Verallia: first 9 months of 2020 results

Michel Giannuzzi, Chairman and CEO of Verallia, said, “Higher‐than‐forecast sales volumes in the third quarter, particularly in Italy and Latin America, enabled Verallia to achieve an organic growth of 8.9% in the quarter and of 2.3% over the first nine months of the year. This increase in volumes contributed to the improvement of Verallia’s profitability despite the impact of destocking associated with furnace repairs.

“The Group’s three strategic pillars, namely the operational leverage linked to volume growth, the positive inflation spread and the sustained deployment of the operational excellence programme, continued to bear fruit. As volumes were better than expected in the third quarter and despite visibility remaining limited, Verallia is raising its objectives for 2020.”

Revenue
In the first 9 months of the year, Verallia achieved a revenue of 1,956 million EUR, compared to 1,97 6million EUR in the first 9 months of 2019, and thus posted a slight decrease of ‐1.0% on a reported basis.

The impact of exchange rate variations was ‐3.3% over 9 months (‐66 million EUR), mainly linked to the depreciation of currencies in Latin America, particularly the Brazilian rea, l which accounted for ‐29 million EUR.

At constant exchange rates and scope, revenue increased by +2.3% in the first 9 months of the year (and by +0.9% excluding Argentina, which remains in hyperinflation) despite the negative impact of the COVID‐19 pandemic, particularly on the results of the second quarter of 2020.

The third quarter turned out to be much better than expected thanks to a +4.2% increase in sales volumes at Group level. This recovery in volumes was particularly dynamic in Latin America, Italy and, to a lesser extent, in Iberia. By product family, the sales of jars for the food industry and non‐alcoholic beverages remained favourable, while the third quarter saw sustained sales of still wine, especially in Italy and in Iberia, in a still uncertain environment. In addition, the sales price increases passed at the beginning of the year continued to contribute to the good performance of the third quarter. The product mix, which was less favourable in the first half of 2020, improved over the quarter thanks to a recovery in sales of higher‐end products during the summer. As a result, organic growth for the quarter alone reached +8.9% (+8.3% excluding Argentina).

Highlights

• Revenue decreased by ‐1.0% over 9 months to 1,956 million EUR (+2.3% at constant exchange rates and scope)

• Volume growth in Q3, resulting in a +5.3% revenue increase to €681m (+8.9% at constant exchange rates and scope)

• Adjusted EBITDA over 9 months of 474 million EUR, at last year’s level

• Adjusted EBITDA margin maintained at 24.3% over 9 months

• Continuous improvement in net debt ratio to 2.2x adjusted EBITDA for the last 12 months, compared to 2.7x at the end of September 2019

• Sales volumes and adjusted EBITDA objectives raised for 2020