Verallia Stock

Ladies and gentlemen, welcome to the Verallia 2026 H1 Results Analyst Call. The call will be structured in two parts. First, a presentation by the Verallia Group management team represented by Patrice Lucas, CEO; and Cristina Riesgo, CFO. Afterwards, there will be a Q&A session. [Operator Instructions] I will now hand over to the management team. Please go ahead.

Good morning, everyone, and thank you for joining us. So welcome to our H1 2026 results call. As usual, so we will go through our presentation and we'll have a 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 #1 in Europe, #2 in Latin America and #3 worldwide.

On this chart, you have our ID card. You have on the left the 2025 split of our sales by segment. As you know, 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 end of June, we operate 34 glass plants, minus one compared to end of last year with the closure of our Essen plant in Germany. And we operate 63 furnaces compared to 67 at the end of last year with the closure of two furnaces in Germany in Essen, one in France at Cognac and one in the U.K. 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 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 the 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 end of March. Negotiations regarding the social plan is done and involved around 300 terminations. In France, Cognac furnace was stopped on June 15. The voluntary redundancy plan is negotiated and underway. And in the U.K., 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 EUR 60 million, EUR 19 million cash out in H1 and the rest will be split between H2 and next year. The run rate industrial cost saving of these three projects is around EUR 40 million, and we do expect the full impact in H2, meaning in H2, we do expect EUR 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 EUR 900 million with an organic growth at minus 0.9% year-over-year with total volume being broadly flat, giving an H1 revenue down by minus 1.4% year-over-year to EUR 1.699 billion with an organic growth of minus 1% year-over-year. Q2 adjusted EBITDA is EUR 192 million, minus 5.6% versus Q2 last year, with a margin at 21.4%, minus 116 bps versus Q2 last year. Giving an H1 adjusted EBITDA at EUR 352 million, plus 0.2% versus H1 '25 with a margin at 20.7%, plus 33 bps versus H1 last year.

About free cash flow generation, we closed H1 with EUR 102 million, plus EUR 36 million compared to H1 last year. Excluding restructuring cash out, free cash flow is at EUR 121 million in H1. And our leverage is now at 2.6x at the end of June, slightly down versus 2.7x at the end of December '25. And finally, our net income is EUR 27 million, minus 60.5% compared to last year -- H1 last year. This net income does include a one-off impact of EUR 43 million after tax in relation with our European industrial footprint adaptation, meaning net income without restructuring is at EUR 70 million. That being said, I let the floor to Cristina for more details.

Thank you, Patrice, and good morning, everyone. Let me start with the second quarter revenue bridge. As a reminder, we present these regions, excluding Argentina, given the hyperinflation and the currency distortions there. So you will see the net impact in a separate line. In the second quarter, revenue was roughly stable at EUR 900 million, down just 0.5% reported or minus 0.9% organic. Volumes were down only very marginally in EUR 2 million. And in fact, they were up year-on-year once you exclude Germany.

So the underlying demand picture is healthier than the headline. Europe was broadly stable with a strong growth in spirits and food offsetting the softer categories. And Latin America was slightly lower as weaker Chile and Argentina wine offset the pickup in Brazilian beer. The key point on this slide is the price/mix effect, which was negative EUR 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 EUR 5 million, mostly the Brazilian real, and there was no scope effect and Argentina added EUR 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 EUR 1,699 million, down 1.4% reported and minus 1% organic. The decline is essentially a pricing story, and it was concentrated in Q1. Prices centralized in the second quarter versus the prior year. On volumes, we were down only marginally, and that is entirely the expected reduction in Germany.

And as mentioned for Q1, excluding Germany, volumes were up in the half, driven by spirits and food jars, whose good momentum from Q1 continued. And that was partially offset by lower nonalcoholic beverages that are down because of an extraordinary destocking in Italy last year and still an impact in wine. And product mix was only very slightly negative over the period. The currency effect was a positive EUR 3.2 million against the Brazilian real, and there was no scope. And finally, Argentina added EUR 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 EUR 1,172 million. What I would highlight is that volumes were up in all 4 countries. So 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 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 U.K., Poland, Ukraine and Russia, where revenue was down 5.4% or 5.1% at constant scope and FX at EUR 338 million. And this is primarily the expected lower volumes in Germany, in line with our new industrial footprint. Lower beer and to a lesser extent, nonalcoholic volumes from our furnace [ repair ] in Russia were not fully offset by higher spirits.

The important one is that price mix was actually positive here, reflecting better capacity utilization. And excluding Germany, volumes across the region were actually stable. We had a strong recovery in Ukraine and the U.K. trend is actually improving in line with stabilization in spirits. And finally, LatAm, where we have Brazil, Argentina, Chile and our U.S. operations. Revenue was up 2.8% reported at EUR 189 million and up 5.5% at constant scope and exchange rate. And even excluding Argentina, organic growth was positive 1.7%.

So this is a real growth, not just Argentina 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 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 EUR 192 million with a margin of 21.4% versus 22.5% a year ago, down 115 basis (sic) [ 116 basis ] points year-on-year. But 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 space (sic) [ 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 faded in Q2. Energy was still down year-on-year, but by less and the Middle East prices 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 EUR 8 million of savings from the restructuring, mainly Essen. And against that, we had the ramp-up cost of the new furnaces we opened this year Pescia -- we opened between last year [indiscernible]. Pescia, Campo Bom and Zaragoza [indiscernible].

