada to present its twenty twenty four full year results. Virdrada will be represented in this meeting by Raul Gomez, CEO, and Inigo Mendieta, Corporate Finances Director. The presentation will be held in English. In the Q and A session, questions will be will be also answered in Spanish. Nevertheless, it is strongly recommended to post questions in English in order to facilitate understanding of everyone.
In the company website, www.vidrada.com, you will find available a presentation that will be used as a supporting material to cover this call, as well as a link to access the webcast. Mr. Mendieta, you now have the floor.
Inigo Mendieta, Corporate Finances Director, Virdrada: Good morning, everyone, and thank you for joining today’s call. As announced earlier, Vital has released its 2024 full year results along with a presentation that will serve as a reference throughout the call. Following the structure of the presentation, we will start with a brief review of today’s key figures before opening the floor for Q and A, where we’ll go deeper into business performance. So let’s begin with the key financials. Over the full year 2024, we delivered revenue of almost €1,600,000,000 EBITDA of €454,000,000 and a net income equivalent to an EPS of €8.85 Please remember that this net income is not fully representative as it is affected by the impact of €50,000,000 capital gain from the sale of our Italian operations.
At the end of the period, net debt stood at €248,000,000 representing a leverage ratio of 0.6 times our annual EBITDA. Turning to revenue performance. Total (EPA:TTEF) sales for the period reached €1,588,300,000 reflecting a 0.2% increase at constant currency and comparable scope. Volume growth of nearly 8% was largely offset by a negative pricemix effect. FX and scope, reflecting the combined effect of incorporating the first eleven months of Libero Porto in 2023 and excluding the last twelve months of Italy, contributed an additional 1.7% to revenue growth.
Looking at EBITDA, we applied the same breakdown to analyze the year on year variation. For the full year 2024, EBITDA came at €454,000,000 reflecting an organic increase of 10.5%. Including all effects, reported EBITDA growth reached 15.3% year on year. These results translated into a solid EBITDA margin of 28.6%, expanding by three thirty basis points compared to last year. Now, this slide breaks down sales and EBITDA by business unit based on the updated perimeter, meaning VidelPorto is fully included in 2023 figures, while Virdala Italy is fully excluded in both years.
Let me briefly remind that Italy contributed to reported sales and EBITDA for the first two months of 2024 before being reported as discontinued operations, adding to net profit from March to June 2024. So we observe somewhat different trends across regions. Absolute figures for Iberia are modestly down year on year, mainly due to price reductions, but volumes remain resilient, slightly up for the year, along with a strong margin performance. The UK continued to perform well, supported by integration of the filling business and some volume gains in the glass business. And Brazil reflects the impact of the large furnace launched last year, which has enabled us to increase sales volume and improve cost absorption.
Now let’s take a close look at free cash flow generation, which is a key priority for us and a critical indicator of our financial health and operational success. These charts illustrates full year cash conversion, starting with an EBITDA margin of 28.6%. We allocated 10.6% of sales to investments and another 5% to working capital, financial expenses and taxes. As a result, free cash flow generation stood at 13% of sales, which is equivalent to $2.00 €6,000,000 highlighting our strong ability to translate operational performance into solid cash flow generation. And finally, net debt was significantly reduced to €248,300,000 with a leverage ratio of 0.6 times our annual EBITDA.
So this shows that we are able to deleverage 0.3 times our anomaly EBITDA in a natural way, excluding the transaction of Vidal Italy this year. Again, these figures reflect the impact of our recent Emani transactions and the acquired debt, along with proceeds from the sale of our Italian operations, dividends and survey backs. This solid financial position gives us a solid foundation and parallel agility and flexibility and the financial capacity to identify opportunities to further enhance our competitiveness and drive sustained growth. And now before we move to the Q and A, I hand over to Raul, who will summarize the key takings of AWS and share additional insights.
