Good morning everyone, and thank you for joining us. Welcome to our H1 2026 result call.

As usual, we will go through our presentation and we will have the Q&A session at the end. After a quick introduction, we'll go directly to our numbers with Cristina, and then I will come back on our outlook for 2026.

As an introduction, just to remind you that Verallia is a global leader in glass packaging. We are number one in Europe, number two in Latin America, and number three worldwide.

On this chart, you have our ID card. You have on the left the 2025 split of our sales by segment.

As one of our strong assets is our customer base and the diversified and balanced end markets in which we operate. We operate in 12 countries.

As end of June, we operate 34 glass plants, minus one compared to end of last year with a closure of our Essen plant in Germany. We operate 63 furnaces compared to 67 at the end of last year with a closure of two furnaces in Germany, in Essen, one in France at Cognac, and one in UK at Knottingley.

We do serve around 11,000 customers and produce around 18 billion bottles and jars per year. Please note also that we are running 19 cullet recycling centers, allowing us to control about 50% of our needs for external cullet.

Before moving to our numbers, I would like to share an update of on our industrial adaptation footprint, which was announced in mid-February. As a reminder, we decided to adapt and reduce our installed capacity to align with the reality of current demand and to address overcapacity in the European market.

Our three projects are now completed. They were all well-managed, without any disruption and any operational problems.

In Germany, in Essen, the plant was shut down at the at the end of March. Negotiations regarding the social plan is done and involve around 300 terminations.

In France, Cognac furnace was stopped on June 15th. The voluntary redundancy plan is negotiated and underway.

In the UK, we stopped at the end of April one of our two furnaces at Knottingley facility. We already have some positive impact in Q2, mainly coming from Essen closure.

Please note that the total cost of this adaptation is around €60 million, €19 million cash out in H1, and the rest will be split between H2 and next year. The run rate industrial cost savings of these three projects is around €40 million, and we do expect the full impact in H in H2, meaning in H2 we do expect €20 million cost savings for this year.

About our financial numbers, we are on track and confirming a higher free cash flow generation. Q2 revenue is down by 0.5% year-over-year to €900 million with an organic growth at -0.9% year-over-year, with total volume being broadly flat, giving an H1 revenue down by -1.4% year-over-year to €1,699 million with an organic growth of -1% year-over-year.

Q2 adjusted EBITDA is €192 million, -5.6% versus Q2 last year, with a margin at 21.4%, -116 bps versus Q2 last year, giving an H1 adjusted EBITDA at €352 million, +0.2% versus H1 2025, with a margin at 20.7%, +33 bps versus H1 last year. About free cash flow generation, we close H1 with €102 million, +€36 million compared to H1 last year.

Excluding restructuring cash restructuring cash out, free cash flow is at €121 million in H1, and our leverage is now at 2.6 at the end of June, slightly down versus 2.7 at the end of December '25. Finally, our net income is €27 million, -60.5% compared to last year, H1 last year.

This net income does include a one-off impact of €43 million after tax in relation with our European industrial footprint adaptation, meaning net income without restructuring is at €70 million. That being said, I let the floor to Cristina for more details.

Thank you, Patrice. Good morning, everyone.

Let me start with the second quarter revenue bridge. As a reminder, we present these bridges excluding Argentina, given the hyperinflation and currency distortions there.

You will see the net impact in a separate line. In the second quarter, revenue was broadly stable at €900 million, down just half a percent reported or -0.9% organic.

Volumes were down only very marginally, -€2 million, and in fact, they were up year-on-year once you exclude Germany. The underlying demand picture is healthier than the headlines.

Europe was broadly stable with a strong growth in spirits and food offsetting the softer categories. Latin America was slightly lower as weaker Chile and Argentina wine offset the pick-up in Brazilian beer.

The key point on this slide is the price-mix effect, which was negative €7.7 million, but that is a clear improvement versus the first quarter with less than 1% negative in Q2, which tells you that price-mix has essentially stabilized. Currency added €5 million, mostly the Brazilian real, and there was no scope effect, and Argentina added €0.5 million.

Moving to the half-year bridge, it's the same story, but with more of the weight in the first quarter. Revenue for the half was €1,699 million, down 1.4% reported and -1% organic.

The decline is essentially a pricing story, and it was concentrated in Q1. Prices have stabilized in the second quarter versus the prior year.

On volumes, we were down only marginally, and that is entirely the the expected reduction in in Germany. As mentioned for Q1, excluding Germany, volumes were up in the half, driven by spirits and food food jars, whose good momentum from Q1 continued.