Currency was a positive EUR 2 million. So the message for the quarter is that actually self-help with its productivity through the 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 EUR 352 million, and the margin actually improved by 33 basis points to 20.7%.

So 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 you know, the expensive 2022 hedges rolled off.

And then the offset again, our performance action plan delivered 2.2% net reduction in cash production costs and the other line again carries the EUR 8 million of restructuring savings against the new furnace ramp-up costs. Currency was favorable at EUR 1.8 million and finally, Argentina contributing EUR 1.6 million. Taking the EBITDA by region now. In Southern and Western Europe, we held adjusted EBITDA essentially flat, down just 0.6% at EUR 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. So a very resilient performance in our largest region. Northern and Eastern Europe is frankly the clearest illustration of our strategy paying off. We grew EBITDA by 9.9% to EUR 53 million, and the margin improved by 219 basis points to 15.8%. And 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 by the footprint optimization from the asset closure. So this region proves the point, which shows profitability of over volume in Germany and it worked out.

And finally, LatAm, which remains our most profitable region with 30% EBITDA margin, even though that's down from 32.2%. EBITDA was EUR 59 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. It's 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 EUR 91 million in the half, which is 5.3% of sales from EUR 104 million a year ago. So let me split that. Recurring CapEx was actually up year-on-year because 2025 had a light furnace repair 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 are now complete, and we have no new capacity planned in the near future. And finally, we are continuing our decarbonization plan with our second hybrid furnace, Saint Romain-le-Puy in France opening in the second half. And for the full year, we still expect CapEx around 8% of sales.

Moving into cash flow, which is one of the real highlights of the half. Free cash flow rose to EUR 102 million, which is up EUR 36 million or 54% year-on-year, and cash conversion improved to 74.2%. I would stress that this was achieved on essentially flat EBITDA, so 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 pay our coupon now in November instead of May last year. And then remember, this EUR 102 million is after around EUR 19 million of cash outs related to the footprint optimization. So excluding those, free cash flow was EUR 121 million, which is the right basis to compare against our full year guidance.

That cash generation flows through the balance sheet and net debt came down to EUR 1,779 million. That includes EUR 61 million of lease liabilities from 1,861 million at year-end and EUR 1,948 million a year ago. So leverage improved 2.6x our last 12 months adjusted EBITDA, which is down from 2.7x at December. And I would note this is after the dividend paid in June. Because our shareholders overwhelmingly chose to take the dividends in shares rather than cash, the actual cash outflow was very limited to just EUR 11 million.

So we returned value to shareholders while continuing to deleverage. And finally, the financing structure and liquidity. Total borrowings were 2,193 million against EUR 440 million (sic) [ EUR 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, so we are well protected on rates. Total available liquidity was EUR 976 million at the end of June, which is up on the period, and we have no significant debt maturities before 2028. So we are in a very comfortable position on liquidity and the maturity profile. And with that, I hand back to Patrice for the outlook.

Thanks, Cristina. So 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 situation in the Middle East crisis situation, we confirm our guidance for full year '26. And as a reminder, we aim to generate an adjusted EBITDA of around EUR 700 million and a free cash flow of around EUR 220 million, excluding the restructuring cash out plan 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 keeping CapEx and strict control of our cost and CapEx around 8% of sales.

So thanks a lot for your attention, and I give you back the floor for the questions. Thanks a lot.

[Operator Instructions]

The next question comes from Paco Ruiz from BNP Paribas.

I have 3, if I may. The first one is on cash flow. And you reached EUR 120 million cash flow this quarter with a very, very low CapEx to sales. So increasing CapEx in the second half that will mean a delta of around EUR 70 million extra. So 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. I mean we have seen that Central European continues to be weak. Now Argentina and Chile looks weaker than initially expected. So what is your thought on this?

And the third one is if you could give more detail on the cash component of the restructuring in the cash flow. I mean you say EUR 19 million this semester. What is missing for second half and for 2027?

Thanks a lot, Paco. So I'm going to take the question about the volumes, and I will let Cristina with the two cash questions. So about volume, and maybe to start with, just to give you some color about H1. So you have understood that our group volume are broadly flat in H1, mainly impacted by control volume decline in Germany. And 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 volumes slightly down but with Brazil being quite positive, mid-single digit in H1, and we can say even high single digit in Q2. So this is the context in which we are. We -- for the rest of the year, we do see something which is going to be relatively similar. So it means at the group level, we're going to be broadly flat. And 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 our growth.

So this is how we see, as we speak, the volume situation for Verallia in the context of a weak demand globally in Europe. Cristina, for cash?

Yes. So for cash, as you mentioned, yes, we do expect a much higher cash outflow on CapEx. And this is why we are actually not raising our guidance. So as you know, 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. So essentially, what we are going to offset against CapEx is working capital and as I mentioned, cash tax and discipline. So you will see a slightly lower free cash flow for the second half.

And on the restructuring cash outflow for the coming semesters?

So the reason why we're going to have a higher outflow in the coming semester, is because we are also going to pay out the U.K. and the France restructuring plan.

But you have understood Paco, that cash out was EUR 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.

The next question comes from Saul Casadio from M&G PLC.

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. So 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, you do remember that we are hedged at 80% in Europe. So obviously, we are impacted by the 20% non-hedged part, which is despite the fact that we are in deflationary situation compared to last year, obviously, we have an adverse effect in energy in Q2 versus Q1.

And then we have inflation as well on all the [ plant ] related costs, speaking about logistics, speaking about packaging, et cetera. What obviously difficult to say what is going to be next. But in this current environment, we do maintain our guidance. And 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 of the team and getting the full impact in H2.

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

Okay. Okay. And on the capacity side, do you think you need to do more? And 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 existing capacity in terms of utilization and whether there's potentially more to come there?

Yes. We do not plan -- so 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 6 furnaces, which do allow us to make an optimization of our business and profitability of our business as it has been shown by Cristina. So this is quite significant in Germany.

We've done the additional one in Cognac one in U.K. And 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, we have a 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. So no more adaptation to come on our side.

There are no more oral questions at this time. So I hand the conference back to the speakers for the written questions.

Sure. So thanks a lot for this. David Placet. I'm the Head of IR. Right now, we have actually 2 questions. One just came. So one is from Inigo Egusquiza. I think it's been pretty much covered. The question is, how do you see pricing for H2 '26 and then '27 after 3 years of price adaptation and considering energy inflation. Do you see the industry well balanced to accept price hikes in '27?

Okay. So about 2026, so 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 price increase to compensate in H2 the inflationary situation.

Speaking about '27, obviously, with the current context, we do not see price decrease. But I mean, let's see in the weeks and months to come and maybe we'll have some opportunity for '27. I hope I have answered your question, Inigo.

Thank you, Patrice. Another question from [ Jaime Remiro ] 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. So maybe just to [ recap ]. So you know that quite significant capacity has been shut down since the end of '23 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 -- so 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.

And just one last question from Emmanuel Chevalier, which I think builds upon the previous one. So let's see whether there's anything we'd like to add. The question is, are you seeing the first positive effect of capacity closures in Europe? Do you see any negative impact from [ Synerglass ], particularly on the beer market? And 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? So basically, impact of capacity closures market-wide. [ Synerglass ] 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. So then we get the positive impact in H2. We see, as I mentioned, and I can speak only about Verallia, obviously, capacity underutilization is just a few points compared to high single-digit points on the previous period 2024, 2025. So I do see right now a good use of our capacity. We will get the full benefit of our additional capacity, and we have already the additional capacity benefit of Campo Bom in Brazil, Pescia in Italy, specifically dedicated to jar and the food growth we are looking for.

So I do not expect any bad news whatsoever. And the ramping up of the new furnaces is done. So no impact -- no material impact to be expected in H2. About [ Synerglass ], 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. So we do not see that as a short-term concern for us. And again, we have made our adaptation upfront 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 the cullet recycling centers? And how much percentage of cullet of your cullet, I guess, are procured from recycling centers? I guess it refers to our own.

Our external cullet rate used is roughly similar to last year. So 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. And 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, enabling us to get some levers to challenge the 50% part -- remaining part we are buying. Hope I have answered.

Yes, that's fantastic. And just one last point maybe to -- one last request to clarify the question about the restructuring cash out following 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. So just to clarify on that point, our restructuring cash out for the overall footprint adaptation, as Patrice said, is around EUR 60 million. But this year, we are within the guidance that we initially said last quarter, which is EUR 50 million. So we paid out EUR 19 million in the first half. So the rest will come in the second half.

Thank you, Cristina. And I think with that, I'm done.

So 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. Just let's -- 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 got already some results in Q2, and we will get the full impact in H2.

So I think it was quite remarkable. Two, let's consider that within the current environment with difficulty to [ predict ] high volatility on our cost coming from, again, non-hedge energy part and brand (sic) [ plant ] related costs. We are demonstrating quite a resilient performance, which is a good way as well to clear the future and to get some nice upside in the semesters to come, all of that being behind us. So thanks a lot for that, for the teams. And please have a good -- thanks for your attention, sorry, and have a good summer. Take care. Bye-bye.

Thank you.

Thank you.

Ladies and gentlemen, welcome to the Verallia 2026 Q1 Results Analyst Call. The call will be structured in 2 parts. First, a presentation by the Verallia Group management team represented by Patrice Lucas, CEO; and Cristina Riesgo, CFO. Afterwards, there will be a Q&A session. [Operator Instructions].

I will now hand over to the management team. Please go ahead.

Good morning, everyone, and thank you for joining us. Welcome to our Q1 2026 financial results call. I'm pleased to have with me today Cristina Riesgo, our new CFO. As usual, we will go through our presentation, and then we'll have the Q&A session. And after a quick introduction, we will go directly to our numbers with Cristina, and I will be back with our outlook for 2026.

As an introduction, just to remind you, as usual, that Verallia is a global leader in glass packaging. We are #1 in Europe, #2 in Latin America and #3 worldwide. On this chart, you have our ID card. You have on the left the 2025 split of our sales by segment. One of our strong assets is our customer base and the diversified and balanced end market in which we operate. We operate in 12 countries with 35 glass plants and 67 furnaces, serving 11,000 customers and producing about 18 billion bottles and jars a year. Please note also that we are running 19 cullet recycling centers, allowing us to control about 50% of our need for external cullet.

Before moving to our numbers, I would like to share an update 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 3 projects are progressing as planned and in line with local processes.

In Germany, in Essen, the plant was shut down at the end of March. Negotiations regarding the social plan should be concluded in the coming weeks and are expected to involve around 300 terminations.

In France, this concerns the closure of one furnace at our Châteaubernard plant. This furnace has reached the end of its life and will not be rebuilt. In this case, the social process to finalize the voluntary redundancy plan is underway, and the furnace is expected to be shut down by the end of H1.

And in the U.K., the closure of 1 of the 2 furnaces at Knottingley plant is scheduled for the end of the month. Overall, these 3 projects are progressing as planned with the full impact expected in H2.

I let -- sorry, before letting the floor to Cristina, a quick comment about our financial numbers. So our Q1 numbers are showing profitability up year-on-year and marking a first stage in the recovery of Verallia's performance. Q1 revenue is down by minus 2.4% year-over-year to EUR 798 million with organic growth at minus 1.2% year-over-year with total volume being flat.

Q1 adjusted EBITDA is EUR 159 million, plus 8.3% versus last year and with a margin at 19.9%, which is plus 197 bps versus Q1 last year. And about our net debt, our leverage is stable versus last December at 2.7x.

So now I let the floor to Cristina for more details.

Thank you, Patrice. So let's start with looking at the revenue bridge based on the numbers that Patrice just gave, okay? So revenue came in at EUR 798 million, down 2.4% year-on-year, which is a minus 1.2% organic growth.

So looking specifically at volumes, trends in Q1 were overall stable and fully in line actually with our expectations. So volumes were slightly down year-on-year at 0.4% where we saw growth in food jars and spirits that actually offset the declines experienced in nonalcoholic beverage and sparkling wines.

In Europe, the demand is broadly stable. As expected, volumes in Germany are down by double digits, but this is fully aligned with our industrial footprint adaptation. But excluding Germany, European volumes were growing at a low single-digit rate, and this is driven by the momentum in Southern and Western Europe.

And then in Latin America, volumes are overall flat. And we saw low single-digit growth in Brazil, stable volumes in Argentina and a high single-digit decline in Chile. Spirits actually continued to perform very well and confirm the positive momentum already observed end of last year, particularly in Brazil and which is supported by our Campo Bom format. And then beer and wine trends remain mixed across the region.

Now if we turn into pricing and mix, the impact was negative by around EUR 60 million, almost 2%, okay? This is what is reflected on the bridge and is coming from the carryover effect from '25 and some initial prices that we had to negotiate at the beginning of the year in a very different cost environment, okay, from what we've seen today.

Importantly is that this price/mix impact is much less pronounced than in previous quarters. And actually, we are confirming that we are moving into a normalized environment.

And finally, foreign exchange had a slight negative impact outside Argentina, and it was mainly related to the U.K. and Ukraine. And there is no positive -- there is no perimeter effect during the quarter.

If we turn now to the EBITDA bridge. What we see is higher profitability and clearly fueled by slightly positive spread and net productivity gains. So adjusted EBITDA reached EUR 159 million in the quarter, which is up 8.3% compared to Q1 versus last year, which translates into a margin of 19.9%, almost 200 basis points higher year-on-year.

The improvement is driven by 3 key factors. First, activity and operating leverage that were broadly neutral and reflecting stable volumes overall.

Second, after 2 years of a strong negative spread, the price/mix cost spread turned slightly positive in Q1, which is reflecting a normalization effect, right, that helped in particular with -- by lower energy costs following the end of the very expensive 2022 hedges.

Third, productivity delivered very strong this quarter and net productivity reached 2.1% net of cash production costs, and that represents EUR 12 million. And this is actually the result of continued discipline and operational initiatives and performance action plans across the group.

And finally, SG&A was very well controlled and all the teams push for reductions that were more than offsetting some one-off items that we saw. And FX was essentially neutral, excluding Argentina.

So overall, this confirms that profitability is structurally improving even in a still challenging commercial environment. So if we look at the net debt evolution and leverage. As of March 31, '26, net debt stood at EUR 1.9 billion, including EUR 64 million of right-of-use assets. So leverage remains stable at 2.7x over the last 12 months adjusted EBITDA, which is unchanged versus the December 2025.

So it's important to remark that they increased -- I mean, the EBITDA increased versus the year-end and moved back above the EUR 700 million for the first time in several quarters, right? I would just mention a quick thing that actually net debt increased versus December 2025, but that was driven by normal Q1 seasonality, minority dividends that we paid in the Canary Islands and then some fair value movements on financial instruments, okay? But that doesn't change our leverage position, which keeps stable.

And then finally, if we move to our financial structure and liquidity, I will just mention a few words. Our financial liquidity remains very strong and has a very good maturity profile, as you can see, with the first maturity in 2028, okay? We have -- the majority of our debt is actually long dated and a significant portion is on our floating rate exposure is hedged to interest rate caps, which actually protects us from short-term market volatility. So our financial structure remains robust and very flexible and resilient, right, which gives us confident visibility to execute our strategy and 2026 objectives.

Thanks a lot, Cristina, for your comments. And let's move to the '26 outlook. So for full year '26, we do confirm our objectives in an economic environment marked by continued soft consumption and increased, obviously, geopolitical uncertainty. But subject to the absence of a significant deterioration of the situation in the Middle East, we aim to generate an adjusted EBITDA of around EUR 700 million and a free cash flow of around EUR 220 million, excluding the restructuring cash out plan in relation to the group industrial footprint optimization project.

So we confirm our objective to confirm our guidance, and we remain focused on strengthening our competitiveness, cash generation and deleveraging by: one, implementing our capacity adaptation plan; two, delivering enhanced PAT savings; and three, keeping CapEx under strict control around 8% of our sales as we presented during the full year '25 results.

So thanks a lot for your attention. And now let's open the Q&A session.

[Operator Instructions]. The next question comes from Francisco Ruiz from BNP Paribas.

