Q3 2021 Results

PRESS RELEASE

9M 2021 results

+3.4% increase in revenue

Growth in adjusted EBITDA to €528 million (+11.2%) and

in adjusted EBITDA margin to 26.1% (+183 bps)

2021 targets confirmed despite the current inflationary tension

Paris, 28 October 2021

Highlights

1. • Revenue increased by +3.4% over nine months to €2,022 million (+5.8% at constant exchange rates and scope)(1)
   • Revenue growth of +2.0% to €695 million in Q3 (+2.1% at constant exchange rates and scope)(1), despite a high comparative basis in Q3 2020
   • Adjusted EBITDA of €528 million over nine months, up +11.2% over the previous year
   • Increase in adjusted EBITDA margin to 26.1% over nine months (+183 bps)
   • Reduction in the net debt ratio to 1.8x adjusted EBITDA for the last 12 months, compared with 2.2x at the end of September 2020
   • Sales and adjusted EBITDA targets confirmed for 2021 despite the current inflationary tension
2. The revenue growth at constant exchange rates and scope, excluding Argentina, was +3.6% over nine months 2021 compared with nine months 2020, and -0.2% in Q3 2021 compared with Q3 2020.

"Despite a high comparative basis created by a very dynamic third quarter last year, Verallia posted a solid growth in revenue over the third quarter and over the first nine months of the year. Adjusted EBITDA and its margin also improved substantially over the nine months, driven by the Group's three strategic pillars: the operational leverage related to the increase in volumes, a positive mix and inflation spread, and improved operational efficiency (Performance Action Plan (PAP)). We thus confirm our targets for 2021, despite the strong inflationary tensions currently observed. In addition, on October 7th, we presented our strategic roadmap for 2022-2024 with ambitious new financial and environmental targets, reflecting our determination to reinforce our global leadership and our commitment to meaningfully contribute to the limitation of global warming", commented Michel Giannuzzi, Chairman and CEO of Verallia.

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Revenue

In € million	9M 2021		9M 2020
Revenue	2,022.2		1,955.8
Reported growth	+3.4%
Organic growth	+5.8%
In € million	Q3 2021		Q3 2020
Revenue	694.5		681.2
Reported growth	+2.0%
Organic growth	+2.1%

Over the first nine months of the year, Verallia recorded revenue of €2,022 million, compared with €1,956 million over the same period in 2020, and thus posted an increase of +3.4% on a reported basis.

The impact of exchange rates was -2.4% over the first nine months (-€46 million), primarily concentrated in the first half. It was in large part linked to the depreciation of the Argentine peso and the Brazilian real and, to a lesser extent, the depreciation of the Ukrainian hryvnia and the Russian rouble.

At constant exchange rates and scope, revenue increased by +5.8% over the first nine months of the year (+3.6% excluding Argentina).

The third quarter posted organic growth of +2.1% at Group level, despite the very strong comparative basis of the third quarter of 2020 (organic growth of +8.9% in Q3 2020 vs. Q3 2019). By product family, sales of wine (still and sparkling) and beer continued to grow, while sales of non-alcoholic beverages and food jars normalised after a particularly dynamic third quarter in 2020.

An increase in sales prices at the start of the year and a product mix that remained positive in the third quarter at Group level also contributed to the revenue improvement over the first nine months of the year.

Revenue breakdown by region:

• In Southern and Western Europe, sales were up over the first nine months of the year, despite a slight slowdown in the third quarter because of the strong comparative basis of Q3 2020.
• In Northern and Eastern Europe,the downturn observed in the first half was reduced over the nine months thanks to a solid revenue growth in the third quarter. This improvement is particularly notable in Germany in food jars and beer.
• In Latin America, the strong momentum in volumes recorded in the first half continued over the third quarter in all countries, while increases in sales prices further contributed to revenue growth.

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Adjusted EBITDA

In € million	9M 2021		9M 2020
Adjusted EBITDA	527.6		474.4
Adjusted EBITDA margin	26.1%		24.3%
In € million	Q3 2021		Q3 2020
Adjusted EBITDA	182.9		175.7
Adjusted EBITDA margin	26.3%		25.8%

Adjusted EBITDA rose by +11.2% over the first nine months of the year to €528 million. Over the third quarter, adjusted EBITDA increased by +4.1%, reaching €183 million, versus €176 million in Q3 2020. The unfavourable exchange rate effect amounted to -€16million, mainly due to the depreciation of Latin American currencies, the Ukrainian hryvnia and the Russian rouble in the first half.

Verallia generated a positive inflation spread1 in all regions, with prices remaining stable in Europe and increasing in Latin America to offset cost inflation. The product mix remained favourable and the net reduction in production cash costs of €29 million (or 2.4% of production cash costs) also contributed to the improvement in adjusted EBITDA.

The adjusted EBITDA margin rose over the first nine months of the year to 26.1% versus 24.3% over the same period in 2020. In the third quarter, the margin reached 26.3%.

Very solid balance sheet

In the first nine months of the year, Verallia continued to improve its net debt ratio, with net debt amounting to €1,213 million at the end of September 2021, after two share buybacks by the Group for €109 million and the payment of €114 million in dividends in July. The net debt ratio was 1.8x adjusted EBITDA for the last 12 months, compared with 2.2x at the end of September 2020 and 1.9x at the end of June 2021.

Building on the success of the bond issue tied to two environmental criteria (Sustainability-Linked Bond) last May, the Group plans to continue its policy to diversify its financing sources.

1 Spread represents the difference between (i) the increase in sales prices and mix applied by the Group after passing the increase in its production costs on to these prices, if required, and (ii) the increase in its production costs. The spread is positive when the increase in sales prices applied by the Group is greater than the increase in its production costs. The increase in production costs is recorded by the Group at constant production volumes and before production gap and the impact of the Performance Action Plan (PAP).

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2021 targets

Despite the strong inflationary tensions currently observed on costs, Verallia is confirming for 2021 the targets announced at the publication of its half-year results on 29 July of this year and will achieve the medium-term targets communicated at the time of its IPO in 2019 a year ahead.

Thus, for the year ending 31 December 2021, the Group anticipates:

• Revenue of around €2.6 billion;
• A level of volumes at the same level as those reached in 2019;
• Adjusted EBITDA of around €675 million.

Restatement of the medium-term targets announced at the Capital Markets Day on 7 October 2021:

Verallia went a step further on October 7th, 2021 by setting new goals aligned with the objective of limiting global warming to 1.5°C:

• 46% reduction in Scope 1 and 2 emissions by 2030 in absolute terms (base year 2019)1
• Scope 3 emissions maintained below 40% of total emissions in 2030
• Net Zero in 2050 for Scope 1 and 2 emissions

The Group has also set new Medium-Term Financial Targets for 2022-2024:

	2022-2023-2024		Assumptions
Organic Sales		• From ca half volume and half price/mix
+4-6% CAGR	•	Moderate inflation in raw material and energy
Growth2
		costs after 2022
Adj. EBITDA		•	Positive price/cost spread
28%-30% in 2024	•	Net PAP > 2% of production cash cost
margin
		(i.e. > €35m per annum)
		• Recurring and strategic Capex @ ca 10% of
Cum. Free	ca €900m over 3 years		sales,
Cash Flow3	•	Including CO2-related capex and 3 new
			furnaces by 2024
Earnings per		•	Average cost of financing (pre-tax) @ ca 2%
Share	ca €3 in 2024
•	Effective tax rate @ ca 27%
(excl. PPA4)
	Dividend / share growth
Shareholder	> 10% per annum +	•	Net income growth > 10% per annum
Return Policy	Accretive share buy-	•	Investment grade trajectory (leverage < 2x)
	backs

1. Target to be validated by the SBT initiative.
2. At constant FX and excluding changes in perimeter.
3. Defined as the Operating Cash Flow - Other operating impact - Interest paid & other financing costs - Cash Tax.
4. Earnings excl. amortization expense for customer relations (PPA) recognized upon the acquisition from Saint-Gobain, of ca €0.38 / share (net of taxes).

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An analysts' conference call will be held on Thursday, 28 October 2021 at 9.00 am (CET) via an audio webcast service (live and replay) and the results presentation will be available on www.verallia.com.

Financial calendar

• 16 February 2022:financial results for Q4 and financial year 2021 - Press release aftermarket close and conference call/presentation the following morning at 9.00 am CET.
• 20 April 2022:financial results for Q1 2022 - Press release aftermarket close and conference call/presentation the following morning at 9.00 am CET.
• 11 May 2022:Annual General Shareholders' Meeting.
• 27 July 2022:results for H1 2022 - Press release aftermarket close and conference call/presentation the following morning at 9.00 am CET.
• 19 October 2022:financial results for Q3 2022 - Press release aftermarket close and conference call/presentation the following morning at 9.00 am CET.

About Verallia - At Verallia, our purpose is to re-imagine glass for a sustainable future. We want to redefine how glass is produced, reused and recycled, to make it the world's most sustainable packaging material. We are joining forces with our customers, suppliers and other partners across the value chain to develop beneficial and sustainable new solutions for all.

With around 10,000 employees and 32 glass production facilities in 11 countries, we are the European leader and the world's third-largest producer of glass packaging for beverages and food products. We offer innovative, customised and environmentally friendly solutions to over 10,000 businesses worldwide.

In 2020, Verallia produced more than 16 billion glass bottles and jars and posted revenue of €2.5 billion. Verallia is listed on compartment A of the regulated market of Euronext Paris (Ticker: VRLA

• ISIN: FR0013447729) and is included in the following indices: SBF 120, CAC Mid 60, CAC Mid & Small and CAC All-Tradable.
  For more information, visit www.verallia.com

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Verallia Investor Relations contact

Alexandra Baubigeat Boucheron [e-mail]

Press contacts

Brunswick - Benoit Grange, Hugues Boëton, Tristan Roquet Montegon [e-mail]- [phone]

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