(BFM Bourse) – The European leader and third world producer of glass packaging for drinks and food products has not confirmed its turnover target while its profitability forecasts are adjusted downwards for 2023.
After having wowed the market last July with an excellent first half, Verallia in turn disappoints… The world’s third largest producer of glass packaging has subtly revised its annual objectives, a point which was interpreted as a warning on results after a quarterly publication considered mixed.
This adjustment of the outlook did not fail to be sanctioned by the markets. The stock, which had fallen by 10% in the first exchanges, recovered a little and only lost 4% shortly after 12:10 p.m.
A nice surprise on the margins but…
Between July and September, Verallia achieved a mixed performance. The former Saint-Gobain subsidiary generated turnover of 931.8 million euros, up 6% in published data and 11.3% in organic data. The growth revealed by Verallia is certainly increasing but it is much lower than that of the second quarter (+22.7% in reported data and +23.4% in organic growth).
It also suffers from comparison with Verallia’s thunderous start to the year. Between January and March, the group saw its turnover jump by 40.2% in published data and by 34.7% at constant exchange rates and scope.
Ultimately, third-quarter revenue missed Deutsche Bank’s estimates by 7% “due to lower volume.”
The French group explains that it had to deal with a degraded market environment. He noted a decline in demand since August, “linked to the slowdown in consumption and continued destocking downstream of the value chain”. But the former Saint-Gobain subsidiary has a valuable asset up its sleeve, namely a favorable product mix, with resistance from sparkling wines, soft drinks and jars for food. The group also benefited from a price effect.
A little further down in the accounts, adjusted Ebitda (gross operating income) increased by 11.9% to stand at 256.1 million euros. The corresponding margin showed resistance to stand at 27.5% in the third quarter of 2023 compared to 26% between July and September 2022.
The margins of the former Saint-Gobain subsidiary once again benefited from a clear reduction in production costs.
Better yet, profitability is higher than Deutsche Bank’s expectations. Adjusted Ebitda came in 5% above the German bank’s estimates (due to a significant gap between prices and costs), leading to a higher margin level than the 24, 5% anticipated by Deutsche Bank.
A “subtle” revision of annual objectives
To understand what is causing market discontent this Friday, we need to look in more detail at the outlook revealed by Verallia, which should be read between the lines.
The company no longer mentions its turnover objective although in July it still anticipated an increase of more than 20% in its sales in 2023.
Asked by an analyst at a conference about the absence of mention of this objective, the general director, Patrice Lucas, replied: “it is true that we expect to exceed 20%”. But “as we see the trend now and with the volatility of the market, we expect much more to be closer to 20% but the most important thing for us is to focus on the profitability of the company and deliver the target of Ebitda,” added the manager.
Another point that does not please investors, the marginal revision of the annual adjusted Ebitda objective, which is now expected at a level “higher” than 1.1 billion euros, where the company put forward a range between 1.1 billion and 1.25 billion euros last July. Verallia has therefore erased from its forecasts the top of this range that it had previously announced.
Sabrina Sadgui – ©2023 BFM Bourse
Are you following this action?
Receive all the information on VERALLIA in real time: