(AOF) – Verallia announces that the rating agency Standard & Poor’s has raised the Group’s long-term credit rating to BBB- with a positive outlook. The credit ratings of the two Sustainability Linked bond issues of €500 million each, issued respectively in May and November 2021, have also been upgraded from BB+ to BBB-. This improvement indicates full recognition of the Group’s financial solidity and the robustness of its economic model of profitable growth.
Verallia now has Baa3 ratings assigned by Moody’s with a stable outlook and BBB- by Standard & Poor’s with a positive outlook.
“This upgrade of Verallia’s credit rating by Standard & Poor’s, shortly after the upgrade of the credit rating by Moody’s, confirms the Group’s Investment Grade positioning,” commented Nathalie Delbreuve, Managing Director Verallia’s financial position.
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Key points
– Third in the world and first in Europe for glass packaging for beverages and food products, created in 1827;
– Turnover of 3.4 billion generated 67% in Southern and Western Europe, 21% in Northern and Eastern Europe and 9% in Latin America;
– Portfolio distributed as follows: 33% for still wines, 17% for food products, 13% for beers, the same for spirits, 12% for sparkling wines and the same for non-alcoholic beverages;
– “Glo-Cal” business model combining strength of the international network and close relationship with customers;
– Capital controlled by the Brazilian BW with 26.55% of the capital and 25.56% of the voting rights, ahead of the Horizon fund (13.34% and 15.75%), BpiFrance (7.51% and 8.4 %) and employees (4.1%), with Michel Giannuzzi chairing the 13-member board of directors, the post of managing director being held by Patrice Lucas;
– Solid balance sheet, debt of €922m giving a leverage effect of 1.6, free cash flow of €364m and cash of €680m.
Challenges
– Strategy 2022-24 with identified objectives:
– annual sales growth of 4 to 6% and investments at 10% of revenues,
– for 2024: operating margin of 28 to 30%, and earnings per share around €3,
– growth in earnings and dividends of more than 10% per year and share buybacks;
– Innovation strategy led by 13 R&D centers (39 patents):
– co-construction of products with customers, accompanied by digital applications,
– “Selective line” for high-end products,
– optimization of heat exchanges in the furnaces,
– securing information systems;
– Environmental strategy aiming for carbon neutrality in 2050 via 3 objectives:
– for 2025, maximization of the integration of cullet in its production processes to 59% compared to 55.7% today in order to strengthen the circular dimension of glass packaging and collection rate of 83% compared to 76% in Europe, with the launch in France of a pilot project for the viable reuse of glass bottles and jars,
– still for 2025, 3% drop in bottle weight,
– for 2030, 46% reduction in CO2 emissions via €220 million in investments and planting of 100,000 trees per year,
– issue of 2 “sustainable” loans;
– Operational excellence, strategic partnership with Fives in the electrification of the Cognac site and launch in 2024 of a hybrid oven in Spain.
Challenges
– Cost of inflation of raw materials and energy costs (16% of sales) offset by the increase in selling prices;
– Integration of the British Allied Glass, local leader in premium glasses, acquired for £315 million;
– After a 24.5% increase in revenues at the end of September, 2022 objectives raised three times with a 25% growth in activity and an operating result of more than €780 million.
Find out more about the BTP / Construction sector
Double punishment for the sector
The French Building Federation (FFB) recently warned of the collapse of the new housing market. Over the first eight months of 2022, sales of the new home market in the diffuse sector collapsed by 26.8% over one year. As for sales of new homes in the grouped sector, sales to individuals fell by 17.3% over one year in the first half, while sales to institutions fell by 23%. The trend is the same for the sale of collective housing, down 9.8%.
These bad trends are accompanied by a decline in public investment, while repayments of PGE begin. Due to a lack of visibility, local authorities prefer to suspend certain projects. They also have to face a drop in their resources and a significant increase in the cost of energy and works. However, the most significant investments are generally made during the third and fourth years of the local authorities’ mandate, that is to say in 2023 and 2024. This therefore represents a significant shortfall for the sector.