Verallia SAS · EURONEXT:VRLA

Verallia SAS — Verallia — H1 2020 Earnings Presentation

43 slides from Verallia SAS's earnings presentation, September 2020

  1. Slide 1: Group Presentation September 2020

    Group Presentation September 2020

  2. Slide 2: Group Presentation agenda

    Group Presentation 1. Group Presentation 2. H1 2020 Financial results and Cash performance 3. Conclusion and Outlook Group Presentation 2

  3. Slide 3: A global leader in glass packaging

    A GLOBAL LEADER IN GLASS PACKAGING 2019 Financial Highlights 2019 Glass packaging(3) sales split by end market Wine and Beer spirits 13% Still 58% wine Soft 33% drinks 12% Food 17% Sparkling wine Spirits 12% 13% Sources: Companies public information, management estimates and Advancy (IPO related stu

  4. Slide 4: Benefits of glass circular economy

    BENEFITS OF GLASS CIRCULAR ECONOMY Eco-design and manufacturing of quality glass Collection Extraction and processing packaging and awareness of raw materials on sorting and recycling: currently collected at 76% (sand, sodium carbonate and calcium rate at European level(1) carbonate) Processing of P

  5. Slide 5: Strong know how in cullet treatment

    STRONG KNOW HOW IN CULLET TREATMENT ` 8 processing plants Cullet Savings France “Key circular economy link” +10% of cullet  Rozet-Saint-Albin reducing  Châteaubernard (Everglass) Spain  Agüimes (Revica) Waste  Guadalajara (Calcín Ibérico(1)) CO2 emissions -5% of CO2 emissions Italy  Lonigo Raw

  6. Slide 6: Contribute to preserving the environment

    CONTRIBUTE TO PRESERVING THE ENVIRONMENT THE HOLISTIC ENERGY AND CLIMATE COMMITMENT ⇢ Accelerate our CO2 reduction target ⇢ Increase cullet ⇢ Continue our integration offsetting program OUR GOAL 2019 > 2030 - 20% OF CO2 SCOPE1&2 OUR GOAL 2019 > 2023 = -2%/year/ton of packed OUR GOAL 2019 > 2023 glas

  7. Slide 7: Furnace of the future: glass industry decarbonization initiative

    FURNACE OF THE FUTURE: GLASS INDUSTRY COLLABORATIVE INITIATIVE IN ITS DECARBONIZATION JOURNEY Common initiative under the framework of the FEVE(*) to build first large-scale hybrid oxy-fuel furnace running on 80% electricity Glass is currently -30% lighter 70% less energy-intensive emits 50% less CO

  8. Slide 8: H1 2020 Financial results and Cash performance

    H1 2020 Financial results and Cash performance 1. Group Presentation 2. H1 2020 Financial results and Cash performance 3. Conclusion and Outlook Group Presentation 8

  9. Slide 9: H1 2020 financial highlights

    H1 2020 FINANCIAL HIGHLIGHTS  Resilience of the Group in the context of the COVID-19 pandemic  Revenue - H1 2020 Reported revenue at €1,275m, down -4.1% vs. H1 2019 - H1 2020 Organic(*) decline of -0.9% (-2.7% excluding Argentina) vs. H1 2019 - Q2 2020 Reported revenue down -9.6% to €630m (-5.4% o

  10. Slide 10: Continued management of the current COVID-19 situation

    CONTINUED MANAGEMENT OF THE CURRENT COVID-19 SITUATION  Business continuity with all factories operational throughout H1 to continue to serve our customers whose role is essential throughout the food industry supply chain  Progressive return to office work in all countries  Protocols consistently

  11. Slide 11: Verallia: united and responsible

    VERALLIA: UNITED AND RESPONSIBLE Examples of local partnerships in France Other examples of local donations Covidom is an application for home monitoring of COVID-19 patients with the help of 2,500 volunteers. Verallia will finance a book testifying of this experience Attached to the Saint-Denis Hos