That was partially offset by lower non-alcoholic beverages that are down because of an extraordinary destocking in Italy last year, and still and sparkling wine. Product mix was only very slightly negative over the period.

The currency effect was a positive €3.2 million, again, the Brazilian real, and there was no scope. Finally, Argentina added €1.4 million.

Now let's move into the regions, starting with Southern and Western Europe, which covers France, Italy, Spain, and Portugal. Revenue there was broadly stable, down 0.8%, both reported and at a constant scope and exchange rate, at €1,172 million.

What I would highlight is that volumes were up in all four countries, we had genuine volume growth across the region, which offset the negative price-mix. The growth came from food jars, helped by the new Pescia furnace in Italy, and from beer, with the spirits accelerating through the second quarter.

Sales mix was slightly adverse, but the headline for the region is volume resilience across the board. Northern and Eastern Europe, which is Germany, the UK, Poland, Ukraine, and Russia, where revenue was down down 5.4% or 5.1% at constant scope and FX, at €338 million.

This is primarily primarily the the expected lower volumes in Germany, in line with our new industrial footprint. Lower beer and, to a lesser extent, non-alcoholic volumes from our furnace refit in Russia were not fully offset by higher spirits.

The important nuance is that price-mix was actually positive here, reflecting reflecting better capacity utilization. Excluding Germany, volumes across the region were actually stable.

We had a strong recovery in Ukraine, and the UK trend is actually improving in line with stabilization in spirits. Finally, LatAm, where we have Brazil, Argentina, Chile, and our US operations.

Revenue was up 2.8% reported at €189 million, and up 5.5% at constant scope and exchange rate. Even including excluding Argentina, organic growth was positive, 1.7%.

This is this is a real growth, not just Argentine inflation. It was fueled by positive price-mix, mostly in Brazil and Argentina, with a strong momentum in spirits, beer, and sparkling wine.

Brazil in particular picked up strongly in the second quarter, helped by the new Campo Bom furnace, and that was partially offset by lower still wine volumes in Argentina and Chile. On currency, the effect was net negative, where the revaluation of the Brazilian real was more than offset by the devaluation of the Argentine peso.

Turning to profitability, let's look first at the second quarter EBITDA bridge. Adjusted EBITDA in Q2 was €192 million with a margin of 21.4% versus 22.5% a year ago, down 116 basis points year-on-year.

I would point out that, in line with our seasonality, it's up sequentially versus the first quarter. There are two negatives, and then our self-help.

Activity was negative on a slightly lower sales volumes and the inventory revaluation effect. The spread between price and cost was also negative.

The strong energy deflation we had in Q1 largely largely faded in Q2. Energy was still down year-on-year, but by less, and the Middle East crisis pushed up mainly freight and packaging.

Against those two headwinds, our Performance Action Plan delivered a 2.3% reduction in cash production costs, and the other line included around €8 million of savings from the restructuring, mainly Essen. Against that, we had the ramp-up cost of the new furnaces we opened this year, Pescia, we opened between last year, I apologize, Pescia, Campo Bom, and Zaragoza Hybrid.

Currency was a positive €2 million. The message for the quarter is that actually self-help, which is productivity plus the first restructuring savings, is doing the heavy lifting in a tougher cost environment.

Let's look now at the first half consolidated adjusted EBITDA, which is the key slide for the half as a whole. Despite revenue being down, we held adjusted EBITDA flat at €352 million, and the margin actually improved by 33 basis points to 20.7%.

How do how did we protect profitability with lower revenue? Activity was only slightly negative, which is coming from the strong growth in Southern and Western Europe, largely offset by the deliberately lower German volumes.

The spread was negative on the lower selling prices, mostly in Q1, and a slightly adverse mix, though we did benefit from energy deflation since, as the expensive 2022 hedges rolled off. Then the offset again, our Performance Action Plans delivered 2.2% net reduction in cash production costs, and the other line again carries the €8 million of restructuring savings against the new furnace ramp-up costs.

Currency was favorable at €1.8 million, and finally, Argentina contributing €1.6 million. Taking EBITDA by region now.

In Southern and Western Europe, we held adjusted EBITDA essentially flat, down just 0.6% at €242 million, with the margin stable year-on-year at 20.6%. The positive activity from the volume growth I mentioned, combined with the PAP savings, was enough to offset the negative inflation spread that came from the lower selling prices and the adverse mix.

A very resilient performance in our largest region. Northern and Eastern Europe, it's frankly the clearest illustration of our strategy paying off.

