VID.MCVID.MCBME
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Operator: Good morning, and welcome to the conference call organized by Vidrala to present its 2025 full year results. Vidrala will be represented in this meeting by Raul Gomez, CEO; Inigo Mendieta, Corporate Finance Director; and Unai Garaizabal, Investor Relations. [Operator Instructions]. In the company website, www.vidrala.com, you will find available a presentation that will be used as a supporting material to cover this call as well as a link to access the webcast. Mr. Alvarez, you now have the floor.
Unai Garaizabal: Good morning, everyone, and thank you for joining today's conference call. As previously announced earlier this morning, Vidrala has released its 2025 full year results together with a presentation that will be used as a guide throughout this call. Following the structure of the presentation, we will start working through the key figures released before moving on to the Q&A session, where we will go deeper into business performance. I will now pass the floor to Inigo, who will take you through the key financial highlights.
Iñigo de la Rica: Thanks, Unai, and thank you, everyone, for joining the call. We know it's -- these days are quite busy for you. So thank you very much for your time. So let's begin with a quick overview of the key financial figures. For the full year 2025, Vidrala obtained revenue of almost EUR 1.5 billion, EBITDA of EUR 441 million and a net income equivalent to an EPS of EUR 6.24. A strong cash generation of EUR 200 million enabled a substantial reduction of debt to EUR 105 million, which is equivalent to 0.2x our annual EBITDA. Please note that the right-hand column provides clarity on the variation on comparable scope basis and excluding also FX and comparable scope means excluding the impact of perimeter changes following the sale of Vidrala Italy back in 2024. In addition, and to allow comparability, EBITDA and earnings per share are shown excluding EUR 13.7 million and EUR 10.2 million, respectively, related to restructuring costs in the U.K. and Ireland. Let's have a deeper look at revenue evolution. Sales for the period reached EUR 1,465.2 million. On a like-for-like basis, excluding contribution from Italy and constant exchange rates, sales declined by 5.4%, reflecting the expected combination of soft demand and price moderation in line with cost developments. Turning now to EBITDA. We apply the same analytical framework to better understand the year-on-year variation. For the full year 2025, EBITDA stood at EUR 441 million, consolidating the profitability of our business model despite challenging market conditions. Excluding FX effect, EBITDA remained basically stable year-on-year. These results translated into a resilient EBITDA margin of 30.1%, reflecting a 1.5 percentage point expansion compared to last year. Now let's understand sales and EBITDA evolution by market based on the current perimeter. Again, that means fully excluding Italy from the 2024 figures. As aforementioned, price moderation are visible over all our operating markets. Southern Europe demand remains resilient, while trading conditions in the U.K. and Ireland continue to be challenging. And in Brazil, Q4 exhibited expected signs of recovery, and we are also constructive for 2026 as we start the year. Anyway, margins remain solid across all regions, thanks to our internal measures, cost discipline and actions to align industrial capacity with market realities. Now let's take a closer look at free cash flow generation, which is our top priority and a fundamental indicator of both our financial strength and the quality of our execution. This chart shows full year cash conversion performance. Starting from EBITDA margin of 30.1%, we deliberately allocated almost 13% of sales to investments, reinforcing our operational capabilities and driving future competitiveness. In addition, 3.6% of sales was dedicated to working capital, financial expenses and taxes. As a result, free cash flow generation reached almost 14% of sales, equivalent to EUR 200.1 million, highlighting our ability to translate operational performance into cash flow despite investing at record levels. As a consequence, net debt was reduced to EUR 105.3 million, which translates into a leverage ratio of 0.x our annual EBITDA. This solid financial position provides us with the ability to continue investing with ambition, with discipline while returning flexibility to seize growth opportunities and return capital to shareholders. Overall, we have largely met the guidance issued in April 2025. Our results underscore the resilience of our business model in a challenging market environment. And notably, our ability to convert operational performance into cash has proven strong, generating value even in an unfavorable global macroeconomic cycle. Moreover, if we adjust the performance of each of our business units in their local currency to the exchange rates assumed in the guidance, namely EUR 0.84 for the British pound and EUR 6.20 for Brazilian real, our EBITDA would have reached EUR 445 million, representing only a very limited deviation of 1% versus the guidance. And now before we move to the Q&A, I'll hand over to Raul, who will summarize the key takeaways and share additional insights.
Rául Merino: Thank you, Inigo. Thank you, Unai. And thank you all for your time and attending this call today. We know it's -- and you know we know it's a busy day for you, so we will try to go ahead quick and direct. Well, our 2025 results demonstrate the strength of the business we are building. Today, Vidrala, are a larger, more diversified and also a less complex company. And this is a result of mostly our deliberate intentional strategic actions. Let me remind, in the recent years, we have entered the U.K., exited Belgium and Italy, and we have started to build a long-term platform for future growth in South America through Brazil. We are now clearly focused on 3 business divisions, operating across 3 different geographies, which create clear combinations and synergies at many levels across the business. And this structure makes us today more agile, closer to our customers and certainly better positioned to capture future opportunities. We are also more efficient industrial today. We invest more and more intentionally, always with our customer in mind. We are running ambitious projects to improve competitiveness, increase vertical integration and differentiate our service proposition. Let me say our goal is quite simple: to become a trusted, reliable partner for every one of our customers. And we are also today a more global company. At the end of the year, after a long process of analysis, we announced our entry into Chile. And this makes us even more attractive to a significant number of strategic customers that will shape our future, customers that are looking for a reliable, distinctive, challenger, long-term packaging supplier. And in the end, in 2025, we delivered despite a more difficult environment. It's evident demand remained negative. But even so, we protected our margins and we reinforced our industrial competitiveness. So the message we want to share today behind our 2025 results is quite clear. Margin resilience in a tough environment, driven by mostly internal actions, a stronger industrial platform supported by the solid execution of an ambitious investment plan and an expanded geographical diversification. And above all, we achieved our cash flow targets, something that help us to reinforce our financial position, increase shareholder remuneration and be ready, better prepared for what is ahead for us in the future. These achievements frame how we see, what lies ahead and support and reflect our confidence in our future. Even more important, the trends of the last few months confirm our firm conviction. Glass may have more future today than ever. I repeat, glass may have more future today than ever. Glass is an unparalleled packaging material, the ultimate sustainable packaging material of choice, the preferred package for customers and consumers across the world, 100% recyclable, eternally. It is, in fact, the packaging of the future, if and only if we take the actions we need to take today to protect our industry. Under this basis, under this starting point, we face 2026 with confidence, a year 2026 in which our results consolidate, evolve positively and support the transition we are making toward our future, a future that belongs to us. Thank you.
Iñigo de la Rica: Thanks, Raul. So this completes our initial remarks. Let's turn to the Q&A session.
Operator: [Operator Instructions] And our first question comes from the line of Paco Ruiz from BNP Paribas.
Francisco Ruiz: So I have 3 questions. The first one is on volumes. I mean it has been a very pure quarter in terms of volumes for Iberia and U.K. in this Q4. How do you see the start of the year in this respect and how is your view for the full year? The second question is on the payback and the cash out of this restructuring that you have announced in the U.K. If you could give us more detail on what's the total savings for this plan and if you are thinking further actions in the near future? And last but not least, you are approaching net cash position and even with the Chilean acquisition, the leverage is very low. Should we wait until the end of the year to see some announcement on shareholder remuneration or this is something that could come earlier than expected?
Iñigo de la Rica: Okay. Paco, thank you very much for your questions. Just give the figures of Q4 and full year in terms of volumes, and then we can make some comments on the start of the year, okay? Just to be very clear, Iberia in Q4, our volumes decreased by 4%. Volumes in the U.K. in Q4, the figure is minus 7.9%. And in the case of Brazil, we have seen in Q4 the expected recovery following a weak Q3. And in Q4, our volumes have increased plus 5.3%, okay. Overall, for the full year, [indiscernible] also the picture of the 12 months, Iberia is flattish in terms of volumes, minus 0.1% with the U.K. and Ireland minus 5% and Brazil due to this weak Q3 is minus 0.8% in terms of volumes.
Rául Merino: Paco, we know you are expecting that we deserve some level of clarity on this side. Let me say, quite clear, we expect our sales volumes to move on the positive side in 2026. And that should be driven by some external things of stabilization, even recovery and also on internal actions to recover market share. It's only the start of the year. We understand that you need more clarity. The start of the year is seasonally different in our regions. It's more seasonally stronger in South America, seasonally weak in Europe, and we are exactly where we expected to be. We are seeing some positive signs that we reflected progressively in our sales volumes across the year.
Iñigo de la Rica: Okay. Taking your second question on the U.K. restructuring. So as you know, as we have explained throughout the presentation, industry-wide market conditions remain challenging throughout the year. And despite this, I would say we have acted decisively by accelerating investments to try to optimize our industrial footprint, but also to try to further strengthen cost efficiency across the business, okay? And in this sense, we are taking steps to accelerate cost control measures, drive productivity plans, particularly in geographies more exposed to competitive pressures, such as the case of the U.K., okay? So obviously, these initiatives will have a short-term impact on our results, but we truly believe that we are fundamentally reshaping the competitive positioning -- our competitive positioning for the future. Specifically, the U.K. workforce reduction plan has been recognized in our 2025 figures through a provision for the full amount that we have clearly disclosed, the EUR 13.7 billion, although you can consider that only 1/3 of the plan has been implemented to date, with the remaining 2/3 scheduled for hopefully completed in 2026, okay? And once fully implemented, trying also to get your point on the payback, once fully implemented, the plan is expected to deliver recurring structural savings of at least EUR 12 billion per year, which should have an effect on, as I was saying before, on enhancing our competitive position. Just to clarify, this is an effort aimed at improving competitiveness and protecting market share.
Rául Merino: And regarding your question on potential further actions, we know or you know us, our future -- we have a firm conviction of this. Our future will be based on our cost competitiveness. So we will keep on dynamically trying to improve our cost competitiveness and attract our customers. So for sure, in the future, we will take more actions when needed. I don't know at what magnitude. You can be sure that we will do as much as necessary to remain competitive. And we have a firm conviction of what that means in each of our regions. But we don't foresee that these cost restructuring actions, whatever happens in the future, should significantly distort the expectations you have in your mind in terms of our profits and cash flow. And your last question, Paco, regarding shareholder remuneration, you know that we do consider that our shareholder remuneration policy is more result or a consequence of our targets. Our financial targets are much more focused on financial strategic targets on diversification, right investments, margin protections and mostly, and at the end, our definite target is cash flow. Should we remain achieving our cash flow targets, we will do as much as necessary to improve our shareholder remuneration. We know what is our level of the strength of our financial position. So let me say that we agree with you that is a margin for further improvement in our shareholder remuneration.
Operator: And our next question comes from the line of Enrique Yaguez from Bestinver Securities.
Enrique Yáguez Avilés: I have 4 questions. The first one is the expected evolution in prices for this year. Secondly, if you could provide some details about Cristalerias Toro acquisition. Whether the acquisition is expected to be closed and the size of the restructuring plan and potential synergies. Third, about the OpEx increase coming from natural gas price increases, then CapEx guidance and where it will be allocated. And finally, I don't know if you could provide some details about the impact of the Storm Kristin in Marinha Grande.