  12. Slide 12: Success of 2020 employee shareholding offer

    GREAT SUCCESS OF VERALLIA’S 2020 EMPLOYEE SHAREHOLDING OFFER  Close to 3,300 employees took part in the 2020 Employee Shareholding Offer proposed by Verallia in 8 countries  Excellent participation level: 42% of eligible employees invested in the offer  Employee shareholders rate now reaches appr

  13. Slide 13: 87% opted for dividend payment in shares

    STRONG SUPPORT FROM OUR SHAREHOLDERS: 87% OPTED FOR THE DIVIDEND PAYMENT IN SHARES Estimated Capital Structure post Dividend Payment  The June 10, 2020 AGM approved the payment of a dividend of 0.85 euros per share either in cash or in newly issued shares Free Float  87% of the shareholders have e

  14. Slide 14: Transformation plan in France

    TRANSFORMATION PLAN IN FRANCE  Production capacity adjustment and industrial performance improvement to respond to the changes in the French market: - Decline in domestic still wine market - Competition from imports from more competitive foreign glassmakers operating in neighboring countries - Rece

  15. Slide 15: Limited revenue decline in H1 despite COVID-19 impact

    Limited revenue decline in H1 despite COVID-19 impact Reported revenue in H1 (in €m)  Revenue organic variation: - Q1: +4.0% organic* growth - Q2: -5.4% organic* decline with Reported Growth: -4.1% Organic Growth*: -0.9% drop mainly in April and May 1,329  Mix deterioration mainly due to France fo

  16. Slide 16: SWE: revenue decline, most notably in France

    SWE*: revenue decline and most notably in France Reported revenue (no exchange rates impact - in €m)  Decline in revenue in all countries in Q2 -5.2%  Most notable drop over H1 in 928 880 France, where exposure to premium products is greater  Dynamism in food jars in all countries  Sparkling win

  17. Slide 17: NEE: good resilience

    NEE*: good resilience Reported revenue (in €m) +3.1% 275 283  Continued dynamism in jars and non-alcoholic beverages in Q2 after a good Q1 H1 2019 H1 2020 Revenue at constant exchange rates (in €m)  Sales price increases compensating lower volumes, +3.4% 284 especially in Eastern Europe 275 H1 201

  18. Slide 18: Latin America: volume and price offset by exchange rates

    Latin America*: volume and price contribution offset by unfavorable exchange rates Reported revenue (in €m) -12.2% 126 111  Increase in volumes in still wine in Argentina and Chile, offsetting a softening Brazilian market starting at the end of Q1  Continued sales price increases, H1 2019 H1 2020

  19. Slide 19: Slight decline in adjusted EBITDA margin to 23.4%

    Slight decline in adjusted EBITDA margin to 23.4% Adjusted EBITDA margin H1 2020 H1 2019 Adjusted EBITDA (in €m) 23.4% 23.5% (9) bps Reported Growth: -4.5%  Adjusted EBITDA almost flat excluding Organic Growth*: -0.3% forex (-€13m), thanks to 1. Contained volume decrease 313 (13.2) 2. Positive pric

  20. Slide 20: SWE: decline due to France

    SWE: decline due to France, despite good resilience in Spain, Portugal and Italy Adjusted EBITDA margin Adjusted EBITDA (no exchange rates impact - in €m) H1 2020 H1 2019 22.2% 23.7% (143) bps 220 -10.9%  Good resilience in Spain, Portugal and Italy, showing a stable adjusted EBITDA in H1 196  Mar

  21. Slide 21: NEE: strong adjusted EBITDA and margin expansion

    NEE: strong adjusted EBITDA value and margin expansion Adjusted EBITDA margin Adjusted EBITDA (no exchange rates impact - in €m) H1 2020 H1 2019 24.3% 21.8% +251 bps 69  Margin improvement thanks to: +15.1% - Sales price increases especially in Eastern Europe 60 - Improvement in industrial H1 2019

