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Vidrala is Western Europe’s fourth glass container manufacturer through six complementary sites located in four countries. Vidrala supplies glass containers for a wide variety of products in the beverages and food industry. Vidrala is a public company listed in the Spanish Stock Exchange.
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Company Presentation
DISCLAIMER
This presentation includes or may include representations or estimations concerning the future about intentions,expectations or forecasts of VIDRALA or its management. which may refer to the evolution of its businessperformance and its results. These forward looking statements refer to our intentions, opinions and futureexpectations, and include, without limitation, statements concerning our future business development andeconomic performance. While these forward looking statements represent our judgment and future expectationsconcerning the development of our business, a number of risks, uncertainties and other important factors couldcause actual developments and results to differ materially from our expectations. These factors include, but arenot limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements inlocal and international securities markets, currency exchange rates and interest rates as well as commodities, (3)competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthinessof our customers, obligors and counterparties.The risk factors and other key factors that we have indicated in our past and future filings and reports, includingthose with the regulatory and supervisory authorities (including the Spanish Securities Market Authority –Comisión Nacional del Mercado de Valores - CNMV), could adversely affect our business and financialperformance. VIDRALA expressly declines any obligation or commitment to provide any update or revision of theinformation herein contained, any change in expectations or modification of the facts, conditions andcircumstances upon which such estimations concerning the future have been based, even if those lead to achange in the strategy or the intentions shown herein.This presentation can be used by those entities that may have to adopt decisions or proceed to carry outopinions related to securities issued by VIDRALA and, in particular, by analysts. It is expressly warned that thisdocument may contain not audited or summarised information. It is expressly advised to the readers of thisdocument to consult the public information registered by VIDRALA with the regulatory authorities, in particular,the periodical information and prospectuses registered with the Spanish Securities Market Authority – ComisiónNacional del Mercado de Valores (CNMV).
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-General Overview
- Business Fundamentals
- Relevant Business Figures
Overview
:
Vidrala is Western Europe’s fourth glass container manufacturer through sixcomplementary sites located in four countries.
Vidrala supplies glass containers for a wide variety of products in the beveragesand food industry, selling more than 3,3 billion bottles and jars per yearamong more than 1,500 clients and managing an annual turnover of morethan EUR 450 million (EUR 457 million in FY 2012).
Vidrala is a public company listed in the Spanish Stock Exchange.
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Brief history
Establishment of Vidrerías de Alava S.A.
Vidrala goes public
New Strategic Plan
Acquisition: GALLO VIDRO (Portugal)
Subsidiary CRISNOVA, S.A. set up
Industrial process innovation
Acquisitions: CORSICO (Italy), CASTELLAR (Spain)
OR
GA
NIC
GR
OW
TH
AC
QU
IS
ITIO
NS
Acquisition: MD VERRE (Belgium)
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AIALA VIDRIO
LLODIO (ÁLAVA)
CASTELLAR VIDRIO
CASTELLAR DEL VALLÉS (BARCELONA)
GALLO VIDRO
MARINHA GRANDE (PORTUGAL)
CRISNOVA VIDRIO
CAUDETE (ALBACETE)
VIDRALA ITALIA
CORSICO (ITALY)
MD VERRE
GHLIN (BELGIUM)
Manufacturing Structure
6 plants, 13 glass melting furnaces
A focus on strategic growth
A complementary footprint, a strategic positioning
FOURTH MANUFACTURER IN WESTERN EUROPE
3,400 MILLION UNITS PER YEAR
6 PLANTS IN 4 COUNTRIES
TURNOVER: EUR 457 MILLION IN FY 2012
MORE THAN 1,500 CUSTOMERS
MARKET CAP: EUR 500 MILLION
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-General Overview
- Business Fundamentals
- Relevant Business Figures
Industry Fundamentals
Glass packaging SECTOR: a competitively solid sector.
VIDRALA.
REFERENCE SUPPLIERS IN OUR STRATEGIC MARKETS THROUGH A COMPLEMENTARY FOOTPRINT.
GLASS MANUFACTURING ACTIVITY:ENTRY BARRIERS
GLASS CONTAINER CHARACTERISTICS LIMIT ITS FREIGHT.
OUR CUSTOMERS´PACKAGING ACTIVITY DEMAND SERVICE QUALITY AND SUPPLY FLEXIBILITY.
THUS, OUR BUSINESS IS GLOBAL BUT OF LOCAL NATURE: BEING NEAR TO THE SUPPLY AREA DETERMINES CUSTOMERS´LOYALTY.
GLASS PACKAGING SECTOR: LOCAL NATURE
GLASS CONTAINERS ARE MANUFACTURED THROUGH MELTING FURNACES IN A CONTINUOUS PROCESS: FACILITIES MUST BE PERIODICALLY REFURBISHED.
CONSTANT ADAPTATION TO TECHNOLOGICAL DEVELOPMENTS AND INNOVATION ALONG WITH THE KNOW-HOW AND THE INDUSTRIAL EXPERIENCE ARE A MUST FOR ASSURING PRODUCTIVITY.
THUS, GLASS CONTAINERS MANUFACTURING ACTIVITY IS HIGHLY INTENSIVE IN CAPITAL (SPECIFIC AND MAINTENANCE CAPEX ARE HIGH).
THEREFORE NEW COMPETITORS ENTRANCE IS LIMITED.
VIDRALA. BET FOR INNOVATION AS A GUARANTEE OF COMPETITIVENESS .
VIDRALA GROUP TODAY
6 PLANTS
13 MELTING FURNACES
43 MANUFACTURING LINES
OUR STRATEGIC AIM IS TO CONSOLIDATE OURTECHNOLOGICAL ADAPTATION LEVEL AND ESTABLISHAN OPTIMUM STRUCTURE IN ORDER TO GUARANTEEOUR COMPETITIVENESS IN THE LONG-TERM.
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Market Fundamentals
Glass packaging MARKET: a mature and stable market.
Demand for food and beverage packaging in WE (2003-2012e)
In thousands of million euros. Source: Datamonitor
SOLID MARKET
THE GLASS CONTAINER MARKET IS A MATURE AND STABLE MARKET. LINKED TO CONSUMPTION PRODUCTS, IT SHOWS LOW VOLATILITY IN TERMS OF ORGANIC DEMAND VARIATION.
GEOGRAPHICAL OPTIMIZATION
OUR NATURAL MARKETS, SPAIN,FRANCE, ITALY, PORTUGAL, ARE ALSO OUR STRATEGIC MARKETS. PREMIUM CONSUMPTION PRODUCTS FOSTER GLASS AS PREFERRED PACKAGING MATERIAL.
Market fundamentals per country.
Glass packaging production per capita VS GDP per capita.
10
20
30
40
50
60
70
0 10 20 30 40 50 60
GLA
SS
PA
CK
AG
IN
G P
RO
DU
CT
IO
NP
ER
CA
PIT
A (
KG
)
GDP PER CAPITA ($000)
Iberia
FranceItaly
Germany
USAUK
JapanBrazil
China
0
10
20
30
40
50
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
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Credit Fundamentals
COMPETITIVE POSITIONING:reference player in a stable market
WESTERN EUROPE MAIN PLAYERS
VIDRALA: SECOND MANUFACTURER OF IBERIAN PENINSULA, FOURTH OF WESTERN EUROPE IN GLASS PACKAGING INDUSTRY, STABLE SECTOR WITH HIGH ENTRY BARRIERS (INTENSIVE CAPEX).
OPERATING STRENGTH:History of efficiency and competitive advantage
VIDRALA: STABLE OPERATING MARGINS AND CONTINUOUSLY HIGHER THAN MAIN COMPETITORS DESPITE NEW ACQUISITIONS AND CURRENT HIGHLY INFLATIONARY ENVIRONMENTS.
2012 OPERATING MARGIN (EBIT)MAIN PLAYERS
Vidrala BUSINESS STRUCTURE: competitive and solid.
VIDRALA: OPERATING MARGINS (EBIT) 2005-2012
O-I
SG VERALLIA
ARDAGH GLASS
VIDRALA
10,9% 11,3% 11,4%
14,3%
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
14,0%
16,0%
SG VERALLIA O-I EUROPE ARDAGH GLASS VIDRALA
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14,7%
14,0% 13,9%
15,4%
14,4%
15,5%
14,1%14,3%
10,0%
11,0%
12,0%
13,0%
14,0%
15,0%
16,0%
`05 `06 `07 `08 `09 `10 `11 `12
Credit Fundamentals
SOLID CASH-FLOW GENERATION
EBIT/SALES vs EBITDA–CAPEX/SALES2011-2012
VIDRALA: FOCUS ON MAXIMIZING ASSETS, CASH-FLOW GENERATION AND RETURN ON CAPITAL EMPLOYED (ROCE). LONG-TERM MAINTENANCE CAPEX NOT HIGHER THAN AMORTIZATIONS.
Vidrala BUSINESS STRUCTURE: cash-flow generation and financial strength
FREE CASH FLOW /SALES2010-2011-2012
NET DEBT2010-2011-2012
12,5%11,1% 11,0%
0,0%
5,0%
10,0%
15,0%
2010 2011 2012
218,8
189,3
159,6
100,0
150,0
200,0
250,0
2010 2011 2012
14,1%14,3%
14,7%
15,6%
13,0%
13,5%
14,0%
14,5%
15,0%
15,5%
16,0%
2011 2012
EBIT/SALES EBITDA-CAPEX/SALES
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Principles
IN THE PRODUCT
IN THE MARKET
IN OUR INDUSTRY
IN OUR PROJECT
WE BELIEVE:
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Glass is identified with the concepts of health (safety, purity, inertity),convenience (flexibility, versatility), sustainability (respect to the environment)and premium image.
Quality: Glass is natural, transparent, impermeable, nonporous, sanitary and completely inert.Safeguards against moisture and oxygen invasion. Is resistant, can be used to process foods and otherproducts at high temperatures. It does not deteriorate, corrode, stain or fade maintaining the taste andquality of the original products.
Image: Glass is attractive, providing a image of quality for products. Can be labeled, colored andformed into various sizes and shapes enabling high product differentiation. More than 70% ofconsumers believe that glass packaging suggest quality.
Ecological: Glass has intrinsic and unique features that make it the only fully and infinitelyrecyclable packaging material. A used bottle can be employed to make a new bottle again and againwithout any loss in quality or quantity. Glass recycling saves energy, reduces emissions and helps topreserve natural resources also extending furnace life and reducing manufacturing costs.
The Product
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Glass: the preferred packaging material
SUSTAINABILITY
HEALTH
QUALITY
IMAGE
Pure and natural, 100% recyclable endlessly
Inert and impermeable, safe, no chemicals, no interference
Warranty of product preservation
Modern, atractive, versatile, premium.
CONSUMERS PREFER GLASSRESULTS OF THE ‘EUROPEAN PACKAGING SURVEY’. SEPTEMBER 2010
The Product
ITS UNIQUE CHARACTERISTICS IN IMAGE, TRANSPARENCY, ATTRACTIVE SHAPES AND COLOURS,VERSATILITY AND FLEXIBILITY HAVE BOOSTED GLASS AS A KEY MARKETING INSTRUMENT. GLASSPACKAGING IS PART OF MODERN LIFE.
