Verallia: 3rd quarter 2017 results show robust financial performance, strong activity, EBITDA margin improvement

Revenue up 4.7% year-on-year, including 5.7% at constant foreign exchange rates; EBITDA up 6.8% year-on-year, including 8.4% at constant foreign exchange rates; EBITDA margin at 20.9%, up 40 bps vs Q3 2016; LTM Adjusted EBITDA of EUR 501.2 million (20.3% margin) as of 30 September; Strong Operating Cash-Flow generation in the quarter: EUR 104.1 million, up EUR 72.4 million compared to Q3 2016.

In line with the previous quarters, Verallia achieved a robust financial performance in Q3. Revenue increased by 5.7% at constant exchange rates, driven by higher volumes, a better mix and prices in South America.

In Europe, the 4.6% increase at constant exchange rates was supported by higher volumes in most countries as well as a better mix, in line with previous quarters trend.

In South America, revenue was negatively impacted by exchange rates evolution, mainly the weakening of the Argentinean Peso against Euro. At constant exchange rates, revenue grew by 13.4%, mainly driven by prices in a highly inflationary environment. Volumes resisted well in a challenging context.

EBITDA was up 8.4% at constant exchange rates, supported by manufacturing performance improvement and higher volumes.

In Europe, the strong 7.4% increase in EBITDA at constant exchange rates was driven by higher volumes and an improved manufacturing performance, which partly offset the negative costs evolution. Sales prices were stable.

In South America, EBITDA was negatively impacted by exchange rates evolution, attributable to the depreciation of the Argentinean Peso against Euro. At constant exchange rates, the robust 12.8% EBITDA increase was attributable to a good level of activity in volumes as well as the pass-through of inflation into sales prices.

Verallia generated a strong operating cash-flow in the quarter, at EUR 104.1 million, up EUR 72.4 million year-on-year. An improved operational performance, a good management of the working capital and the positive impact of factoring contributed to this increase.

In the quarter, Verallia has continued to deleverage, with a net debt representing 3.7x its LTM Adjusted EBITDA of EUR 501.2 million at 30 September.

After early repayment of EUR 100 million of its Term Loan B Facility on 30 November, Verallia still has a good level of liquidity available, with cash on hand as well as an undrawn RCF of EUR 250 million.

For the rest of the year, Verallia anticipates a moderate growth in revenue at constant foreign exchange rates as well as a further improvement of EBITDA. Capital expenditures for the year 2017 are expected to be in the same range as in 2016.

2017 annual results will be released 1 March 2018.

An independent group, Verallia is the third largest global manufacturer of glass containers for food and beverages, and proposes innovative, customized and environmentally-friendly solutions. Verallia produced around 16 billion glass bottles and jars in 2016. Verallia’s business model is based on combining the strength of its global network (manufacturing operations in 13 countries, sales locations in 46 countries with 5 technical centres and 13 product development centres) and local customer relationships in all regions. In 2016, Verallia achieved net sales of EUR 2.4bn.