  22. Slide 22: Latin America: strong adjusted EBITDA margin improvement

    Latin America: strong adjusted EBITDA margin improvement Adjusted EBITDA (in €m) Adjusted EBITDA margin H1 2020 H1 2019 +2.5% 34 30.6% 26.2% +440 bps 33  Margin improvement thanks to the continuous deployment of Verallia’s 3 main improvement drivers H1 2019 H1 2020 Adjusted EBITDA at constant excha

  23. Slide 23: Tight control of investments

    Tight control of investments Total Booked Capex H1 2020 (€m) Total Booked Capex H1 2019 (€m) 91.5 97.4 8.9 27.2 Recurring Capex 6.7% 88.5 in % of revenue: 5.1% 64.4 H1 2020 H1 2019 Strategic investments (excluding M&A) Recurring capex  Lower recurring capex in H1 2020: different timing of furnace r

  24. Slide 24: Solid cash flow fundamentals

    Solid cash flow fundamentals with good WCR management and continued high cash conversion In €m H1 2020 H1 2019 Adjusted EBITDA 298.7 312.8  Operating cash flow impacted by Total Capex 91.5 97.4 - Adjusted EBITDA decrease - Expected increase in Capex Cash conversion 69.4% 68.8% cash-out relating esp

  25. Slide 25: Continuous deleveraging capabilities

    Continuous deleveraging capabilities In € million 30/06/2019(*) 31/12/2019 30/06/2020 Net Debt 1,689.5 1,590.6 1,475.7 LTM Adjusted EBITDA 590.7 615.2 601.1 Net Debt / LTM Adjusted EBITDA 2.9x 2.6x 2.5x  2.5x ratio of net debt over LTM adjusted EBITDA at June 30, 2020: - Net debt at €1,475.7 millio

  26. Slide 26: Net debt: €1,475.7 million at June 30, 2020

    Verallia’s net debt: €1,475.7 million at June 30, 2020 Nominal amount or Final In € million maximum amount Nominal rate June 30, 2020 maturity drawable Term Loan A 1,500.0 Euribor +1.75% 07/10/2024 1,495.8 Revolving Credit Facility 1 500.0 Euribor +1.35% 07/10/2024 200.8 Revolving Credit Facility 2

  27. Slide 27: Conclusion and Outlook

    Conclusion and Outlook 1. Group Presentation 2. H1 2020 Financial results and Cash performance 3. Conclusion and Outlook Group Presentation 27

  28. Slide 28: Conclusion: Resilient H1

    Conclusion: Resilient H1  Revenue decrease limited to -4.1% on a reported basis (-0.9% organic*) in H1 2020  Slight decline in adjusted EBITDA margin to 23.4% vs. 23.5% in H1 2019 due to France  Further deleveraging to 2.5x LTM adjusted EBITDA (-0.1x vs. end of Dec 2019)  Transformation plan in

  29. Slide 29: 2020 Outlook

    2020 Outlook  Persistent uncertainty linked to the duration of the crisis making 2020 forecast still difficult, yet: - Q2 should be a low point in terms of sales volumes drop - Full year 2020: volumes expected down around -5% compared to 2019 - Adjusted EBITDA 2020: should be slightly above that of

  30. Slide 30: Mid-term guidance from the IPO - update

    MID-TERM GUIDANCE FROM THE IPO - UPDATE Mid-term (2020-2022F) • Negative impact of Covid-19 on sales volumes in 2020 • Lower expected sales price increase with ORGANIC SALES GROWTH(1) +3-5% CAGR NO LONGER VALID: more moderate inflation in production costs than initially anticipated over the period A

  31. Slide 31: Appendices

    APPENDICES Group Presentation 31

  32. Slide 32: A unique value creation opportunity

    A UNIQUE VALUE CREATION OPPORTUNITY 1 Positive outlook for glass with attractive dynamics in the European market 2 Differentiated positioning with a compelling customer value proposition 3 Operational excellence initiatives with tangible margin upside 4 Strong execution driving continuous growth in

  33. Slide 33: Consumer preferences driving volume growth

    1 CONSUMER PREFERENCES DRIVING VOLUME GROWTH Positive outlook for glass with attractive dynamics in the European market Glass penetration by end market Consumer preferences How has your usage of the following packages evolved % Volumes (2018, Top 5 European Countries(1)) over the last 3 years? Which