Iñigo de la Rica: Okay. Thank you, Yaguez. Thank you for your question. So regarding -- so many questions, I will try to organize them, okay? Regarding guidance outlook for 2026 in terms of prices, in terms of CapEx, first of all, as usual, you already know, we will announce our official guidance at the Annual General Meeting in April, okay? However, what we can say at this stage in terms of results, free cash flow is that we do not see current levels being at risk. But anyway, regarding prices, we remind you that approximately 50% of our sales are supported by multi-annual agreements with strategic customers that incorporate price adjustment formulas. And the outcome of these formulas points to a price moderation of around 2% at the group level. That said, it will be also important to assess potential mix effect associated from our strategy to recover selectively some market shares.
Rául Merino: Let me take a little bit at this point with more detailed prices. And let me invite you to make a historical analysis, okay? We have the evidence, the strong evidence that our glass prices have been adapted significantly over the last 2 years. And this is very positive if we consider how glass was positioned 3 years ago after the inflationary shock in comparison with where we are today. I mean competition is still high. We will maintain a disciplined approach to our prices. But when we see all those numbers, when we see our cost competitiveness and we also see other materials, I have the feeling that we are going evolving in the right direction.
Iñigo de la Rica: Okay. And just to complete on 2026, Yaguez, going back to CapEx. Well, first of all, just to clarify that we believe our cash profile is sustainable. Obviously, investment levels currently at almost 13% of revenues are expected to ease in the medium term, not in the short term, okay, which should be easing in this medium term CapEx over sales should further support the improvements in our cash generation profile. And for 2026, CapEx should remain close to the 2025 CapEx figure, which is EUR 189 million, probably slightly lower than that, but still ambitious ranging between EUR 170 million to EUR 180 million. Then regarding the closing of the acquisition of Chile, everything is proceeding as anticipated, okay? There is no news there, and we continue to expect the transaction to close in the first quarter of 2026. A few remaining points still need to be finalized, which we expect to resolve in the very short term. And in any case, sales, EBITDA and margin figures remain in line with what we announced in December, okay? And we will take the opportunity of the guidance that we expect to issue with occasion of the AGM to include Chile and to give more visibility in that sense. Then regarding the impact of the recent or increase in gas prices in the last -- in the start of the year, please consider that at year-end, around 80% of our NAV exposure for 2026 and around 40% for 2027 was hedged through derivative instruments. This excludes Vidroporto, where, as you know, almost all our customer contracts are dictated by price adjustment formulas. And what really hedges for 2027 are now slightly above the previously mentioned figures. And then just to finalize on the impact of the Storm Kristin. At the beginning of the year, our plants in Portugal were impacted by Storm Kristin. This severe weather event caused disruptions to electricity supply and resulted in temporary impacts on our operations and consequently affecting production at both facilities. Although we expect there to be an economic impact. However, this should be largely mitigated through the group's insurance policies as well as through the support measures made available by the Portuguese government, okay? So we are not worried in that sense. And more relevant, let me take the opportunity to sincerely thank the teams for their professionalism, commitment and outstanding effort in responding to the situation and ensuring a swift and orderly record of operations.
Rául Merino: And just to add on your comments, Inigo. Okay, the limited impact we will suffer under this big climate or external issue proves again the right direction and the strength of our investment plan. And finally, Enrique, on the Chile point, let me please remind that we know that this deal, this step for us will be -- will have less impact from a financial view and from the strategic sense. And we know what we want. We will need our time to take deficit actions to deploy our industrial model and everything is going as expected, okay? What that means? That means that the results we will publish regarding Chile will be the starting point for what is ahead in the future.
Operator: [Operator Instructions] And our next question comes from the line of Inigo Egusquiza from Kepler.
