Verallia Sas · EURONEXT:VRLA
Verallia Sas — Verallia — Investor Day (October 2021)
104 slides from Verallia Sas's investor day presentation, October 2021
Slide 1: Investor Presentation
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Slide 2: Disclaimer
DISCLAIMER Certain information included in this presentation does not constitute historical data but constitutes forward-looking statements. These forward-looking statements are based on current beliefs, expectations and assumptions, including, without limitation, assumptions regarding present and f
Slide 3: Today's Presenters
TODAY’S PRESENTERS SOUTHERN & NORTHERN & LATIN AMERICA WESTERN EUROPE EASTERN EUROPE Michel GIANNUZZI Chairman and CEO Paulo PINTO Head of Iberia Hugues Nathalie DENISSEL DELBREUVE Head of Northern CFO and Eastern Quintin Marco Europe(1) TESTA DOMINGUEZ RAVASI Head of Head of Italy Dirk Latin Americ
Slide 4: Today's Agenda
TODAY’S AGENDA 1 INTRODUCTION 2 KEY ACHIEVEMENTS SINCE IPO 3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES 4 ENVIRONMENTAL ROADMAP 5 SEGMENT OVERVIEW 6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE CONCLUSION 7 FOLLOWED BY A Q&A SESSION 4
Slide 5: Introduction
1 INTRODUCTION Michel GIANNUZZI Chairman and CEO
Slide 6: A Global Leader in Glass Packaging
1 INTRODUCTION A GLOBAL LEADER IN GLASS PACKAGING 2021 OUTLOOK(1) 45678!53574%9:4%.9;9:<74%7:4= !"#$%&'"()$*&$+,-./0 >98?7@! 1234(#"2$567891)$*&$+.:;<$ 2020 Glass packaging(2) sales split by end-market !"#""" 1 !! employees countries !$% N! 3002 in Europe(3) &'((')* 90% of 2020 sales 18% #$ 2 !"#$$%
Slide 7: Our Purpose
1 INTRODUCTION OUR PURPOSE Re-imagine Re- Re imagine glass for a sustainable future ESG more than ever at the heart of Verallia's purpose and strategy 7
Slide 8: Our Values
1 INTRODUCTION OUR VALUES !"#$ 2$3'$,+ %&'()$#&$*+ 4$"&)(#5 for customers for people, and ",,(-*+"./0/+1 laws and the environment 8
Slide 9: Our Beliefs Drive the Way We Do Business
1 INTRODUCTION OUR BELIEFS DRIVE THE WAY WE DO BUSINESS Our Corporate We deliver We are lean, Operational Alignment and We invest in this purpose drives sustainable and agile and excellence and coherence of all company as a our strategy and profitable growth decentralized, value creation stakeholder
Slide 10: Key Achievements Since IPO
2 KEY ACHIEVEMENTS SINCE IPO Michel GIANNUZZI Chairman and CEO
Slide 11: Our Proven Financial Performance (2016-2020)
2 KEY ACHIEVEMENTS SINCE IPO OUR PROVEN FINANCIAL PERFORMANCE (2016-2020) GROWTH PROFITABILITY CASH Superior Operating +16.7% Cash Flow CAGR Outsized Adjusted +7.6% EBITDA CAGR Well invested asset and strategic Capex Performance Action Plan (Productivity) Strong sales +2.6% Positive price- CAGR(1) c
Slide 12: October 2019 (IPO) Guidance Achieved One Year in Advance
2 KEY ACHIEVEMENTS SINCE IPO OCTOBER 2019 (IPO) GUIDANCE ACHIEVED ONE YEAR IN ADVANCE (2021 VS 2022) !AB8@%@78> >54%@78> 2019 Guidance 2019 Actual 2020-2022 Guidance 2021 Forecast +2.1% in 2020 ORGANIC SALES GROWTH(1) +6-8% +9.1% +3-5% CAGR ? +7.7% in H121 ADJUSTED EBITDA / MARGIN ca !610m !615m > 2
Slide 13: Evolution of Our Capital Structure
2 KEY ACHIEVEMENTS SINCE IPO EVOLUTION OF OUR CAPITAL STRUCTURE !A987AB;45:C%!@8D<@D87%9!%B3%B<@B.78%EFEG H!" 7>I;BJ77%BK:78!A5I%I8BC89> ! Verallia launched its 6th Employee Ownership Program C#*8+2#: ?D8#*+ in May 2021 !"#$%"&'(&)*+,-*&,+ 5#8+$.';8##8&, 1.7% !"./$&0+(1) </-$&$+,#8=>"'/*'5*&+* 16.3%
Slide 14: Our Commitment to the UN SDGs and COP 21 Objectives
2 KEY ACHIEVEMENTS SINCE IPO OUR COMMITMENT TO THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS AND COP 21 OBJECTIVES Enhance Significantly reduce Provide the circularity our CO2 emissions a safe & inclusive of glass packaging across our operations place of work See detailed presentation made on Jan
Slide 15: CO2 Emissions Reduction
2 KEY ACHIEVEMENTS SINCE IPO CO2 EMISSIONS REDUCTION VALIDATED STATUS PLAN VALIDATED TO OUR NEW AMBITION TO LIMIT GLOBAL WARMING LIMIT GLOBAL WARMING Jan 21 WELL BELOW 2%C Oct 21 ONLY TO 1.5%C New objectives Our commitment: -27.5% in 2030 reduction in 2030 of scope 1 & 2 emissions(1) 46% for scope 1
Slide 16: 2022-24: Market Dynamics and Strategic Priorities
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES Michel GIANNUZZI Chairman and CEO
Slide 17: Consumer Concerns About Packaging Sustainability Increased During Covid-19