  34. Slide 34: European glass packaging demand steadily growing

    1 EUROPEAN GLASS PACKAGING DEMAND HAS BEEN STEADILY GROWING Before COVID-19 Positive outlook for glass with attractive dynamics in the European market European domestic container glass sales volumes Demand and supply remain balanced (Food & beverages, mt)(1) (Demand and capacity increase in SWE and

  35. Slide 35: Meaningful sector consolidation

    1 MEANINGFUL SECTOR CONSOLIDATION Before COVID-19 Positive outlook for glass with attractive dynamics in the European market European(1) food and beverage glass packaging market share Top 5 <50%  >5mt (25%) consolidated over the last 15 years Top 5 = ca.71%  Announced capacity increases in line wi

  36. Slide 36: Spirits focus: capturing growing demand for premium products

    2 SPIRITS FOCUS: CAPTURING GROWING DEMAND FOR PREMIUM PRODUCTS Differentiated positioning with a compelling customer value proposition Premium vodka case study - Premiumisation Higher growth from premium spirits Global spirits volume growth(3) Premium spirits Entry level spirits (2017-22E CAGR) +7.8

  37. Slide 37: Well invested asset base and new approach to investment strategy

    3 WELL INVESTED ASSET BASE AND NEW APPROACH TO INVESTMENT STRATEGY Operational excellence initiatives with tangible margin upside Capital expenditure (€m) “Smarter” Capex spending 9.8% 9.3% 9.8% Total capex 253  Focus on short payback/high return and machine as % of sales 236 225 46 standardization

  38. Slide 38: Operational excellence driving accelerated cost reduction

    3 OPERATIONAL EXCELLENCE DRIVING ACCELERATED COST REDUCTION Operational excellence initiatives with tangible margin upside Proven methodology for cost reduction Performance Action Plan (“PAP”) Result / Production cash costs reduction Step Follow – up Follow- 7 KPI / Bridge PAP up Step Cost / Resourc

  39. Slide 39: Operational excellence driving financial results

    3 OPERATIONAL EXCELLENCE DRIVING FINANCIAL RESULTS Operational excellence initiatives with tangible margin upside Monthly internal tracking tool P&L impact only starting to materialize (€m) Industrial PAP Non-industrial PAP 46 44 Industrial PAP in % of production cash costs 10 Objectif: 2% 44 16 36

  40. Slide 40: Glass packaging is highly profitable

    GLASS PACKAGING IS HIGHLY PROFITABLE Glass packaging Glass packaging is growing globally Glass packaging is highly profitable generates significant cash 2016-2019 CAGR(1) 16.6% Superior Cash Flow(2) CAGR 9.6% Well invested asset Outsized Adjusted EBITDA CAGR and strategic capex Productivity Positive

  41. Slide 41: Verallia sustainable approach

    VERALLIA SUSTAINABLE APPROACH Addressing the diversity of our social and environmental stakes ACT FOR THE TEAMS’ SAFETY & DEVELOPMENT CONTRIBUTE TO PRESERVING THE ENVIRONMENT BY BEING A REFERENCE LAYER IN THE CIRCULAR ECONOMY CULTIVATE RELATIONS WITH OUR STAKEHOLDERS Group Presentation 41

  42. Slide 42: Board of Directors and committees

    BOARD OF DIRECTORS AND COMMITTEES Board of Directors Composition Committees of the Board of Directors Michel Giannuzzi Chairman Audit Committee Robert Seminara Apollo  Marie-José Donsion (Chairwoman)  Claudia Scarico Claudia Scarico Apollo  José Arozamena Pierre Vareille Apollo Sébastien Moynot B

  43. Slide 43: Disclaimer

    Disclaimer Certain information included in this presentation are not historical facts but are forward-looking statements. These forward-looking statements are based on current beliefs, expectations and assumptions, including, without limitation, assumptions regarding present and future business stra

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