Verallia (VRLA) Q2 2024 earnings summary

Executive summary

• H1 2024 revenue declined 17.6% year-over-year to €1,765 million, with organic growth at -10.4% and adjusted EBITDA down 34.6% to €431 million; net income attributable to shareholders dropped to €124 million (€1.06/share).

• Recovery in volumes was gradual but slower than expected due to prolonged destocking and softer end consumption.

• Acquisition of Vidrala Italy completed for €230 million, adding a modern plant and strengthening presence in a strategic market.

• Major developments included the launch of a world-first 100% electric furnace in Cognac and a successful employee shareholding offer.

• Leverage ratio increased to 1.9x, with net debt at €1,645.7 million at June 30, 2024.

Financial highlights

• Revenue declined by €378 million year-over-year, mainly due to lower volumes and negative price/mix and FX effects, especially from Argentina.

• Adjusted EBITDA margin contracted to 24.4% from 30.8% in H1 2023.

• Net income for H1 was €123 million, with EPS at €1.06.

• Free cash flow was negative at €-49.2 million, mainly due to lower EBITDA and working capital outflows.

• CapEx was tightly controlled at 8.9% of sales, focused on decarbonization and asset modernization.

Outlook and guidance

• 2024 full-year guidance revised: sales volumes expected flat to slightly down, with H2 up high single digits.

• Adjusted EBITDA for 2024 expected to be around €866 million, comparable to 2022, despite lower volumes and adverse macro conditions.

• Gradual recovery anticipated in 2025 as destocking ends and end consumption improves.

• Continued focus on cost discipline, capacity adaptation, and cash management.

• Leverage expected to remain around 2x by year-end.