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES CONSUMER CONCERNS ABOUT SUSTAINABILITY OF PACKAGING HAVE INCREASED DURING COVID 19 PANDEMIC ><?5:!7J%I9<?9C5:C%!D867J%7L@89<@%M47<N%EFEFO USA UK France Germany Italy Brazil Paper-based cartons 1 2 4 3 3 5 Glass bottles and jars 2 1 1 1 1 7 Plastic
Slide 18: Consumer Preferences Driving Volume Growth
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES CONSUMER PREFERENCES DRIVING VOLUME GROWTH (2020 STUDIES, EU) <B:!D>78%I873787:<7!(1) C;9!!%I7:7@89@5B:%.J%7:4%>98?7@ How has your purchase of the following packaging Why have your purchases of glass increased % Unit volumes evolved over the last 3
Slide 19: European Glass Packaging Demand Has Been Steadily Growing
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES EUROPEAN GLASS PACKAGING DEMAND HAS BEEN STEADILY GROWING 7D8BI79:%4B>7!@5<%<B:@95:78%C;9!!%!9;7!%6B;D>7! (Food & beverages, mT)(1) AGR: 2.1 % 22 2015-20 C 21.7 21.4 21.1 =>,-C@A 20.6 =D?-;@A NOTE =>,-:@A 20.0 EF-C'-8#G*, 20 =>,-C@A 19.3 =>B-;@A H'
Slide 20: Meaningful Sector Consolidation in Europe
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES MEANINGFUL SECTOR CONSOLIDATION IN EUROPE EUROPEAN(1) FOOD AND BEVERAGE GLASS PACKAGING MARKET SHARES Top 5 <50% Top 5 = ca 70% Verallia Others 21% 30% <50% Top 5 Early 2000s 2020(2) Others >50% 19% #2 8% #5 9% 13% #4 #3 Top 5 players now represent
Slide 21: Growing Demand in a Tight Supply Environment
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES GROWING DEMAND IN A TIGHT SUPPLY ENVIRONMENT MARKET CAPACITY/DEMAND IN WESTERN EUROPE (mT) KEY ANNOUNCED CAPACITY ADDITIONS (2020-24) 1.4 ! France: Gironcourt (OI, +110kT, 2020) 1.1 Cognac (Verallia, -105kT, 2020), (+2.1% pa) 0.7 Masnières (Stoelzl
Slide 22: Our 4 Strategic Priorities
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES OUR 4 STRATEGIC PRIORITIES 1 2 Pursue disciplined growth Increase operational (incl. strategic investments) VERALLIA excellence INDUSTRIAL MANAGEMENT 2.0 Anchor a strong Invest wisely for a entrepreneurial 3 sustainable future culture 4 For a profi
Slide 23: Detailed Strategic Initiatives for 2022-2024
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES DETAILED STRATEGIC INITIATIVES FOR 2022-2024 PURSUE Improve Customer Experience to grow the business 1 ! DISCIPLINED ! Complete Value Based Pricing deployment on all market segments GROWTH ! Actively seek value accretive acquisitions or new greenfi
Slide 24: Our Differentiated Strengths and Opportunities
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES OUR DIFFERENTIATED STRENGTHS AND OPPORTUNITIES SUPPORTIVE MARKET DYNAMICS KEY VERALLIA STRENGTHS AND OPPORTUNITIES Growing demand in a tight supply A Leadership positions in own key markets and geographies environment B Beyond products, focus on se
Slide 25: Leadership Positions in Own Key Markets and Geographies
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES A LEADERSHIP POSITIONS IN OWN KEY MARKETS AND GEOGRAPHIES REGION # POSITION VERALLIA GROWTH DRIVERS ASSETS Southern and Western Europe ! Leading share in wine (still and sparkling) leveraging 20 growing export trends and premiumization # of glass 3
Slide 26: Beyond Products, Focus on Services and Customer Experience
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES B BEYOND PRODUCTS, FOCUS ON SERVICES AND CUSTOMER EXPERIENCE CUSTOMER-CENTRIC SALES ORGANIZATION ! Strong team of ca 300 local sales people complemented by dedicated Differentiated international account managers handling global clients Experiences
Slide 27: Largest Product Portfolio & Most Diversified Customer Base
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES C LARGEST PRODUCT PORTFOLIO & MOST DIVERSIFIED CUSTOMER BASE LARGEST PRODUCT PORTFOLIO IN EUROPE* BROAD AND DIVERSE CUSTOMER BASE Differential vs Verallia 2020 +23% +64% +97% +144% +191% +670% Products Customers Customer Concentration Sales Split c
Slide 28: Spirits Focus: Capturing Growing Demand for Premium Products
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES C SPIRITS FOCUS: CAPTURING GROWING DEMAND FOR PREMIUM PRODUCTS PREMIUM VODKA CASE STUDY – PREMIUMIZATION HIGHER GROWTH FROM PREMIUM SPIRITS Global spirits volume growth(3) ENTRY LEVEL SPIRITS PREMIUM SPIRITS 2016-20 CAGR 2020-24 CAGR Retail price:
Slide 29: Differentiation, Premiumization & Customization in Our DNA
