Verallia (VRLAF) Q3 2024 Earnings Call Highlights: Navigating Challenges with Strategic Growth ...

GuruFocus News
4 min read

In This Article:

  • Revenue: EUR871 million in Q3 2024, down from EUR932 million in Q3 2023.

  • Organic Growth: -4.7% for Q3 2024; -9.7% excluding Argentina.

  • EBITDA: EUR210 million in Q3 2024 with a margin of 24.1%, down from EUR256 million and 27.5% margin in Q3 2023.

  • Net Debt: Leverage at 2.3x at the end of September 2024, compared to 1.9x in June 2024 and 1.2x at the end of 2023.

  • Volume Growth: Positive organic volume growth in Q3 2024, driven by beer and nonalcoholic beverages in Europe and Latin America.

  • Price/Mix Impact: Negative EUR92 million in Q3 2024, with a slight negative price mix impact.

  • Cash Production Cost Reduction: 2.9% reduction in Q3 2024, contributing EUR14.8 million.

  • Free Cash Flow: Positive in Q3 2024.

  • Acquisition Impact: Contribution from newly acquired Vidrala Italy operations consolidated in Q3 2024.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Verallia (VRLAF) has successfully launched its Air Range, a lightweight glass product line, achieving strong customer recognition and industry awards.

  • The company is making significant strides in decarbonization with the implementation of an electrical furnace, reducing CO2 emissions by 60%.

  • Verallia (VRLAF) reported a positive organic volume growth in Q3, driven by strong performance in Latin America and the beer segment in Europe.

  • The acquisition of Vidrala Italy has contributed positively to the company's Q3 results, enhancing its market position.

  • The company maintains a strong focus on cost discipline and cash management, achieving a 2.9% reduction in cash production costs through its productivity action plan.

Negative Points

  • Verallia (VRLAF) experienced a 6.6% year-over-year decline in Q3 revenue, with a 4.7% decrease in organic growth.

  • The company faces a challenging market environment in Europe, with soft consumption and ongoing destocking in premium and export-oriented segments.

  • There is a negative price/mix impact, particularly in Europe, due to lower selling prices and adverse geopolitical conditions.

  • Verallia (VRLAF) reported an increase in net debt, with leverage rising to 2.3 times by the end of September, compared to 1.9 in June.

  • The company anticipates a slightly negative full-year volume compared to 2023, reflecting a slow market recovery.

Q & A Highlights

Q: Can you provide insights on the destocking situation in Europe and when it might end? A: Patrice Lucas, CEO: In Europe, destocking is ending for fast-moving products like non-alcoholic beverages. However, for export-oriented segments such as spirits and wines, destocking is still ongoing. We expect this to continue into early 2025, but we are closely monitoring the situation.

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