So I have 2 questions. The first one is related to pricing. If you could give some -- I know that you don't give flat numbers on pricing, but if you could give us an idea of how prices are in the different geographies. And in this environment of high energy costs, taking into account that you and some of your very close competitors are fully hedged for the year, but not the small players in the industry. If you are seeing from those players [ on movement trying to move ] to the current levels in order to offset the energy cost.

The second question is you have booked around EUR 53 million provisions this quarter in your P&L. I was wondering how much of this is cash? And also if this is the total amount that you expect from the restructuring plan to happen or we could expect something more in the future?

Thanks a lot Francisco, for your 2 questions. I will take the first one about pricing and cost and Cristina will take the second one. So about pricing, so you have seen that in Q1 results number, we are around 2%. As volume is being flat, we have a 2% low single-digit price reduction. By geography, obviously, this is a mix of Europe and LatAm.

In LatAm, we are much more in an inflation situation. So we have some slight price increase, but the weight of LatAm in our business, I think we can do that. But still low single-digit price decrease to make it simple in Europe with 80% of -- more than 80% of the negotiation already done and behind us, which is putting us in a situation we were expecting, which is a normalization of the spread of the price mix versus cost.

About -- so you're right, you know that we are hedged on energy of [indiscernible] and we are benefiting from that and being in a kind of cautious situation versus what is coming, especially with this Middle East situation. I do -- I cannot comment about competition and what competition is doing, obviously, as I do not have any information except what is publicly communicated, but we do not communicate ourselves on that. So no more to say about that on my side, Francisco. For the EUR 53 million...

So yes, Francisco, as you were mentioning, we booked in Q1 a EUR 53 million restructuring provision, and that reflects our best estimate as of today of the one-off cost that we plan to have, right, on the restructuring programs. So as Patrice mentioned, our -- I mean, the program is proceeding as planned, and it's fully in line with the road map that we communicated, okay? So the measures are primarily people related and focused on removing structural costs in geographies where capacity utilization and demand dynamics no longer justify the current footprint. So these costs are actually largely cash-based and will be mostly absorbed in 2016 -- 2026, with a little reminder in '27.

So thinking of the cash impact of Q1, I can say that it's -- I mean, it's just a few millions, okay, less than EUR 10 million in Q1. The plans are still [indiscernible] and we'll see the structural savings coming towards the rest of the year, which means permanent reduction in fixed personnel costs.

Okay. And could we have an update of the savings? I don't know if you have commented already this, if it's going to be long one to the provision or a payback of 1 year or something like that? Or could you give us more details on the savings?

So on the savings, so what we have is we are expecting, let's say, a net run rate EBITDA gain of around EUR 20 million. And we expect to get that -- obviously, as we expect full impact in H2, it's going to be in '26, 50% of that. This is what we have in our plan.

And it's included in the EUR 700 million that you mentioned on the guidance?

Yes.

Yes.

The next question comes from Jean-Francois Granjon from ODDO BHF.

Three questions from my side. The first one, could you come back on the volume? So we saw stabilization for the Q1. Do you expect an improvement or not for the volume in the coming months and coming quarters?

Second question is regarding the spread impact. So we -- there is a negative impact for the top line, but a neutral impact for the EBITDA during this fourth quarter. Do you expect an improvement or a neutral impact for the full year despite the decrease of the pricing?

And the last question concerns the capacity in the European market. There is lots of close reduction capacity with some closure of furnaces. Do you consider that currently the market is well balanced or remain with some overcapacity?

Okay. Thanks a lot, Jean-Francois. So about volume for Q1. So as we said in Q1, we have flat volume zero minus, but as we said that it will be considered flat with a strong growth in food jars and spirits, which is offsetting a decline in non-alcoholic beverage and sparkling wines. We have a low performance, decline performance, I would say, in Germany, which was expecting and in line as it has been said by Cristina and in line with the adaptation plan we have put in place.

In Latin America, overall, we are flat as well, but with, let's say, a low single-digit growth in Brazil, flat in Argentina and high single digit down in Chile. And in LatAm, spirits are performing very well and confirm the momentum -- the positive momentum we had last year, especially in Brazil, while we see beyond wine more mix in terms of evolution.

For the rest of the year, we stick to what we said during full year. So we expect to be in a flattish situation, no plus/minus. So no big expectation on the volumes compared to last year for us to go. We are very cautious about that and especially cautious in the current environment with the Middle East and to understand if inflation is back, is there any demand impact to come or whatsoever. So we are really vigilant on that. So no big change for this topic.

On spread, we are exactly where we said we would be, which is you remember that after 2 big positive year '22, '23, two strong negative year '24 and '25, we said that spread will normalize. This is exactly what we see and we do expect that for the full year. So no change there.

And about capacity, what I can say that I do believe that we have still some overcapacity as a market and not well balanced between demand and capacity in Northeast Europe. But we do consider that we have done our part of the job there, moving from -- if you do remember, we used to add at the end of '23, 10 furnaces in Germany. And with the plan we have now, which is underway, we are going to move from 10 to 6 furnaces. So we do believe that we have done our job on our side and that we are quite comfortable, I would say, we have now footprint in Germany with 3 plants, 6 furnaces to do good business. For the rest of Europe, we see the demand and capacity much more balanced. So in our view, on our side, no need to go for much more adaptation.

The next question comes from Saul Casadio from M&G plc.

I have a couple. The first one is on the price cost spread. Do you expect that to remain positive over the year? You mentioned normalization, but wondering whether that could be a positive contributor to the EBITDA bridge for this year.

