Vidrala SA (FRA:VIR) Q3 2024 Earnings Call Highlights: Strong Financial Performance Amidst ...

GuruFocus News
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In This Article:

  • Revenue: EUR1,216.4 million, reflecting 0.9% growth at constant currency and comparable scope.

  • EBITDA: EUR337.7 million, representing an organic improvement of 4.3% and a year-on-year increase of 7%.

  • Net Income: EPS of EUR7.22.

  • EBITDA Margin: 27.8%, an expansion of 140 basis points compared to the previous year.

  • Net Debt: EUR299 million, with a leverage ratio of 0.7 times net pro forma EBITDA.

  • Free Cash Flow Generation: Close to 13% of sales.

  • Volume Growth: Increased by almost 9%.

Release Date: October 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 EUR1.2 billion for the first nine months of 2024, indicating a stable financial performance.

  • The company achieved an EBITDA of almost EUR338 million, reflecting a 7% year-on-year increase and an expansion of operating margins by 140 basis points.

  • Free cash flow generation is close to 13% of sales, with expectations to exceed EUR180 million for the full year, marking a record level for the company.

  • The UK market is performing well, driven by the integration of the filling business and improved glass volume performance.

  • Vidrala SA (FRA:VIR) maintains a strong balance sheet with a net debt of EUR299 million and a leverage ratio of 0.7 times net pro forma EBITDA.

Negative Points

  • The company experienced a negative price mix effect, which nearly offset the 9% volume increase.

  • Demand in Europe, particularly in mature markets like Iberia, remains weak, with a significant drop over the last two years.

  • EBITDA performance is weaker due to price adjustments and a soft demand context, although improvements are expected in Q4.

  • There is no immediate plan to increase capacity in Brazil despite running at full capacity, indicating potential limitations in meeting future demand.

  • The company is forced to adapt capacity in Continental Europe due to a significant drop in demand, running at 85% capacity utilization.

Q & A Highlights

Q: After two years of volume declines in Europe, mainly in Iberia, do you see a more positive volume cycle beginning? What is your view on this, and how do you expect volume increases in Europe to take place? A: Raul Gomez Merino, CEO: We have three different markets with distinct dynamics. In Brazil, we see growth, while Europe and the UK show weakness. Demand in Europe has dropped 10-15% over the last two years. Although we don't see signs of recovery yet, demand has stopped dropping. We don't expect further significant declines in 2025.

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