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES C DIFFERENTIATION, PREMIUMIZATION & CUSTOMIZATION IN OUR DNA INTERNATIONAL PREMIUM RANGE WITH “SELECTIVE LINE” HIGH SHARE OF PREMIUM PRODUCTS Higher differentiation, higher margins Decoration inspiration Naked Finished bottle product ! Premium and
Slide 30: Flexible Plants and Organization, Close to Our Customers
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES D FLEXIBLE PLANTS AND ORGANIZATION, CLOSE TO OUR CUSTOMERS LOCAL PARTNER NORTHERN & ! Fully empowered local entities providing commercial agility EASTERN EUROPE ! Outstanding customer intimacy with ca 300 local sales representatives 17 furnaces ! D
Slide 31: Unique Performance Action Plan Methodology
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES E UNIQUE PERFORMANCE ACTION PLAN METHODOLOGY… PROVEN METHODOLOGY FOR COST REDUCTION PERFORMANCE ACTION PLAN (“PAP”) Production cash costs reduction PAP Result / Follow – up STEP 7 Brain storming Follow-up KPI / Bridge COST DEPLOYMENT Cost / Resourc
Slide 32: Driving Operational Excellence & Continued Cost Reduction
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES E … DRIVING OPERATIONAL EXCELLENCE & CONTINUED COST REDUCTION MONTHLY INTERNAL TRACKING TOOL ACTIONS ! Performance Action Plan (“PAP”) programme implemented as part of the Verallia Industrial Management (“VIM”) 2.0 initiative in 2018 ! >2% producti
Slide 33: Smart Capex Policy Supporting Clear, Ambitious ESG Roadmap
3 2022-24: MARKET DYNAMICS AND STRATEGIC PRIORITIES F SMART CAPEX POLICY SUPPORTING CLEAR, AMBITIOUS ESG ROADMAP SMART CAPITAL EXPENDITURE (M!) ANNUAL CASH OUT INVOLVED IN CO2 REDUCTION PLAN (M!) ! Benefiting from a well invested asset base ! Total investment required to reach 2030 CO2 reduction tar
Slide 34: Environmental Roadmap
4 ENVIRONMENTAL ROADMAP Romain BARRAL Director of Operations
Slide 35: CO2 Emissions: The Scopes
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS: THE 3 SCOPES HFCS N2 0 SCOPE 1 CH4 SCOPE 3 DIRECT SCOPE 3 INDIRECT INDIRECT SCOPE 2 INDIRECT C02 PFCS Electricity Leased assets Company Facilities SF6 for own use Employee Transformation commuting & Distribution Business Processing of Purchased goods Fuel & ene
Slide 36: CO2 Emissions Reduction: Plans On Track to Stay Well Below 2°C
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS REDUCTION: PLANS ARE ON TRACK TO STAY WELL BELOW 2°C PLAN VALIDATED TO LIMIT GLOBAL WARMING Jan 21 WELL BELOW 2%C VALIDATED STATUS Status: All actions on track, Our commitment: for all 3 levers -27.5% in 2030 (cf. next pages) of scope 1 & 2 emissions(1) Intermed
Slide 37: Circularity Is Core to Our Model
4 ENVIRONMENTAL ROADMAP CIRCULARITY IS CORE TO OUR MODEL SAVINGS* Extraction and processing Eco-design and manufacturing +10pts of raw materials of quality glass packaging Collection and (sand, limestone, soda ash) awareness on sorting and recycling of cullet -5% of CO2 emissions Processing of colle
Slide 38: CO2 Reduction: Cullet Usage Rate Increase
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS REDUCTION: PLANS ARE ON TRACK TO STAY WELL BELOW 2°C EXTERNAL CULLET USAGE RATE CULLET RATE INCREASE ! Reduces CO2 emissions through lower melting energy and 60% lower CO2-intensive materials ! Objective of reaching maximum achievable cullet rate on all furnaces
Slide 39: CO2 Reduction: Melting Energy Mix and Reduction
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS REDUCTION: PLANS ARE ON TRACK TO STAY WELL BELOW 2°C MELTING ENERGY MIX MELTING ENERGY REDUCTION (CA 80% OF TOTAL ENERGY CONSUMED) ! Upgrade of furnace technology (hardware and process 100% control) to address losses, eliminate water ingress via 90% cullet and a
Slide 40: CO2 Reduction: Green Energy Purchases
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS REDUCTION: PLANS ARE ON TRACK TO STAY WELL BELOW 2°C GREEN ENERGY PURCHASES ! Maximize green energy purchases through certified sources of electricity (target >60% by 2025, from 34% in 2020) – 9 plants in 2021 100% powered with 0 carbon electricity LEVER BIOGAS
Slide 41: New Ambition to Limit Global Warming to 1.5°C
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS REDUCTION: OUR NEW AMBITION TO LIMIT GLOBAL WARMING ONLY TO 1.5°C Oct 21 46% <40% Net Zero reduction in 2030 Scope 3 emissions in 2050 for scope 1 & 2 emissions(1) maintained for scope 1 & 2 emissions in absolute value from base year 2019 Target to be validated
