Verallia (VRLA) Q2 2024 earnings summary

Executive summary

• H1 2024 revenue reached €1,765 million, down 17.6% year-over-year, with organic growth at -10.4% and a slower-than-expected recovery in volumes.

• Adjusted EBITDA was €431 million, a 34.6% decrease, with a margin of 24.4% (down from 30.8% in H1 2023).

• Net income for H1 was €123 million (€1.06/share), down from €311 million in H1 2023.

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

• Gradual volume recovery observed, but delayed by prolonged destocking and softer end consumption.

Financial highlights

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

• Adjusted EBITDA margin remained strong at 24.4%, despite a significant drop from 30.8% in H1 2023.

• Net debt increased to €1,645.7 million, leverage at 1.9x LTM adjusted EBITDA.

• Free cash flow was negative at €-49.2 million for H1, mainly due to lower EBITDA and working capital outflows.

• CapEx was tightly controlled at 8.9% of sales, with strategic investments in decarbonization projects.

Outlook and guidance

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

• Adjusted EBITDA for 2024 expected to be comparable to 2022, reflecting slower-than-expected demand recovery.

• Focus remains on cost discipline, agility, and cash management amid delayed market recovery.

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

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