Raul Gomez, CEO, Virdrada: Thank you, Inouye, and thank you all for attending this call today. We really appreciate your time, particularly for those of you that are connected today far from Europe at different time slots. Good morning. Well, 2024, what a year. What a year for us.
Us. We have a strategically refocused the business on three Koreas. We divested from Italy where we were weak. We integrated a large motoring facility in Bristol that has made our business in The UK and Ireland and silk stronger and even more unique. A business that reached in 2024 new a higher profitability levels.
Also big thing for us we have entered Brazil. Very important strategic movement for us. We’re very happy to welcome the reporters team. We say it’s it’s fantastic leadership. And I am proud to see that we are learning and improving together quite a lot.
At the same time, during 2024, we kept on investing in improving our operations in Spain and Portugal, where we are today stronger than before. I mean more cost competitive. And in the end with the work of all our people and the support of our customers we have navigated through quite a challenging macroeconomic environment with, let me say, a reasonable level of efficiency. This is evident in our numbers. And there are an overall quite weaker than expected demand context.
We have exceeded our initial expectations for EBITDA and cash generation. So please consider that our 2024 results are proof of who we have become and what we realized today. A business statically focused with competitive and differential positions in each of our three year regions of activity and a company in a strong financial position. Hope you join me today recognizing that this is the result of our strategic actions the work of our people and the support of our customers and our shareholders. We are all part of this.
Looking ahead to 2025, despite macro underlying macro uncertainties and a still weak global consumption environment, We consider that the competitive optimization of our production capacity in Iberia. The value of our unique positioning in The UK. And our continuous progress in Brazil. Mean that our cash flow levels are safe despite we are to invest more and our EBITDA is expected to stay at similar or higher levels in 2025 in comparison with the previous year. In any case, more important for us, far beyond this year, you please consider that we are living in exciting times, a real transformation in the consumer world and a material progress in digital in our business.
We are moving forward with our view on the long term, strictly fit to our industrial principles. That means that we aim to invest more than before with our customer in mind. And we will do so with financial discipline, firmly committed to our long term steady guidelines: customer, cost, capital. That’s all from my side. Thank you very much again for your time and your interest.
And you please remind, keep on eating and drinking in glass, please. Thank you.
Inigo Mendieta, Corporate Finances Director, Virdrada: Thank you. This completes our initial remarks. So let’s turn to the Q and A session.
Conference Moderator: Our first question comes from Natasha Frieland from UBS. Now your line is open.
Natasha Frieland, Analyst, UBS: Thank you very much for taking my questions. So maybe if we could just get an update in terms of what you’re seeing in demand in the last few months. And you obviously talk about a soft environment, but are there any signs of improvement in terms of volumes? And any color that you can give us by the different end markets would be very helpful. And similarly, if we could have an update on the most recent pricing discussions that that you had with your customers at the end of last year.
And then my other question is just if you can update us on your capacity utilization at the moment, if there’s been any change in that since we last spoke and how that might impact your percentage margins as we go through 2025? Thank you.
Raul Gomez, CEO, Virdrada: Well, thank you, Natasha. Thank you for the question. Regarding the the context the first thing to consider is that the comparable basis today with one year ago is let’s say more normal. We are not yet seeing any sign of relevant recovery but we are not seeing any further drops. Okay.
So that means that for our comfort and for your comfort, the 2025, the comparable basis will be much more normal. We are seeing it’s true that we are seeing some minor symptoms of potential recovery in the consumer space. But globally, we are still at softer than initially expected demand context.
Inigo Mendieta, Corporate Finances Director, Virdrada: Just just to clarify, Natasha, on that, all the comments we are doing today is an effort, let’s say, to give you some visibility and an exercise of transparency. But please remind you all that official guidance will be issued with occasion of the AGM. Okay? That’s, as Rob was saying, the start of the year is more or less being as expected. But please remember also that q one will be quite challenging in terms of comparison basis, especially in terms of top line, not that much in terms of EBITDA.