Slide 42: New Ambition Driven and Powered by New Technologies
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS: OUR NEW AMBITION TO LIMIT GLOBAL WARMING ONLY TO 1.5°C NEW AMBITION POWERED BY NEW AMBITION DRIVEN BY NEW TECHNOLOGIES AND PARTNERSHIPS ! Robustness of our current plan, giving solid baseline to ! Current plan (-27.5% by 2030)(2) is based mainly on reduce furth
Slide 43: New Plan Still Built on 3 Levers
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS: OUR NEW AMBITION TO LIMIT GLOBAL WARMING ONLY TO 1.5°C NEW PLAN STILL BUILT ON 3 LEVERS 1 Shift raw material mix 2 Reduce energy consumption 3 Increase use of green energy ! Support actively FEVE target to ! Fast deployment of Hybrid Furnace ! Secure long term
Slide 44: Preparing Extensive Use of Hydrogen
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS: OUR NEW AMBITION TO LIMIT GLOBAL WARMING ONLY TO 1.5°C A DEFINING PROJECT FOR OUR NEW AMBITION: PREPARE EXTENSIVE USE OF HYDROGEN ! Verallia is working with several partners to feed furnaces with Coke Oven gas THE PATH TOWARDS A EUROPEAN HYDROGEN ECO-SYSTEM STE
Slide 45: CO2 Scope 3: Maintain Below 40% of Total Emissions in 2030
4 ENVIRONMENTAL ROADMAP CO2 SCOPE 3: MAINTAIN BELOW 40% OF TOTAL EMISSIONS IN 2030 SCOPE 3 EMISSIONS REPRESENT 37% OF TOTAL EMISSIONS, AT 1,830KT CO2 FOCUS ON THE 3 MAIN CONTRIBUTORS WITH SPECIFIC ACTION PLANS VERALLIA TOTAL CO2 EMISSIONS 2019 (IN KT) GOODS & SERVICES 50.5% ! Raw materials for new g
Slide 46: Upgraded Action Plan to Reach 46% Reduction Target
4 ENVIRONMENTAL ROADMAP CO2 EMISSIONS: OUR NEW AMBITION TO LIMIT GLOBAL WARMING ONLY TO 1.5°C Current plan Well below 2°C New Ambition to 1.5°C -850 kt (-27.5%) -1,421 kt (-46%) 3,090 2,240 1,669 CO2 Emissions 2019 Raw materials Energy efficiency Greener energy Prod increase CO2 Emissions 2030 New A
Slide 47: Southern and Western Europe Segment Overview
5 SOUTHERN AND WESTERN EUROPE SEGMENT OVERVIEW Olivier Marco ROUSSEAU RAVASI Head of France Head of Italy Paulo PINTO Head of Iberia
Slide 48: Southern and Western Europe Business Overview
5 SOUTHERN AND WESTERN EUROPE SOUTHERN AND WESTERN EUROPE (SWE) BUSINESS OVERVIEW KEY 2020 FIGURES HIGH DENSITY OF THE LEADER France % of Group sales 69% 67% % of Group Adjusted EBITDA 20 glass plants ! Sales: !1,744m 35 ! Adjusted EBITDA: !419m furnaces ! Adjusted EBITDA margin: 24% ca 3.7mt 2020 v
Slide 49: French Market Overview
5 SEGMENT OVERVIEW: SWE (FRANCE) FRENCH MARKET OVERVIEW FRENCH GLASS PACKAGING MARKET: A PREMIUM MARKET DRIVEN BY EXPORTS ESTIMATED SPLIT BY END MARKET (KT) > French exports of still and sparkling wines (!m) Price per bottle of still and 13% Verallia Sales vs Market: sparkling wine exports = > 8% 29
Slide 50: Cognac: High-End Market with Attractive Growth Prospects
5 SEGMENT OVERVIEW: SWE (FRANCE) COGNAC: HIGH-END MARKET WITH ATTRACTIVE GROWTH PROSPECTS COGNAC MARKET IS BOOMING Global cognac consumption (m bottles) 300 ! Premium and luxury 225.7 +33% perception 203.5 209.9 184.8 187.7 ! Diversified end product destination (Europe, Asia, North America) ! Export
Slide 51: Rosé Wine: Growth and Value Creation Through Premiumization
5 SEGMENT OVERVIEW: SWE (FRANCE) ROSÉ WINE: GROWTH AND VALUE CREATION THROUGH PREMIUMIZATION PREMIUMIZATION THROUGH PACKAGING: “SOIRÉE À ROSÉ” ROSÉ WINE CONTINUES TO GROW FASTER THAN STILL WINE ! “Soirée à Rosé” bottle created in 2013 Global wine consumption (m of bottles) 2020 2020-2025 Forecast CA
Slide 52: How We Address Competitiveness in the French Factories
5 SEGMENT OVERVIEW: SWE (FRANCE) HOW DO WE ADDRESS COMPETITIVENESS IN THE FRENCH FACTORIES TRANSFORMATION PLAN SHARE OF IMPORTS IN FRENCH CONSUMPTION % Imports in domestic consumption 35% 39% 1 500 33% 31% RATIONALE 26% 28% A structurally Imports ((kT) 1 000 ! Eliminate excess capacity in France by
Slide 53: Encourage Employee Shareholding Ownership
5 SEGMENT OVERVIEW: SWE (FRANCE) PROVIDE AN INCLUSIVE PLACE TO WORK CAC All Tradable index ENCOURAGE EMPLOYEE SHAREHOLDING OWNERSHIP 8 2025 countries PERFORMANCE INDICATORS 2019 2020 2021 TARGETS % of Verallia share capital held by employees (directly 2.6% 3.3% 3.5% 5% or through FCPE) 41% participa
Slide 54: Prosecco: Italian Sparkling Wine Booming Internationally
5 SEGMENT OVERVIEW: SWE (ITALY) BUSINESS CASE PROSECCO: THE ITALIAN SPARKLING WINE BOOMING INTERNATIONALLY PROSECCO (DOC) – KEY TRENDS VERALLIA’S PRESENCE & STRENGTHS IN PROSECCO BOTTLES PRODUCED (M PCS) ! Verallia Italy is a leader in glass bottles produced for sparkling wine 486 500 440 464 manufa