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Glass: ecologically unique
The Product
SOURCE: FEVE.ORG 18
The Market
Source: DATAMONITOR, FEVE, EUROMONITOR, VIDRALA
Breakdown of beverage containers by material in Western Europe 2012
Annual demand growth prospects 2010-2014By item
Glass container productionIn Western Europe (2002-2012e)In million tonnes
European glass container industry: CAGR 2003-2012: +2%
Demand for food and beverage packagingIn Western Europe (2003-2012e)Thousands of million EUR
The glass packaging industry: a resilient market
GLASS
PAPER & BOARD
OTHERS
PLASTIC
METAL
2.7%
2.8%
2.7%
1.8%
Glass containers worldwide demand growth
Beverage containers worldwide demand growth
Food containers worldwide demand growth
Total containers European demand growth
0
5
10
15
20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
0
10
20
30
40
50
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
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SPAIN47%
ITALY44%
SPAIN41%
ITALY18%
REST OF MEDITERRANEAN
AREA
37%
Our Natural Markets: unique market fundamentals
The Market
Source: OIV - Organisation Internationale de la Vigne et du Vin
Source: Consejo Oleícola Internacional
ITALY18%
FRANCE16%
SPAIN13%
PORTUGAL3%
ITALY19%
FRANCE15%
SPAIN19%
PORTUGAL3%
World wine production World wine exports
World olive oil production World olive oil exports
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Our Natural Markets: unique fundamentals
The Market
0%
25%
50%
75%
100%
WORLD SPAIN FRANCE ITALY PORTUGAL
GLASS BOTTLE
PLASTIC
DRAUGHT
CAN
BEER. PACKAGING MIX BY COUNTRY
0
2
4
6
8
10
WESTERN EUROPE NORTHAMERICA WORLD
SPIRITS
BEER
WINE
PER CÁPITA CONSUMPTION BY REGION . LPA PER ANNUM
Source: PIRA, EUROMONITOR, WORLD PACKAGING ORGANISATION.
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10
20
30
40
50
60
70
0 10 20 30 40 50 60
The Market
GLASS PACKAGING PRODUCTION PER CÁPITA vs GDP PER CAPITA
OUR NATURAL MARKETS, OUR STRATEGIC MARKETS
GLA
SS
PA
CK
AG
IN
G P
RO
DU
CTIO
NP
ER
CA
PITA
(K
G)
GDP PER CAPITA ($000)
Iberia
FranceItaly
Germany
USAUK
JapanBrazil
China
22
The Industry: Europe
VIDRALA: 4th player
7% market share
Source: Vidrala
European market: EU15´s + Switzerland + Turkey
The European industry. Main producers
15%
6%
18%25%
36% OTHERS
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The Industry: Europe
Plants locations
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-General Overview
- Business Fundamentals
- Relevant Business Figures
Business performance. FY 2012
NET SALES
ANNUAL ACCUMULATED SINCE 2008EUR millions
387.2 382.4
405.9
433.3
456.9
300
350
400
450
2008 2009 2010 2011 2012
26
OPERATING PROFIT
EBIT ANNUAL ACCUMULATED SINCE 2008EUR millions
Business performance. FY 2012
59.7
55.0
62.961.0
65.3
40
45
50
55
60
65
70
2008 2009 2010 2011 2012
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EBIT and EBITDA AFTER CAPEX
SINCE 2011EUR millions and % of sales
Business performance. FY 2012
61.0
65.3
63.9
71.1
2011 2012
EBIT EBITDA after Capex
(% of sales) 14.1% 14.8% 14.3% 15.6%
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WORKING CAPITAL/SALES
SINCE 2010% of sales
Business performance. FY 2012
30.5%
27.2%
22.8%
31 Dec 2010 31 Dec 2011 31 Dec 2012
29
CASH ALLOCATION
2012EUR millions
Business performance. FY 2012
46.5
49.9
NET INCOME
FREE CASH FLOW
13.4
DIVIDEND PAYMENT
6.8
SHARE BUYBACKS
29.7
DEBT REDUCTION
30
NET DEBT
SINCE 2009EUR millions
Business performance. FY 2012
NET DEBT/LTM EBITDA 2.9x 2.2x 1.9x 1.5x
GEARING 102% 76% 61% 47%
256.6
218.8
189.3
159.6
100
150
200
250
DEC 2009 DEC 2010 DEC 2011 DEC 2012
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Business performance. FY 2012
EPS (EUR/SHARE)
2012
ROCE
2012
1.791.94
0,00
0,50
1,00
1,50
2,00
2011 2012
10.0%10.5%
6,0%
7,0%
8,0%
9,0%
10,0%
11,0%
2011 2012
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Our Project
A solid industrial project:
Based on clear business and market definitions,
with a vocation to customers service,
supported by an optimal financial structure,
and a strategy focused on our Shareholders interests.
We Know and understand: The industryThe packaging marketThe glass sectorOur natural marketsOur competitorsOur customers
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www.vidrala.com