Raul Gomez, CEO, Virdrada: Regarding pricing, as you may remember, our rather unfortunate about half of our sales are comprised by long term supply agreements with yesterday customers, where prices are defined by formulas. This is more simple than in the past. This means that most of our prices are and will be progressively adapted to reflect real or underlying external cost factors. And we do consider that our starting point today is that we broadly see that our price levels in each of our regions of activity are broadly competitive. And that makes me think that the reason behind the weak demand context that we are suffering is not our glass price levels, but much more structural cost on macro factors.
So we have little reason to compete, let’s say, more aggressively. Anyway, we will make our best to satisfy our customers attracting volumes, compete with financial discipline and trying to protect our markets. And finally, a third question, utilization rates. We are today at utilization rates of slightly above 90%. And you probably remember that we ended 2024 at utilization rates of slightly below 90%.
So that’s probably consistent. The improvement in our digital rates is probably consistent with the message that we are saying with you regarding the demand context. Okay. We are seeing some symptoms of modest improvement.
Natasha Frieland, Analyst, UBS: Thank you. That’s very clear. Can I just ask a follow-up if there’s any the improvements coming from beer or wine or spirits, any color by end market?
Raul Gomez, CEO, Virdrada: Probably this improvement is some recovery after big drops last year. So it’s more related to the comparable basis. But on a more mid term view, considering the last two, three years aggregated, we are seeing better performance in by regions in Brazil, next in The U. K. Because of our unique positioning and third in Mainland Europe.
And in terms of segments, beer is performing better than high alcoholic products, okay? And wine is probably flat.
Natasha Frieland, Analyst, UBS: That’s very helpful. Thank you so much.
Conference Moderator: The next question comes from Fraser Dunham from Berenberg.
Fraser Dunham, Analyst, Berenberg: It’s Fraser here from Berenberg. I have three or four questions. So the first was just about The UK business. Could I’d be interested in your thoughts on kind of EPR, DRS and how the next few years could play out for UK Glass and how you look at, let’s say, NSERC within that? The second question on M and A.
I guess you probably have some competitors who could be forced to sell some assets in the next year. So I guess do you see a more kind of buoyant environment on the M and A side? Would you consider buying assets in Europe? Or are you strictly focused on South America, Central America? And then the third question is just on investments.
I know you said you kind of plan to invest continue to invest more. Could you maybe go through a little bit like the CapEx wallet you see for 2025 and almost how you allocate that in terms of maintenance, logistics, filling, CO2 related investments, for example. I’ll leave it there for now. Thank you very much.
Raul Gomez, CEO, Virdrada: Okay. Thank you very much, Fraser. And regarding The UK and the specific case of EPR and packaging recovery now, it’s okay. This is a new example of the hyper hyper regulation that is affecting the packaging industry as a whole and the glass packaging industry, particularly in The UK and also in Europe. Okay?
Something that we need to manage. It’s an issue that we need to navigate through and, okay, makes The UK and Europe different than South America and explains a little our recent static actions. Okay? Anyway, so far, what we can see is that our customers are, reacting well. To this new regulation in The UK, particularly maybe for us because our business is more unique.
Please consider our three sixty business model with our filling or bulk lean services. The last integration we made last year in The U. K. After the acquisition of the large bottling facility in Bristol. And at the end, these issues that we are trying to manage shouldn’t change our profitability levels in The U.
K. In the next two years, okay, that they are safe, particularly safe after having reached new record levels in 2024. We are dealing with that. We are managing this, but our business is still under control. Second point, you asked about the M and A.
Or let me say the potential inorganic static actions. In that sense, our story and our plans remain the same. We are and we have always been continuously looking for opportunities to grow the business. We will first try to explore where we can expand our capacity. Probably you will understand very well that is most likely to expand to find opportunities to expand capacity in Brazil and in Mainland Europe and The UK.