We grew EBITDA by 9.9% to €53 million, and the margin improved by 219 basis points to 15.8%. We did that despite a significant, deliberate reduction in German volumes.

The negative activity contribution from those lower volumes was more than offset by a positive inflation spread and, above all, industrial a very strong industrial performance, a 3.2% net reduction in cash costs, driven primarily primarily by the footprint optimization from the Essen closure. This this region proves the point: we chose profitability over volume in Germany, and it worked out.

Finally, LatAm, which remains our most profitable region with 30% EBITDA margin, even though that even though that's down from 32.2%. EBITDA was €58 million, and the decline came from a slightly negative activity contribution on the lower volumes in Chile and Argentina, plus the ramp-up cost of the new Campo Bom furnace in Brazil.

Offsetting part of that, the PAP contributed to deliver 2.3% net reduction in cash costs. Still a highly profitable region with the dip driven by a mix of activity and the transitional furnace cost rather than anything structural.

On CapEx, we came down to €91 million in the half, which is 5.3% of sales, from €104 million a year ago. Let me split that.

Recurring CapEx was actually up year-on-year because 2025 had a light furnace rebuild schedule. The big move is strategic CapEx, which fell sharply from 2.6% of sales to just 0.6%.

That's because the first half of last year included the final stages of our big growth projects: Campo Bom, Pescia, and the Zaragoza Hybrid. Those, as I are now complete, and we have no new capacity planned in the near future.

Finally, we are continuing our decarbonization plan with our second hybrid furnace, Saint-Romain in France, opening in the second half. For the full year, we still expect CapEx around 8% of sales.

Moving into cash flow, which is the one of the real highlights of the half. Free cash flow rose to €102 million, which is up €36 million, or 54% year-on-year, and cash conversion improved to 74.2%.

I would stress that this this was achieved on essentially flat EBITDA, it reflects genuine cash discipline and not earnings growth. The improvement came from lower CapEx, disciplined working capital, and lower cash tax.

Below that, other operating and financing items broadly offset each other with lower cash interest helping, although this is just timing from the refinancing of our sustainability-linked bonds, where we we pay our coupon now in November instead of May last year. Then remember, this €102 million is after around €19 million of cash-outs related to the footprint optimization.

Excluding those, free cash flow was €121 million, which is the right basis to compare against our full-year guidance. That cash generation flows through to the balance sheet, and net debt came down to €1,779 million.

That includes €61 million of lease liabilities, from €1,861 million at year-end and €1,948 million a year ago. Leverage improved to 2.6 times our last 12 months adjusted EBITDA, which is down from 2.7 at December.

I would know I would note this is after the dividend paid in June. Because our shareholders overwhelmingly chose to take the dividend in shares rather than cash, the actual cash outflow was very limited to just €11 million.

We returned value to shareholders while continuing to deleverage. Finally, the financing structure and liquidity.

Total borrowings were €2,193 million against €414 million of cash, giving €1,779 million of net debt. Our debt is well-spread across our sustainability-linked bonds and our conventional bonds with maturities out to 2033, plus the Term Loan B and two undrawn revolving credit facilities.

A significant part of our floating rate exposure is hedged through interest rate caps, we are well-protected on rates. Total available liquidity was €976 million at the end of June, which is up on the period, and we have no significant debt maturity before 2028.

We are in a very comfortable position on liquidity and the maturity profile. With that, I'll hand back to Patrice for the outlook.

Thanks, Cristina. About the outlook, at the end of H1, we are on track.

First half is in line with our expectations despite a much more difficult Q2 impacted by inflationary situation with the Middle East situation. Within this context, the company is demonstrating its resilience.

The discipline and good execution of our footprint adaptation in just few months is going to support our performance. Therefore, we do remain confident in our ability to meet 2026 guidance.

Then obviously, assuming no significant deterioration of the Middle East crisis situation, we confirm our guidance for full-year '26. As a reminder, we aim to generate an adjusted EBITDA of around €700 million and a free cash flow of around €220 million, excluding the restructuring cash out planned in relation to our footprint optimization.

With our industrial adaptation plan being completed, we remain focused on strengthening our competitiveness, cash generation, and deleveraging by delivering PAP savings and strict control of our costs and CapEx around 8% of sales. Thanks a lot for your attention, and I give you back the floor for the questions.

Thanks a lot.

Good morning, and thank you for taking my question. I have three if I may.

The first one is on cash flow. You reached €120 million cash flow this quarter with a very, very low CapEx to sales.

