Verallia Q1 2025 results: Volume recovery gains momentum despite lower margins and tough pricing environment
Find out how Verallia is navigating inflation and pricing pressure in Q1 2025 while ramping up cash flow and decarbonisation plans.
How Did Verallia Perform Financially in Q1 2025 Amid Inflation and Market Tensions?
Verallia‘s first quarter results for 2025 reflect a cautious but strategic advance in a demanding macroeconomic environment. The European glass packaging leader posted €818 million in revenue, a year-on-year decrease of 2.2%, primarily attributed to lower selling prices influenced by 2024 pricing carry-overs and the outcome of early 2025 negotiations. Organic growth excluding Argentina contracted by 4.3%, reinforcing the difficult landscape faced by the company, especially in Europe.
Despite subdued topline performance, the company showed resilience in volumes, buoyed by the acquisition of the Corsico site in Italy and an end to the destocking cycle across the value chain. However, Verallia’s adjusted EBITDA fell sharply to €147 million from €204 million in Q1 2024, with margins narrowing to 18% from 24.4%, due to an unfavourable cost-price dynamic and temporary negative inventory variations.
What Drove Regional Performance and Volume Growth Across Verallia’s Markets?
In Southern and Western Europe, Verallia capitalised on positive momentum carried over from Q4 2024, aided by incremental volumes from the Corsico facility. Segments such as beer and spirits outperformed, while like-for-like growth also emerged across most categories. Northern and Eastern Europe saw modest improvements, particularly in beer and soft drinks, although spirits underperformed—especially in the UK, where demand remained soft.
Latin America remained a robust growth pillar. Strong performances in the beer and non-alcoholic beverages categories helped mitigate declines in spirits and food jars. However, regional currencies such as the Brazilian real and Argentine peso depreciated, dragging on revenue when translated into euros.
How Is Verallia Managing Profitability Pressures and Inflationary Impact?
The Group continued executing its Performance Action Plan (PAP), which delivered a 2.3% reduction in cash production costs, slightly ahead of its 2% target. However, the inflationary spread—where costs rose while prices fell—led to an €85 million negative impact on adjusted EBITDA. The effect of currency depreciation further worsened profitability by €4 million.
Nevertheless, Verallia’s strong focus on liquidity and free cash flow has paid off. Free cash flow improved significantly year-on-year, helping maintain robust liquidity of €928 million by the end of Q1. Net financial debt rose to €1.82 billion due to the Vidrala Italia acquisition, bringing the leverage ratio to 2.3x adjusted EBITDA.
What Is Verallia Doing to Advance Its Sustainability and Decarbonisation Goals?
Verallia’s long-term strategy continues to prioritise environmental innovation. In Germany, the company launched a major hydrogen combustion project at its Essen plant, developed in collaboration with ArcelorMittal and Uniper. The initiative, expected to reduce CO2 emissions by up to 10% annually, now represents the largest hydrogen-fuelled glass furnace in the industry.
Meanwhile, in Brazil, Verallia is preparing to activate a second furnace at its Campo Bom facility, equipped with oxy-combustion technology projected to reduce emissions by 18%. These projects are pivotal to Verallia’s roadmap for decarbonisation and operational efficiency.
What Are the Implications of the BWGI Takeover Bid and Argentina Stake Offer?
Verallia’s reference shareholder, BW Gestão de Investimentos Ltda. (BWGI), announced a public offer to acquire control of the company at €30 per share, including the 2024 dividend. The offer is not conditional on achieving any specific shareholding threshold beyond the regulatory 50%. The Board of Directors is set to issue a formal opinion following its review of an independent expert’s report.
Separately, Verallia acknowledged receiving an unsolicited proposal to acquire its 59.9% stake in Argentinian subsidiary Rayen-Cura. Due diligence is underway, and Verallia has made it clear that any sale would only proceed if the offer fully reflects the subsidiary’s strategic value.
How Is Verallia Responding to Regulatory Scrutiny and Labour Market Challenges?
On 27 March 2025, the French Competition Authority conducted an unannounced inspection at Verallia’s La Défense offices. While the investigation remains ongoing, the company reaffirmed its full cooperation and commitment to regulatory compliance and corporate ethics.
Additionally, Verallia launched a resource optimisation initiative focused on its German operations. Approximately 100 roles are expected to be eliminated across the Essen and Bad Wurzach sites, incurring an estimated restructuring cost of €10 million. This move aims to align the cost base with continued weakness in the German market.
What Is the Updated 2025 Outlook, and How Are Investors Reacting?
In light of persistent market volatility, Verallia revised its 2025 adjusted EBITDA target downward to around €800 million, compared to its earlier forecast of €842.5 million. However, the company raised its free cash flow target to more than €200 million for the year, maintaining a strong focus on liquidity generation and expenditure control.
Sentiment Analysis and Stock Performance
As of April 23, 2025, Verallia’s stock (Euronext: VRLA) was trading at €28.72, reflecting a 1.04% daily increase but remaining down approximately 16.5% over the past 12 months. This underperformance relative to broader indices like the FTSE Global All Cap underscores ongoing investor concerns around margin compression and macroeconomic uncertainties.
Institutional investors maintain substantial influence over Verallia’s equity, with BWGI holding nearly 29%, followed by Invesco Asset Management at just over 10% and Bpifrance Participations with 7.6%. Their presence signals long-term confidence but also heightens sensitivity to strategic developments such as the BWGI takeover.
The analyst consensus remains “Buy,” with a target price of €33.70 implying a 17% upside potential from current levels. Verallia’s dividend yield of nearly 6% also adds to its appeal for income-focused investors, with the next ex-dividend date set for May 13, 2025.
Investment Considerations: Buy, Hold or Sell?
Investors bullish on Verallia’s decarbonisation strategy and long-term fundamentals may consider initiating or adding to positions at current levels. The share’s underperformance and attractive dividend yield may signal a buying opportunity for those with a multi-year horizon.
Existing shareholders might adopt a wait-and-see approach, especially ahead of the BWGI offer review and H1 2025 results. However, those with shorter investment timelines or lower risk appetites may reassess exposure given continued pressure on margins and European demand.
In summary, Verallia is navigating a delicate balancing act between inflationary challenges and strategic resilience, with strong fundamentals and long-term sustainability goals offering a cautiously optimistic path forward.
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