Second, we also want to seek for cooperations with the steady customers, something that could be a big thing for us. Third, we aim to strategically verticalize the business to gain control over our operations and better serve our markets. And we have made quite a few small transactions in the last month in spaces as recycling, both clean or energy supply that in some cases explain our cash profile in the last months. And third, yes, Fraser we are exploring a few number of potential acquisitions. All of them in regions that we consider currently core and strategic.
And in any case in the mid term we will remain financially prudent and stay at low levels of debt preserving our solid financial position to stay well capitalized. Probably today is a competitive advantage and to be ready to be ready for whatever happens in the in the long future. There is nothing more that we can add so far. As seen in any cases, we are in very preliminary stages of analysis and in some cases affected by the useful confidentiality agreements. We can promise that you won’t be surprised.
This is the same that you know speaking and just and there are somewhat more dynamic management actions. And we also promise that we will inform you in due time and transparently in case anything material evolves. It is not yet the case.
Inigo Mendieta, Corporate Finances Director, Virdrada: Okay. And then, Fraser, on your last question on on CapEx, just to remind the CapEx figure for 2024 was €168,800,000 equivalent to 10.6% of sales. So next year, probably this figure will be slightly higher than that. You can assume something in the range of 11% of sales. There is more than pure replacement in that CapEx, as Raul just mentioned, regarding sustainability, regarding verticalization or some opportunities to grow volumes or to capture volumes in specific regions, basically Brazil.
Anyway, despite the CapEx figure in 2025 being expected to be higher than that of 2024, as Raul also mentioned in the initial remarks, we consider that our free cash flow generation, the absolute figure around €200,000,000 is safe for 2025.
Conference Moderator: Our last question comes from Inigo Eguzquita from Kepler Cheuvreux.
Inigo Eguzquita, Analyst, Kepler Cheuvreux: Raul Inigo, hello, how are you? Inigo from Kepler Cheuvreux. Just I would say three questions from my side. The first one, if you can provide us In Europe pricing and volumes by regions in 2024? This is the first question.
The second question, sorry to come back on the CapEx because I didn’t get your answer on the CapEx for 2025. And then a final question on the M and A that you were mentioning, Raul. I don’t know if you can obviously, it’s not an easy question, but I don’t know if the M and A that we can expect would be similar in terms of size to EnCirco vedero Porto or smaller than that similar to Santos Barossa? I don’t know if you can give us some indication on that. Thank you, Gracias.
Inigo Mendieta, Corporate Finances Director, Virdrada: Okay. Vinu, thank you for your questions. So the first one on the breakdown between volumes and prices in 2024 and Bay regions. Okay? In Iberia, volumes were slightly up, plus 1%, with prices down minus 9% for the full year.
In The UK and Ireland, volumes were up almost 8%, with prices down minus 7%. And in Brazil, volumes were significantly up due to the effect of the new furnace, plus 38% in the full year with prices slightly down minus 3%. Overall in the group, as we mentioned in the call, we saw volumes growing in the range of 8%, which was fully offset by price variations. Second of all, in terms of CapEx, what I was saying is that we are expecting higher CapEx in 2025 in comparison to 2024. You can expect something a figure around 11% of sales.
But the two highlights in that sense is that, first of all, there is more than pure replacement in that CapEx figure. And second of all, free cash flow generation of around €200,000,000 for 2025 is safe.
Raul Gomez, CEO, Virdrada: And the last question, Inigo, thank you. Regarding M and A, as we say then with respect to any specific question regarding any specific case or anything that we can say today with you is almost nothing as we are in very in all the cases in very preliminary states. But in any case, follow your question and that will be quite illustrative, in all of the cases that we can foresee so far, our debt levels are to be preserved below one times debt to EBITDA. So that means answering your question that is very clear. Thank you for that.
The transactions that we could be exploring, as we can see so far are smaller transactions than the ones that we have made in the last five, ten years and the ones that we mentioned. Okay. Hope that gives you some level of comfort of clarity.
Inigo Eguzquita, Analyst, Kepler Cheuvreux: Okay. Thank you.
Conference Moderator: There are no further questions by the telephone. I return the floor to mister Gomez and mister Mendieta.