Increasing CapEx in the second half, that would mean a delta of around €70 million extra. What is going to offset this situation in order to reach to your free cash flow target?

The second question is if you could give us some visibility on the volume situation in Europe for the second half of the year. We have seen that Central European continues to be weak.

Now Argentina and Chile looks weaker than initially expected. What is your thought on this?

The third one is if you could give more detail on the cash component of the restructuring in the cash flow. You say €19 million this semester.

What is missing for second half and for 2027? Thank you.

Thanks a lot, Paco. I'm gonna take the question about the volumes, and I will let Cristina with the two cash questions.

About volume, and maybe to start with just to give you some color about H1. You have understood that our group volume are broadly flat in H1, mainly impacted by control volume decline in Germany.

Excluding Germany, our volumes at the group level are low-single-digit up. We see Southwest Europe up low-single-digit in H1 and Q2, and all countries being positive.

LatAm, we have in H1 volume slightly down, but with Brazil being quite positive, mid-single-digit in H1, and we can say even high-single-digit in Q2. This is the context in which we are.

For the rest of the year, we do see something which is going to be relatively similar. It means at the group level, we're going to be broadly flat.

We don't want to bet on any volume increase, but we want, as we explained already in Q1 and especially at the beginning of the year, we want to focus on our self-help measures to deliver on growth. This is how we see, as we speak, the volume situation for Verallia in a context of a weak demand globally in Europe.

Cristina, for cash?

Yeah. For cash, Paco, as you mentioned, yes, we do expect a much higher cash outflow on CapEx.

This is why we are actually not raising our guidance. As for the first half, the tailwind comes from some structural actions like cash tax and discipline, and this is what we keep for the second half.

Essentially what we are going to offset against CapEx is working capital and, as I mentioned, cash tax and discipline. You will see a slightly lower free cash flow for the second half.

Okay.

Thank you. On the restructuring cash outflow for the coming semesters?

The reason why we are going to have a higher outflow in the coming semester, it's because we are also going to pay out the UK and the France restructuring plans.

You have understood, Paco, that cash out was €19 million in H1, and the rest, as I mentioned, is going to be split between a part in H2, and we still have some remaining in H1 next year.

Thank you.

Welcome.

Hi, thanks for taking my question. Apologies for the voice, a bit under the weather.

First question is on your spread, which turned negative in Q2, wondering whether you can provide an outlook for this component for the rest of the year and whether you think that your self-help measures will be able to offset that.

Thanks a lot for this question. About the spread, as you mentioned, obviously we are positive in Q1, we are negative in Q2, mainly coming from the inflationary effect from the Middle East situation.

On energy, do remember that we are hedged at 80% in Europe, obviously we are impacted by the 20% not hedged part, despite the fact that we are in deflationary situation compared to last year, obviously we have an adverse effect on energy in Q2 versus Q1. Then we have inflation as well on all the, I would say, Brent related costs, speaking about logistics, speaking about packaging, et cetera.

Obviously difficult to say what is going to be next, but in this current environment, we do maintain our guidance. Obviously what is going to be supporting our performance is the restructuring plan we did in Europe in quite a few months, again, I think it was a strong performance for the team, and getting the full impact in H2.

In other words, the H2 performance is going to be supported by this €20 million savings coming from our footprint adaptation, which is going to offset the inflationary situation we are seeing as we speak, which impacted our Q2.

Thank you. On the capacity side, do you think you need to do more?

Can you provide some measures of capacity utilization if you have some idling just to give a sense of what is the state-of-the-art of the excess capacity in terms of utilization and whether there's potentially more to come there? Yeah.

You understood that we have done quite a significant part of the job of adaptation in Europe, especially in H1 this year. As a reminder, in Germany, we used to have 10 furnaces running; now we are running six furnaces, which do allow us to make an optimization of our business and profitability of our business, as it has been shown by Cristina.

This is quite significant in Germany. We've done the additional one in Cognac.

We've done one in UK. As we speak, we do not plan to do any additional capacity reduction because the forecast we see, even within a small growth environment, we do not need to do it.

We have, as we speak, few points of underutilization, mainly driven by the inventory control we want to keep, but I would say it's not material to justify any additional capacity adaptation as we speak. No more adaptation to come on our side.

Thank you. Thank you for the color.

Appreciate it.

Sure. Thanks a lot for this.

David Placet, I'm the Head of IR. Right now, we have actually two questions.

One just came. One is from Iñigo Egusquiza.