Again, this is what we said. We stick to what we commented in February. We see the spread. So price mix versus cost normalizing, which is, again, if you take the latest '22, '23, '24, '25, we had big positive and negative swing. Here, we are saying that it's normalizing. And this is what Q1 is demonstrating. And this is why we say we stick to that for the full year. So it means it's going to be 0 plus, 0 minus. You know that in price mix versus cost, there is a mix, which is quite complicated to predict and depend on the demand, so we'll see.

But we clearly have the demonstration that compared to the past 4 years, there is a clear normalization and we are back to our standard business model, which is a slight growth in activity, neutral spread, I would say, and then an improvement in profitability coming from self-help measure, mainly delivering more than 2% cash cost saving. So we are back to something which is much more...

Okay. Thanks for clarifying this part. And in terms of your volume performance, I just want to double check, you said minus 0.4% for the volumes in the quarter overall. Just want to check that. And also if you can give us a sense of the market performance if you were in line with market, above, below, just want to get sense of the market overall.

So I do confirm on the volume side for Q1, this is what you said. So it's flat. And again, it's flat in Europe with Germany being strongly negative, but I mean, expected and in line with our plan. So it means that on some of the regions, we have much more positive development in Europe. LatAm as well is again flat with Brazil slightly up and Argentina flat and Chile down. So this is what we see.

And compared to market, it's always complicated to position as we speak because we do not have really, as we speak, the market, and we cannot speak about market share or category share or whatsoever. What is a positive news for us is that we are aligned with what we said and planned at the beginning of the year.

Okay. Okay. So roughly in line with market. Last one, if I can, is just a clarification in terms of the cost and savings associated with the closures of the 3 furnaces. You mentioned EUR 20 million as cost savings that you expect to see. You already mentioned the cash cost, but I just want to clarify what the number is. The cash cost on...

It is what we announced in February. It's between EUR 40 million to EUR 50 million.

Sorry, I just want to repeat that.

The next question comes from Manuel Lorente from Santander.

Welcome Christina to our small community. My first question probably it's on hedging, energy hedging. You commented that you are fully hedged for 2026. And my question is more related to 2027, whether you have made some proactive actions given the current backdrop or whether you can give us initial thoughts of the amount of hedge that you have for next year?

Okay, Manuel. And just to correct, we are not fully hedged for '26. We are hedged around slightly above 80% just to correct and this is aligned with our hedging policy, which is for year plus 1 at the end of the year. For the year plus 1, I want to be covered by 80%, for the year plus 2, 40% and for the year plus 3, 20%, and this is a rolling policy. So we are fully aligned with that. So we have about 20% of our energy cost for '26, which are following the spot price, just to clarify.

Two, about '27. So we are in a situation to apply our hedging policy, but since March, to be clear, due to the uncertainty and the volatility, we have admitted pause for '27, waiting for a better understanding of where the energy is going to land, especially on the gas side. So for '27, we have already taken some hedging position, but taken from '26 and taken from beginning of the year, Jan and Feb and no more since March. We are in a kind of pause mode as we speak. I hope it clarifies.

Okay. So maybe a follow-up on this. Can you remind us, Patrice, please, what is the amount of price pass-through or direct pass-through mechanism on your contracts as a percentage of sales or whatever number you can provide us?

It's about 15% to 20% of our business, which is managed under [indiscernible].

Okay. Great. Excellent. So my second question then is I believe that Cristina mentioned the EUR 11 million net productivity gain on this year. My perception, and correct me if I'm wrong, is that the EUR 20 million delta of new savings for the revamping of the European business are not included in those EUR 11 million. So it's just to confirm to double check that this EUR 20 million expected savings are something that we are going to see in coming quarters.

Yes. Manuel, I confirm. So we -- as we were mentioning, we are still closing negotiations. So [indiscernible].

Manuel, the EUR 20 million is the full...

Yes, Manuel. Could you hear me?

Yes. Now, yes.

Okay. So I was just mentioning that I confirm the EUR 11 million doesn't include any benefit from the rest.

Okay. And then...

Sorry go ahead.

So then my final question then. Since we expect an acceleration or a solidifying of the benefits from the cost-cutting plan, we have seen a very nice 8% EBITDA improvement year-on-year. However, the guidance imply a flattish performance for the full year. So this is because, I mean, you want to be conservative at this point in time because to some extent, Q1 results has been benefiting from some easier comps from Q1 last year.

So I wanted to double check with you at this point in time, why with a meaningful close to double-digit EBITDA improvement guidance is still pointing to a flattish performance year-on-year.

So first of all, we guide on a full year basis. We are not guiding by quarter, and it's already a nice exercise, one.

Two, obviously, we have a solid performance, and we are quite satisfied with Q1, which is in line with what we expect for the full year shape, but it's just one quarter. And this quarter, you're right, we have a positive comparison base compared to last year. So let's see how it's going to develop. But as we speak, we are in line with what we committed on.

Our plans are underway. And we will see how Q2 is confirming our plans or not, and we will be back in H1 or in July for H1 results, and we'll see if we have to update on that. But based on the uncertainty volatility, what is in front of us, sticking to our full year guidance is our stance today. Let's see, it's just 1 quarter on, 3 quarters to go.

There are no more oral questions at this time. So I hand the conference back to the speakers for the written questions.

