Ukraine war damage impacts Vetropack's glass sales

War damage to Vetropack’s Ukraine glass production plant resulted in a reported loss of CHF9.7 million ($10.04 million).

In its latest financial note, the glass container manufacturer said three major developments were dominant during the first half of 2022: the ongoing Ukraine conflict, increases in energy and production costs, and sustained high demand for packaging glass.

Sharp increases in energy and production costs led to major market price adjustments in the packaging glass industry.

Vetropack managed to compensate for the majority of these additional costs with an energy surcharge that is transparent for customers.

Nevertheless, unabated high demand for glass packaging and capacity reductions caused by the shutdown of the Ukrainian glass industry have already led to a number of bottlenecks in meeting customer demand throughout Europe.

The Vetropack Group sold 2.69 billion units of packaging glass in the first half of 2022.

Due to the absence of capacity at its Ukraine plant, sales volume was 6.9% below the prior year's figure of 2.89 billion units.

Consolidated net sales from goods and services rose by 9.0% to reach CHF 435.0 million ($450 million) compared to CHF 399.2 million ($413.5 million) the previous year.

The cash flow margin was 18.7% of net sales (prior year: 21.0%).

Due to war damage in the Ukraine plant, a value adjustment of CHF 46.5 million had to be debited to the half year, so the Vetropack Group is posting a loss of CHF -9.7 million (prior year: 40.4 million).

We reported in May how damage to its Gostomel, Ukraine production plant had led to the loss of jobs at the facility.

Outlook for the second half of 2022

The packaging glass market is positive and demand for glass packaging remains high.

However, the market is subject to increasingly negative effects due to inflation, the general cost trend and the related decrease in purchasing power.

Growing uncertainties regarding energy supplies (gas and electricity) are impacting the entire glass industry, making it difficult to foresee how sales will develop going forward.

Assuming constant exchange rates and overall conditions, it expects to achieve slightly higher net sales than in the 2021 financial year.