Slide 55: Flexibility & Service Improvements to Suit Customer Needs
5 SEGMENT OVERVIEW: SWE (ITALY) BUSINESS CASE FLEXIBILITY & SERVICE IMPROVEMENTS TO SUIT OUR CUSTOMERS NEEDS FLEXIBILITY AND SERVICE ACTION PLAN IMPACT ON FG STOCK AND OTIF* CHALLENGE FINISH PRODUCT STOCK 100 ! Improve service to customers (OTIF*) whilst reducing finished 90 products (FP) stocks 80
Slide 56: Verallia Italy Distribution in a €300m Market
5 SEGMENT OVERVIEW: SWE (ITALY) BUSINESS CASE VERALLIA ITALY DISTRIBUTION IN A !300M MARKET (16% OF ITALY) (2017-2020) - BEGINNING TODAY FUTURE ! <5 sales people ! 10/15 sales people ! 25/35 sales people ! <200 clients ! 400/500 clients ! 1,500/2,000 clients ! Top 20 distributor ! Top 10 distributor
Slide 57: PAP Savings and Environmental Benefits
5 SEGMENT OVERVIEW: SWE (ITALY) BUSINESS CASE PAP SAVINGS AND ENVIRONMENTAL BENEFITS SUSTAINABLE SUPPLY CHAIN MANAGEMENT VERALLIA ITALIA MULTIMODAL SITUATION OPPORTUNITIES TRANSPORTATION PLAN ! Europe-wide shortage of drivers ! Move from road to train and ! Upstream supply chain & fuel price increas
Slide 58: PAP Savings: Ecoglass and Lonigo Synergies
5 SEGMENT OVERVIEW: SWE (ITALY) BUSINESS CASE PAP SAVINGS AND ENVIRONMENTAL BENEFITS EXAMPLE OF SYNERGIES BETWEEN VERALLIA CULLET PLANT (ECOGLASS) AND GLASS PLANT (LONIGO) PROJECT OVERVIEW KEY BENEFITS YIELD AND QUALITY IMPACT BACKGROUND ! +4% capacity increase ! Improvement in all yield and quality
Slide 59: Joint Sustainability Project with a Beer Customer
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE JOINT SUSTAINABILITY PROJECT WITH A BEER CUSTOMER PROJECT KPI OBJECTIVE ! Reduction in natural gas consumption by more than 60% in ! Take advantage of the residual energy generated in glass Mahou San Miguel, driving a 60% reduction in customer CO2 melti
Slide 60: PAP Example: Phytosanitary Pallet Repair Loop
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE PAP EXAMPLE WITH ADDITIONAL ENVIRONMENTAL BENEFITS PHYTOSANITARY PALLET REPAIR LOOP ESTIMATED ANNUAL BENEFITS !4.7 ! Past situation: systematic purchase of new phytosanitary pallets whenever new ones were needed – Used for export markets at Verallia Spa
Slide 61: PAP Example: Energy Reduction in Water Circuits at Sevilla
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE PAP EXAMPLE WITH ADDITIONAL ENVIRONMENTAL BENEFITS ENERGY REDUCTION IN WATER CIRCUITS AT SEVILLA PLANT 2020 BENCHMARK: NON-MELTING PROJECT OVERVIEW ENERGY RANKING (KWH/T) 800 ! “Non-Melting Energy” Verallia Benchmark showing clear potential for improvem
Slide 62: Photovoltaic Projects in Iberia
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE PHOTOVOLTAIC PROJECTS IN IBERIA ! Installation of photovoltaic panels in all 7 Iberia sites ! One contract signed already with an external supplier / operator, three more targeted in 2021 (starting up 2022-23) ! Targeting full setup on all 7 sites by 20
Slide 63: Design and Digitalization Leadership
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE DESIGN AND DIGITALIZATION LEADERSHIP IBERIA 2 DIGITAL FAIRS: DIGITAL CUSTOMER VIRTUAL CREATION CONTEST CUSTOMER INTERACTION CONTEST ON FACEBOOK ! Show glass possibilities to future ! WINE & SPIRITS ! Initiative to be close to customers during designers
Slide 64: Friends of Glass: Communication Campaign
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE FRIENDS OF GLASS: COMMUNICATION CAMPAIGN TO REACH THE END CONSUMERS YOUTUBE, INSTAGRAM & TIKTOK STAY HOMAS SONG + INFLUENCERS CAMPAIGN ! +5.6 MILLION VIEWS ! 13 MILLION IMPACTS ! 3.5 MILLION PEOPLE REACHED ! 547K INTERACTIONS ! +7.5 MILLION VIEWS ! 6.5
Slide 65: Circular Economy: Reused Cider Bottles in the Basque Region
5 SEGMENT OVERVIEW: SWE (IBERIA) BUSINESS CASE CIRCULAR ECONOMY: REUSED CIDER BOTTLES IN THE BASQUE REGION A SINGLE BOTTLE REUSED AT EACH CIDER PRODUCER ! Reuse is the most sustainable practice in local markets that use the same bottle CIRCULAR GLASS PRODUCER ECONOMY ! Every year 12 million liters o
Slide 66: Northern and Eastern Europe Segment Overview
5 NORTHERN AND EASTERN EUROPE SEGMENT OVERVIEW Hugues DENISSEL Head of Northern and Eastern Europe(1) Dirk BISSEL Head of Northern and Eastern Europe (2) Notes: (1) Until 2nd of November 2021. (2) From 2nd of November 2021.