Okay. Thanks a lot, and good morning all. David Placet, I'm the Head of IR. We have a few written questions that I'll share with you now. The first one comes from Antoine Laurent questioning, if I remember well, your expectations for '26 for price was towards 0 for the full year and mix was still a question mark. I'm wondering if this Q1 price/mix cost spread, so slightly positive was expected. It would be -- it looks like it would be some unexpected upside so far. So basically, expectations for the full year price/mix cost spread.

So the answer is yes, it was expected. Again, keep in mind that what we said, we expect in '26 spread -- normalization of the spread. Again, look at what was the result of our spread in '22, '23, '24, '25 with big swing up and down. Here, we are speaking about a normalization. So what we have in Q1 is what was expected, sorry. And -- but again, we are not managing on a quarterly basis. We are managing on a full year basis. And what we said is still valid for the full year, with the caveat of the mix, again, that we do not control. This is why we are saying normalizing.

Great. Thanks, Patrice. Another question from Samir Shah. Can you talk about industry level capacity closures for this year or planned for this year? I guess, planned probably we can't. But I mean, I guess maybe we can have a quick update on what -- on the recent announcements.

Yes. So plan, I don't know, we'll see. What we know is with the latest announcement and especially the one, which came last week or the week before, I don't remember with [indiscernible] in Germany. Since 2023, since the end of 2023, we are up to 25 furnaces closed, still to come in '26, the final date, but 25 announcements made, which is at the end, an equivalent of 2.2 million tonnes of glass, which is about 10% of the total production gas in Europe. So this is quite significant.

Thank you, Patrice. And then a final set of questions from [ Andre Giuseppe Fray ] 4 of them. The first one relates to energy prices. Question is, what are your scenarios for energy prices? And how confident are you to keep full year EBITDA guidance given significantly higher energy prices? How do you mitigate the impact? That's the first question.

So about energy impact, again, thanks to our hedge policy, we are exposed about 20% of our energy cost, which is -- so we can make many simulations, but with what I would consider as a central scenario, the impact on energy cost is not so material, I would say, compared to a full year impact.

We are speaking about something which will be below double-digit million euro for us. But again, this is according to what we have as a view today. Obviously, what is much more complicated for us to simulate is what is everything related to logistics and cost and all of that. And it could be somewhere something similar worst case. So this is what we have.

And in terms of pricing, we are monitoring all of that. So far, no pricing adjustments related to this Middle East situation. But obviously, if it will last, we'll have to move and make a kind of surcharges at a point of time. But so far, nothing done, nothing planned, waiting and observing the situation.

Thank you. The second question, I guess you've just answered it actually relates to pricing. So how do you expect pricing to develop in '26. But I guess that's been -- this is what you've just comment. And the last 2 questions relate to leverage and rating. The first question is where do you expect net leverage to end up by the end of '26 is around 2.5x a fair assumption?

So look, I will not comment on a different or new guidance. So I will refrain to the earnings -- I mean, at the first half of the year, okay? But what I can say is that definitely our capital allocation priorities remain unchanged, right? We have had a strong quarter in terms of cash generation with the disciplined CapEx, and we keep targeting to deleverage by the end of the year, right? So there are no changes to the dividend mechanics. There will be no buybacks and no capacity projects, right?

And in the Capital Markets Day in Q3, we will have the appropriate forum to address any medium-term capital allocation. Okay? And then on -- as I was mentioning, the first quarter follows typically a seasonal pattern with a bit of working capital absorption, but we've managed to contain our cash outflows.

And for the full year, we expect cash generation to be weighted towards the second half. And with this, liquidity remains strong. I mean -- and the leverage will obviously doing the math, it will hopefully go down, right? So we have significant headroom, right, across our financing structure. And definitely, our goal is, as we said in the press release, is to return to investment grade, but that's something that we don't control, and we remain focused on execution, right, rather than agency decision.

Great. Thanks, Cristina. And that leads us to the last question, which actually you've just partly answered, which was how confident are you that you can keep Moody's IG rating, i.e., how much time you have to improve credit metrics, et cetera. So I mean, again, we're working towards that. We're doing the job, and I think that's it.

So that is it from me. Thanks, Christina. Thanks, Patrice.

[Operator Instructions]. The next question comes from Saul Casadio from M&G plc.

It's very similar to the question that's just been asked. So it's on your rating on the -- sorry, on the Fitch side -- sorry, on the S&P side. Sorry, I don't remember if it was -- yes, on the S&P side. And basically, you mentioned in your release that you plan to return to investment grade, I guess, also to regain IG status with S&P. Would you be able to put a time frame in your plan to get back to IG by -- on the S&P side?

No. Unfortunately, not. As I was mentioning, I mean, we are focusing on operational execution, deleveraging and cash generation. And we are in contact with S&P, and they also look at -- they not only look at 1 quarter, right? So unfortunately, I mean, I cannot give you a time frame. But what I can give you is that deleveraging and cash generation is definitely is a priority and one of my main focus.

The next question comes from Manuel Lorente from Santander.

Yes. Sorry, just a quick housekeeping related type of question. Correct me if I'm wrong, but neither in the presentation nor in the press release, I have seen any comment regarding the new dates of the Capital Market Day. So I don't know what is your latest thoughts about this event?

We are on it, Manuel. We stick to Q3. So we should come back to a precise date. We'll fix that for sure for our next release, working on that and trying to -- yes, to work on that, obviously.

Okay. And Manuel, I would like to just clarify one additional point on the prior question on S&P. The fact that we were downgraded, it didn't trigger any coupon step-up, okay, put option on an acceleration clause. So there is no immediate or mechanical impact on the cash interest payments for us with the downgrade, just to clarify.