Inigo Mendieta, Corporate Finances Director, Virdrada: Okay. So, before finalizing, there is still one question on the webcast regarding Shift2Cans that says, some reported particularly strong European volumes. Have you been hearing much from your customers recently that could shed light on attitudes on cans versus glass in 2025?
Raul Gomez, CEO, Virdrada: Well, thank you. This is a very interesting question. Okay? Cans versus glass in the beverage packaging space. Okay?
It’s very evident that over the last and we need to be very aware of this over the last three or four years, cans, metal cans, aluminum cans particularly has, have taken some market share against glass in every place in the world, in the packaging world. And it’s now time for us to be aware of that. Try to recover some of the gap. Okay. And that will depend basically on the our how competitive glass is for our customers and for the consumer.
Okay. The good thing is that we can see very recently that the gap is under a process of reduction. We are reducing the gap, the price gap between an aluminum can and a glass bottle. And that makes us to be a little bit more optimistic looking at the future. The things that we are seeing in the world regarding tariffs and geopolitical tensions is something that could should give us and use some level of comfort about the capacity of the glass container industry to recover some of the gap against Saudi bean camps.
Okay. And we are doing this and you can see that the a growing portion of our sales volumes are dependent on global customers that help us learn a lot about that. Okay? Please consider that we do consider this as a priority, study priority in the long term.
Inigo Mendieta, Corporate Finances Director, Virdrada: Okay. There is an additional one on the webcast, on global demand and tariffs. It says if would you be able to guide us to what proportion of your volumes relate to export, particularly to The US and China?
Fraser Dunham, Analyst, Berenberg: Firstly, how might you expect your exporting customers to
Inigo Mendieta, Corporate Finances Director, Virdrada: be affected in the event of US tariffs? And, customers to be affected in the event of US tariffs? And to what extent could a weak Chinese consumer hold back your volume growth in the medium term? What what do we think?
Raul Gomez, CEO, Virdrada: Well, there is nothing more that we can add on this. Okay? We are trying to analyze the field costuses that are quite changing. And I have mentioned one potential positive factor of the these these costuses in comparing the cost of aluminum, the overall cost of aluminum with the cost of manufacturing glass. And regarding negative impacts.
Okay. What we can intensify the message now is that we don’t export any of our volumes into The U. S. Or Asian American or Asian markets. But some of our customers exports into these markets and a total percentage of our sales indirectly exposed to this is, I would say, less than 3%.
Okay? Nothing relevant for us in the short end, but I have a feeling that what is happening could be something relevant for the glass container industry as a whole. We’ll take a look and we’ll try to monitor this very carefully.
Inigo Mendieta, Corporate Finances Director, Virdrada: Okay. And one final question, on prices negotiations in Eberia. Says, how was the price negotiation in Eberia, specifically where the weight of formulas is lower in a soft consumer situation.
Raul Gomez, CEO, Virdrada: This is a good question. Iberia or as we say it’s Southern Europe or Mainland Europe is the region of our activity where demand is weaker. It’s probably the region where competition should be or competitive dynamics should be tougher. But so far we are maintaining a disciplined approach with the aim and the priority of protecting our margins. I have the feeling that the softer than expected demand context we are living is not due to our competitive levels to our pricing proposal to our customers.
It’s more due to macro factors. So it’s time for us to be prudent, keep calm and try to capture volumes and market share on a long term view. Okay?
Inigo Mendieta, Corporate Finances Director, Virdrada: Okay. So we have now answered all the questions received via webcast. Please remember that we are always at the disposal for any further questions. Before leaving, I am pleased to share that we will be soon strengthening our IR team, confident that this new incorporation will help us to improve and better meet the growing demands from you, analysts and investors. So I’m excited for you to meet him soon.
That’s all. Thank you once again for your time and attention. And remember to choose Glass, a powerful way to care for your health and the planets.
Raul Gomez, CEO, Virdrada: Thank you very much.
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