Slide 67: Northern and Eastern Europe Business Overview
5 SEGMENT OVERVIEW: NEE NORTHERN AND EASTERN EUROPE (NEE) BUSINESS OVERVIEW KEY FIGURES GRANULAR INDUSTRIAL FOOTPRINT WITH HIGH CUSTOMER REACH ! Sales: !554m ! Adjusted EBITDA: !127m 7 Poland Russia ! Adjusted EBITDA margin: 23% glass plants 22% % of Group 20% % of Group 17 sales Adjusted furnaces E
Slide 68: Premium Spirit Strategy: Adding Product and Service Value
5 SEGMENT OVERVIEW: NEE BUSINESS CASE PREMIUM SPIRIT STRATEGY: ADDING PRODUCT AND SERVICE VALUE PROVIDING A ONE-STOP SHOP OFFER INVESTING IN HIGH-END DECORATION TECHNOLOGY ! Strong synergies between extra flint glass production ! Hot-stamping (hot-foil application on painted bottles)– from Ukraine a
Slide 69: Weight Reduction of Still Wine Bottles
5 SEGMENT OVERVIEW: NEE BUSINESS CASE WEIGHT REDUCTION OF STILL WINE BOTTLES LIGHT-WEIGHTING TRENDS AND ACTIONS AVERAGE ARTICLE WEIGHT (STILL WINE) (100 basis in 2015) ! Verallia is the leading manufacturer for light weight standard wine bottles 100 in Germany 98 ! Market asks for more weight reduct
Slide 70: German Reuse Market Is Strong and Keeps Growing
5 SEGMENT OVERVIEW: NEE BUSINESS CASE GERMAN REUSE MARKET IS STRONG AND KEEPS GROWING LONGSTANDING FEATURE GROWING TREND A POSITIVE FOR REUSE GAINING GROUND OF THE GERMAN MARKET TOWARDS REUSE GLASS MAKERS IN NEW END MARKETS ! Reuse has been a major ! Trend towards further reuse ! Reuse trends fully
Slide 71: Verallia Germany Is a Well-Established Partner for Reuse
5 SEGMENT OVERVIEW: NEE BUSINESS CASE VERALLIA GERMANY IS A WELL-ESTABLISHED PARTNER FOR REUSE SEGMENT-SPECIFIC RETRO ELEGANCE STANDARDIZATION TRENDS ! New Verallia “Sud” bottle 0,33l ! New “N-Range” Pool bottles with ! GEMEMA: new Pool initiative by ! Trend to reuse in Dairy products in sold more t
Slide 72: Securing Sustainable Access to Cullet Supply
5 SEGMENT OVERVIEW: NEE BUSINESS CASE SECURING SUSTAINABLE ACCESS TO CULLET SUPPLY ALREADY DONE (2021) ON-GOING (2021-2023) UNDER STUDY (2022-2024) ! Verre Recycling JV (Verallia + Remondis) ! Industrial capacity increase in the South ! Increase in capacity of Verre Recycling established July 1st, 2
Slide 73: Maximizing Cullet Usage in Glass
5 SEGMENT OVERVIEW: NEE BUSINESS CASE MAXIMIZING USAGE IN GLASS OLD Input Waste Gravel LARGE SCALE GLASS SAND CAPACITY ! New State-of-the-Art sorting process For 100t 13t 87t ! Increasing total capacity ! Decreasing waste by 50% NEW Input – New Process Gravel - Line 1 TOTAL MAXIMIZING POSSIBLE INPUT
Slide 74: LATAM Segment Overview
5 LATAM SEGMENT OVERVIEW Quintin TESTA DOMINGUEZ Head of Latin America
Slide 75: LATAM Business Overview
5 SEGMENT OVERVIEW: LATAM LATAM BUSINESS OVERVIEW KEY FIGURES 2020 STRONG PRESENCE ACROSS 3 COUNTRIES ! Sales: !237m ! Adjusted EBITDA: !80m 5 ! Adjusted EBITDA margin: 34% glass plants Brazil ! 10% % of Group 13% % of Group 6 sales Adjusted furnaces EBITDA KEY END MARKETS ca 655kt 2020 volumes sold
Slide 76: LATAM Business Environment and Performance
5 SEGMENT OVERVIEW: LATAM LATAM BUSINESS ENVIRONMENT AND PERFORMANCE MACROECONOMIC ENVIRONMENT BUSINESS FUNDAMENTALS (GDP, INFLATION, FX) AND STRATEGY BRAZIL ARGENTINA CHILE ! Strong and experienced team 60% 140 6% 1 000 ! Leading on Wine market in the region and 4% 50% 120 900 leveraging capacity a
Slide 77: Market Overview
5 SEGMENT OVERVIEW: LATAM MARKET OVERVIEW VERALLIA’S STRATEGIC FOCUS IN LATIN AMERICA LATIN AMERICA GLASS MARKET (2021 EST.) VERALLIA HAS A DIFFERENTIATED STRATEGY AND END MARKET FOCUS IN LATIN AMERICA: 10% Beer ! Focus on wine end market in Argentina and Chile with a strong leadership position 6% S
Slide 78: A Safe Place to Work Is Our Priority
5 SEGMENT OVERVIEW: LATAM BUSINESS CASE A SAFE PLACE TO WORK IS OUR PRIORITY LTM ACCIDENTS - VERALLIA EMPLOYEES & CONTRACTORS SAFETY IS OUR #1 PRIORITY ! 31,108 Unsafe Situations (equipment and behaviors) 2.87 identified and resolved since 2018 12,587 7,932 7,265 3,324 2018 2019 2020 H1 2021 7 1.20