Íñigo Egusquiza: So most of my questions have been already answered. So just 2 quick follow-ups on Chile. You mentioned that you will give us more information at the time of the guidance, if I understood well. My question would be more on further capital allocation. You mentioned, Raul, there is obviously room for increasing shareholder remuneration considering your limited leverage. But the question is more on -- on more M&A. I think that the company has a very clear strategy in my personal view of growing and continue consolidating the market and probably Latin America is the priority. If you can share with us if we can expect more M&A in the near future, 2026 and 2027. This is the first question. And the second one would be on volumes. You have mentioned that you expect some stability in Europe in 2026. The question is how do you see, I mean, the industry evolving? You sounded more positive on glass future compared to other materials. And what about all the capacity shutdowns announced by the industry, if my numbers are right, almost, I would say, close to 9%, 10% of once the Europe capacity has been shut down. So obviously, this would be a positive for the industry recovery. So if you can share with us your thoughts.
Rául Merino: Thank you, Inigo. Thank you very much. Well, first, regarding capital allocation, let me remind that we are -- as Inigo can add, we are today active under our share buyback program. So this is an example that we are taking seriously our shareholder remuneration policy with some specific efforts this year. And regarding your specific question of what is next, well, let us please first finalize our entry into Chile before speaking about the next step. It's too soon. But our approach remains consistent, the same. We are and we will continuously -- remain continuously exploring potential opportunities. But this year is a year to be a focus and not distract? And at the end, whatever we see, whatever you see from us, I'm sure that you won't be surprised, okay? And regarding the second question, capacity actions across the industry, capacity rationalization, it's all a matter of cost competitiveness. And capacity rationalization by its competitor in this industry in the glass space and in other substrates will be basically a matter of cost competitiveness. And we know how clear we are in our mindset regarding cost. Cost competitiveness will drive our future. And that's the reason why we are not expecting any capacity rationalization, and we hope the industry to rationalize capacity if needed. And this will help us to recover some market share.
Operator: There are no further questions by the telephone. I'll now hand it back to the Vidrala team who will address questions submitted via the webcast.
Iñigo de la Rica: So we have received some additional questions through the webcast. First of all, on the Chilean acquisitions, we are asked about EBITDA margins because the question says that they are substantially lower over the rest of the assets and if this is structural or we can improve, okay? As we disclosed at the time of the acquisition, it is true that margins -- the figures that we announced back in December showed EBITDA margins in the range of 17%. And part of this is due to factors specific to the asset. We should consider that a business in Chile with the scale of Cris Toro won't have the same metrics as the one in Brazil just because of a matter of scale and because of differences between the regions. But in any case, we consider that margins should improve. So we recognize that this is a different transaction in the sense that it includes a process to improve margins, to optimize margins. And this should be through costs, won't be dependent on volumes, on sales volumes. And please remember that this is a company that we knew pretty good because we were providing them with technical assistance similar to the case of [indiscernible]. In any case, in order to give more visibility, as we have said before, we should wait at least until the guidance in April where we can give more detail.
Rául Merino: Just to add on this, Inigo, you can be sure that we know what we are guiding, okay? I mean, far from a surprise, we do consider current operational margins in Chile as an opportunity, part of our business plan.
Iñigo de la Rica: Good. Then there is a second question on overcapacity in Europe. As you all know, the capacity closures that have been announced in the last 2 years have been very significant. We are still seeing some announcements to further close capacity in regions that are structurally uncompetitive. And this means that considering the structural capacity closures, permanent capacity closures and also the adjustments in terms of production capacity, temporary adjustment that we are all hitting, we believe that the industry is reasonably balanced in terms of supply and demand. And then there is a final question on savings in the U.K. due to the restructuring. I could say we have already answered that question through the live questions. But just to be very clear and to avoid any misunderstanding, out of the EUR 13.7 million that we have registered in our numbers, 1/3 has been already executed and I mean, in terms of cash flow. And 2/3 of that figure of the EUR 13.7 million will be executed in 2026. It's not an additional amount on top of the EUR 13.7 million. So we have now answered all the questions received via webcast. So please remember, we are always at your disposal for any further questions. Thank you very much for connecting.
Rául Merino: Thank you very much. Please keep on eating and drinking in glass and see you on April.