I think it's been pretty much covered. The question is, "How do you see pricing for H2 '26 and then '27 after three years of price adaptation and considering energy inflation?

Do you see the industry well-balanced to accept price hikes in '27?"

Okay. Hello, Iñigo.

About 2026, you have understood that our pricing is down low-single-digit, all of that done in Q1, stabilizing in Q2. We do not expect any additional price reduction in H2.

Obviously what is quite significant and important is this inflation situation, but the competitive landscape as we see it today does not give real room for a price increase to compensate in H2 the inflationary situation. Speaking about '27, obviously with the current context, we do not see price decrease, but let's see in the weeks and months to come, and maybe we'll have some opportunity for '27.

Hope I have answered your question, Iñigo.

Thank you, Patrice. Another question from Jaime Raimundo regarding the capacity situation in Europe: "Can you please give us an update about capacity closures and the competitive environment you see in Europe?"

I think we have given already some information about that. Maybe just to rephrase, you know that quite significant capacity has been shut down since the end of 2023 in Europe.

More than 20 furnaces have been closed, which is representing a capacity adaptation around 10%. We have done the part of our job.

Let's see if some competitors in some specific regions are going to adapt again, but I would say that the big part of it has been done. This is our view as we speak today.

Thank you. Just one last question from Emmanuel Chevalier, which I think builds upon the previous one, let's see whether there's anything we'd like to add.

The question is, "Are you seeing the first positive effects of capacity closures in Europe? Do you see any negative impact from Sinalco glass, particularly on the beer market?

What will be the additional impact in the second half of the year as the full-year effect of your most recent furnace start-ups kicks in?" Basically, impact of capacity closures market-wide, Sinalco impact, and for ourselves, second half impact of the end of the ramp-up of our new furnaces.

First, about capacity adaptation, you see, as I mentioned, for us a significant positive impact in Germany, and just part of it is in our numbers in H1, coming from Q2. Then we'll get the positive impact in H2.

We see, as I mentioned, and I'm speaking only about Verallia obviously, capacity underutilization is just few points compared to high-single-digit points on the previous period, 2024-2025. I do see right now a good use of our capacity.

We'll get the full benefit of our additional capacity, and we have already the additional benefit of Campo Bom in Brazil, Pescia in Italy, specifically dedicated to jars and the food growth we are looking for. I do not expect any bad news or whatsoever, and the ramping up of these new furnaces is done, no material impact to be expected in H2.

About Sinalco glass, too early to make comments about that, and I'm not sure we need to comment, but let's keep in mind that we are less beer-exposed than many of our peers. We do not see that as a short-term concern for us.

Again, we have made our adaptation up front in Northeast Europe and in Germany.

Fantastic. Thank you, Patrice.

One last question, I think, in relation this time to cullet: "Could you talk a bit about cullet recycling centers and how much percentage of your cullet, I guess, are procured from recycling centers, I guess it refers to our own?"

External cullet rate use is roughly similar to last year, it's close to 60%, a little bit less than 60%. And 50% of the cullet we are using is coming from our recycling centers.

This is something which is quite important because, one, it does allow us to control part of this resource, but two, it does allow us as well to have a good understanding of the cost of the cullet and about the quality of the cullet, aiming us to get some levers to challenge the 50% part, remaining part we are buying. Hope I have answered.

That's fantastic. Just one last request to clarify the question about the restructuring cash-out, following obviously I think that was Paco who initially asked that, just to clarify the cash-out that is expected going forward and especially in H2.

Yes. Just to clarify on that point, our restructuring cash-out for the overall footprint adaptation, as Patrice said, is around €60 million, but this year we are within the guidance that we initially set last quarter, which is €50 million.

We paid out €19 million in the first half, the rest will come in the second half.

Thank you, Cristina.

Okay.

I think with that, I'm done.

Thanks a lot for your question. Just maybe a few words to conclude again and emphasize what we have been able to deliver in H1.

If we step back, we have been able to adapt our footprint adaptation with some significant closure and social measures in Europe in just a small period of time, because remember that we started that in February, and we get already some results in Q2, and we will get the full impact in H2. I think it was quite remarkable.

Two, let's consider that within the current environment with difficulty to predict high volatility on our costs coming from, again, non-hedged energy part and Brent-related costs, we are demonstrating quite a resilient performance, which is a good way as well to prepare the future and to get some nice upside in the semesters to come, all of that being behind us. Thanks a lot for that, for the teams, and thanks for your attention, and have a good summer.

Take care. Bye-bye.

Thank you.

Thank you.