Slide 79: Diversity: Focus on LATAM's Project Objective
5 SEGMENT OVERVIEW: LATAM BUSINESS CASE DIVERSITY- FOCUS ON LATAM’S PROJECT Gender Handicaps Age OBJECTIVE Sexual orientation Ensuring that Verallia is a safe and inclusive workplace, free from Safe and Religion prejudice and discrimination, providing Inclusive opportunities for all people in all Br
Slide 80: Diversity Project – LATAM
5 SEGMENT OVERVIEW: LATAM BUSINESS CASE DIVERSITY PROJECT – LATAM 1ST QUARTER ACTIONS ! Dedicated lecture for all women. Theme: “The importance of emotional intelligence for the high performance of women” ! Sponsorship for the event related to the month of women called "Between Women and Wines”. Ope
Slide 81: External Cullet Usage Growth in Brazil
5 SEGMENT OVERVIEW: LATAM BUSINESS CASE EXTERNAL CULLET USAGE GROWTH IN BRAZIL ACTIONS TO DEVELOP VERALLIA BRAZIL: CHALLENGES CULLET COLLECTION EXTERNAL CULLET USAGE ! Recycling habits CULLET COLLECTION WITH BEER DISTRIBUTION External Cullet per TVB ! Almost 75% of glass goes ! Implement collection
Slide 82: Upcoming Strategic Investments in Brazil
5 SEGMENT OVERVIEW: LATAM UPCOMING STRATEGIC INVESTMENTS IN BRAZIL JACUTINGA – 2ND FURNACE (FJA2) NEW FURNACE (SITE TBD) PROJECT OVERVIEW PROJECT OVERVIEW ! Add capacity in FJA2 to grow across the Beer market in Brazil ! Add capacity to grow across the Wine market in Brazil with a focus ! Focus on L
Slide 83: Financial Overview & Mid-Term Guidance
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE Nathalie DELBREUVE CFO
Slide 84: Strong Top Line Contributing to Sustained Adjusted EBITDA Growth
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE STRONG TOP LINE CONTRIBUTING TO SUSTAINED ADJUSTED EBITDA GROWTH & MARGIN IMPROVEMENT ADJUSTED EBITDA GROWTH (!M): SUSTAINED ORGANIC SALES GROWTH (!M): +7.6% PA OVER 2016-2020 DESPITE COVID & ADJ. EBITDA MARGIN +7.4% PA OVER 2016-20(1) DESPITE COVID INCREASED
Slide 85: Three Key Financial Performance Improvement Drivers and Outlook Assumptions
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE OUR THREE KEY FINANCIAL PERFORMANCE IMPROVEMENT DRIVERS AND OUTLOOK ASSUMPTIONS ! Market expected to grow out of 2020 trough at a rate at least equal to last 5 years (+2.1%) A SUSTAINED ! Volume growth supported by increasing consumer concerns about packaging
Slide 86: Leading to Sustained Adj. EBITDA Growth & Margin Improvement
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE LEADING TO SUSTAINED ADJ. EBITDA GROWTH & MARGIN IMPROVEMENT ADJUSTED EBITDA (IN !M AND % OF SALES) +!83m +2.2pts 24.7% ! Activity / Operating leverage resilience & destocking 22.5% 77.3 – Positive organic growth every year despite the Covid 121.8 626 pandemi
Slide 87: Disciplined and Dynamic Risk Hedging Policy
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE DISCIPLINED AND DYNAMIC RISK HEDGING POLICY ENERGY CO2 EXCHANGE RATES ! Disciplined fuel, gas and electricity ! Disciplined carbon emission quotas ! Very limited transactional FX risk with hedging policy limiting energy cost hedging policy in Western Europe c
Slide 88: Efficient and Responsible Purchasing Strategy
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE EFFICIENT AND RESPONSIBLE PURCHASING STRATEGY COGS & SG&A Raw Materials Raw Mat. excl. cullets ! External cullet share exceeding total of other raw !2.1bn* !400m !196m material volume reflects increase in external cullet In % of 2020 COGS + SG&A usage Soda As
Slide 89: From Adjusted EBITDA to Net Income and EPS
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE FROM ADJUSTED EBITDA TO NET INCOME AND EARNINGS PER SHARE Historical P&L summary (!m) 1 Depreciation & Amortization (D&A) includes !m 2018 2019 2020 H1 20 H1 21 ca !720m customer relationship recorded in Sales 2,416 2,586 2,536 1,275 1,328 % growth - 7.0% -1.
