Release Date: July 25, 2024

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

Positive Points

• Vidrala SA (FRA:VIR) reported revenues above EUR 830 million and an EBITDA of EUR 225 million for the first half of 2024.
• The company achieved a solid EBITDA margin of 27.1%, maintaining stability compared to the previous year.
• Vidrala SA (FRA:VIR) successfully completed the sale of Vidrala Italy, which is expected to reduce net debt to around EUR 320 million by the end of July 2024.
• The UK market continues to perform well, supported by new demand for glass containers and the integration of The Park.
• Brazil has shown significant growth, with volumes up more than 65% due to recent capacity expansion projects.

Negative Points

• The company experienced a negative price-mix effect, which almost fully offset the 9% volume growth.
• Organic year-on-year EBITDA variation was down by 2.4%, although this was compensated by scope contributions.
• Iberia's performance was weaker, negatively affected by price adaptations and a soft demand context.
• Demand recovery in mature markets is progressing slowly, with visibility remaining low for the second half of the year.
• Working capital increased by EUR 50 million in the first half, impacting cash flow.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with FRA:VIR.

Q: Can you comment on the visibility for the second half in terms of volumes in Continental Europe, given the reiterated guidance? A: Inigo de la Rica, Head of IR: We see demand recovery in mature markets being smooth, with softness widespread across regions. In Iberia, volumes are expected to be flattish or slightly positive for the full year, with a slight improvement in the second half.

Q: Are there any initiatives for growth in Brazil, given the current full capacity? A: Raul Merino, CFO: We are analyzing opportunities for future growth in Brazil, but we need some time to consolidate recent growth. We are maintaining a prudent approach for now.

Q: Could you provide a trading update for July and expectations for August? A: Raul Merino, CFO: The summer period in Europe is performing as expected, consistent with our prudent guidance. The UK and Brazil have specific dynamics due to their respective business operations.

Q: How are you thinking about pricing for the rest of the year and into 2025? A: Raul Merino, CFO: Prices will be adapted at the end of the year to reflect real external cost conditions. We hope to relax prices if conditions allow, but this is not yet the case.

Q: How sustainable are the 40% margins in Brazil, and what are the supply-demand dynamics into 2025? A: Raul Merino, CFO: Brazil's market is balanced between supply and demand. The 40% margins are necessary to sustain operations and invest in Brazil, similar to the 25-30% needed in Europe.

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