Slide 90: Key Drivers for Strong and Steady Cash-Flow
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE KEY DRIVERS FOR STRONG AND STEADY CASH-FLOW ! High adjusted EBITDA margin level A ADJUSTED EBITDA ! Improving year-on-year from sustained volume growth, positive spread and operational excellence deployment ! Adjusted EBITDA margin > 25% in 2021, one year bef
Slide 91: Very Strong Cash-Flow Generation
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE VERY STRONG CASH-FLOW GENERATION ! Growth in adjusted EBITDA In !m FY 2019 FY 2020 ! High level of cash conversion Adjusted EBITDA 615.2 625.7 Total Capex 252.5 250.5 ! Significant improvement in operating working capital requirement Cash conversion 59.0% 60.
Slide 92: Robust Balance Sheet
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE ROBUST BALANCE SHEET SIMPLIFIED BALANCE SHEET STRUCTURE AS OF 30-JUNE 2021 ! High quality tangible assets, representing ca 40% of total assets !2,758.4m !2,758.4m – Average Capex of 9.8% of sales in the past 5 years (2016-20) – New furnace being built in our
Slide 93: Continuous Deleveraging and Strong Credit Profile
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE CONTINUOUS DELEVERAGING AND STRONG CREDIT PROFILE STRONG DELEVERAGING PROFILE CORPORATE RATING TRAJECTORY Net Debt Leverage !1,708.8m BB+ !1,590.6m BB+ (sta) !1,278.6m !1,266.2m 3.1x BB- Ba2 Ba2 2.6x (sta) B- Ba3 2.0x 1.9x 2018 2019 2020 June 2021 Apr-19 Oct-
Slide 94: Diversification of Funding and Lengthening of Maturities
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE DIVERSIFICATION OF FUNDING AND LENGHTENING OF MATURITIES SOURCES OF FUNDING DEBT* PROFILE (!M) 30 NOMINAL !M MATURITY NOMINAL RATE JUNE AMOUNT MATURITY SOURCES 2021 Sustainable Linked Bond (SLB) 500.0 May 2028 1.625% 496.8 Term Loan A (TLA) 1,000.0 October 20
Slide 95: Key Financial Takeaways
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE KEY FINANCIAL TAKEAWAYS 1 Proven financial performance since IPO Positive organic growth despite pandemic, IPO mid-term targets met one year in advance 2 Straightforward business model relying primarily upon self-help initiatives Positive spread (value-based
Slide 96: Mid Term Financial Guidance (2022-2023-2024)
6 FINANCIAL OVERVIEW & MID-TERM GUIDANCE MID TERM FINANCIAL GUIDANCE (2022-2023-2024) 2022-2023-2024 ASSUMPTIONS ORGANIC SALES From ca half volume and half price/mix +4-6% CAGR GROWTH(1) Moderate inflation in raw material and energy costs after 2022 ADJ. EBITDA Positive price/cost spread 28%-30% in
Slide 97: Conclusion
7 CONCLUSION Michel GIANNUZZI Chairman and CEO
Slide 98: Our Winning Strategy for Profitable, Inclusive and Durable Growth
7 CONCLUSION OUR WINNING STRATEGY FOR A PROFITABLE, INCLUSIVE AND DURABLE GROWTH 1 Pursue disciplined growth (incl. strategic investments) 2 Increase operational excellence VERALLIA INDUSTRIAL 2024 ADJ. EBITDA 2022-2023-2024 ORGANIC MANAGEMENT MARGIN 2.0 SALES GROWTH 28% - 30% +4-6% CAGR PLANET Envi
Slide 99: Thank You for Your Attention
7 CONCLUSION THANK YOU FOR YOUR ATTENTION Re-imagine Re- Re imagine glass for a sustainable future PEOPLE PLANET PROFIT 99
Slide 100: Appendices
Cveraliia CAPITAL MARKETS DAY ! APPENDICES
Slide 101: Verallia Complies with the AFEP-MEDEF Code
APPENDICES VERALLIA COMPLIES WITH THE RECOMMENDATIONS SET OUT IN THE AFEP-MEDEF CODE* 12 members and 2 non-voting observers BACKGROUND NATIONALITY INDEPENDENCE DIVERSITY SKILLS BOARD TRAINING 40% 40% 40% Strategy/Ope Strategy/Operations rations 25% Verallia integration program 60% 60% 60% In dustry
Slide 102: Long Term Incentive Plans
APPENDICES LONG TERM INCENTIVE PLANS WEIGHT OF ALL PERFORMANCE 2021-2022 PLAN 2021-2023 PLAN PERFORMANCE CRITERIA CRITERIA OBJECTIVES OBJECTIVES ! Between 0% and 50% if Increase between 2020 and 2022 Increase between 2020 and 2023 Theoretical objective is achieved of [8 x Adj. EBITDA – Net Debt] of
Slide 103: Latest Ratings and Partnerships
APPENDICES LATEST RATINGS AND PARTNERSHIPS Top 5% Score: 67/100 A- Since 2020 Since 2013 “COMMITTED” Since 2020 status Since 2020 Since 2016 Low risk Since 2020 Since 2016 103
Slide 104: Verallia ESG Goals
APPENDICES VERALLIA ESG GOALS OUR PURPOSE: RE-IMAGINE GLASS FOR A SUSTAINABLE FUTURE OUR ALIGNMENT OUR PERFORMANCE 2025 2018 2019 2020 COMMITMENTS UN SDGS GOALS INDICATORS TARGETS ! % of domestic used glass collected in 76% 76% N/A ! Enable the increase cullet collection by 7 pts 83% Verallia’s coun