The next question comes from Fraser Donlon from Berenberg.

Cristina, Fraser here from Berenberg. I just had one question. I was wondering if you've seen any change in behavior of your customers as a result of the war in Iran, especially reading about kind of higher aluminum pricing, force majeure and smelters in the Middle East. I was wondering if there's any kind of increased interest you start to see in glass as a substrate or not yet.

Thanks a lot, Fraser, for your question. It's a good one, and we are monitoring that, obviously, interacting with our customers. To be clear, so far, no change. I think for our customers, the biggest impact could be supply chain disruption and obviously, presenting them to bottle and to sell. But so far, to be honest and clear, no change, no major change. I have not observed that. It's a little bit early to see that.

Okay. So I believe that we have no more questions. So again, so thanks a lot for your attention. So as you have seen, we have quite a solid Q1, but it's just one quarter. You know, as I know, all the uncertainty and from one day to the other, the geopolitical situation could trigger some impact on our business. But we remain confident according to the guidance we committed on early this year.

And you have understood that we are really focused on self-help measures strengthening our competitiveness, cash generation and deleveraging. So let's see. Thanks a lot again, and let's meet in July for a full H1 review. Thanks a lot. Take care. Bye-bye.

Thank you.

Ladies and gentlemen, welcome to the Verallia 2025 Full Year Results Analyst Call. The call will be structured in 2 parts. First, a presentation by the Verallia Group management team, represented by Patrice Lucas, CEO; and David Placet, Head of Investor Relations. Afterwards, there will be a Q&A session.

[Operator Instructions] I will now hand over to the management team. Gentlemen, please go ahead.

Good morning, everyone, and thank you for joining us. So welcome to our Q4 '25 and full year financial results. Today, David Placet, our Head of Investor Relations, is with me. And as usual, we'll go through our presentation, and then we'll have the Q&A session. I will share with you some key highlights, and David will present in detail our numbers, 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 #1 in Europe, #2 in Latin America and #3 worldwide. On this chart, you have our ID card. You have on the left, the update of our 2025 split of sales by segment. Compared to 2024 split, still wine and spirits have lost 1 point each. Spirit -- sorry, still wine and sparkling have lost 1 point each. Spirits and beer have kept the same weight, and soft drink and food have won 1 point each.

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 with 35 glass plants and 67 furnaces, serving around 11,000 customers and producing around 18 billion bottles and jars annually. Please note also that we are running 19 cullet recycling centers, allowing us to control about 50% of our needs for external cullet.

Let's now move to some key highlights. And I would like to come back on 4 of them, which have been key milestones in 2025. One, our net zero 2040 trajectory was validated by SBTi, making Verallia the first global food and beverage glass producer to commit to a 2040 pathway. This confirms our decarbonization leadership, and we have a robust plan to do so. By 2030, we plan to reduce our Scope 1 and 2 by 46.2% compared to 2019 and by 90% in 2040.

For Scope 3, the plan is to reduce by 27.5% in 2030 compared to 2019 and by 90% by 2050. Some of our customers have committed to achieving net zero by 2040, and they need our contribution. This commitment is paramount and demonstrates how glass packaging is well positioned as a sustainable solution for the future. This is a strategic lever for future value creation.

Number two, we added targeted capacity and progress in decarbonization. In 2025, we commissioned a second furnace in Campo Bom, Brazil to support our organic growth in a dynamic market. And we also commissioned a second furnace in Pescia in Italy to support the food growing segment. These 2 plants moving to 2 from 1 furnace are also improving their own competitiveness.

And then we opened our first hybrid furnace in Zaragoza in Spain, replacing a traditional furnace. It is a success. We are running now up to 60% electricity and getting the CO2 emission reduction.

First key highlights, obviously, 2025 was marked by BWGI's voluntary tender offer. This process ended mid-August and was successful. BWGIs went up and has now 77% of Verallia share. BpiFrance went down and has now 3.8%. Employees still have 4.1% of the share capital, and the floating part is now at slightly above [ 12% ]. And last key highlight is our successful new bond issuance of EUR 850 million, demonstrating the support and confidence in Verallia.

About our CO2 emission reduction, we are on track to reduce absolute emissions by 46% by 2030 compared to 2019. In 2025, Scope 1 and 2 emissions were slightly up by 0.7% year-over-year, gains being offset by higher production level compared to 2024. We are now at minus 23.2% compared to 2019. What is very significant is the reduction of our intensity, meaning the CO2 by tons of pipe glass, which is down by 3.1% in '25 compared to '24.

Please also note that external cullet usage increased to 57.7% and that our renewable low-carbon electricity share rose to 69% from 64%.

Next is about the communication we did last week about targeted industrial adaptation in Europe. After a strategic review conducted in each of our European countries, we are considering adapting our industrial footprint in Europe to align with the reality of the current demand.

These actions respond to: one, weak demand in Germany, Benelux without significant evolution at midterm; two, no material rebound expected in Cognac and overcapacity in extra-flint; and three, a market downturn in the U.K., especially in spirits.

Facing these market realities, in Germany, we are considering the closure of the Essen site, about 300 positions, with production transfer to other Germany sites. In France, we are considering non-reconstruction of our furnace in Cognac, which is approaching end of line. And here, we are speaking about 60 positions. And in U.K., we are considering shutting down one of the furnace in Knottingley and restart a more efficient furnace in Leeds.

With this plan, we are moving from conjunctural to structural adaptation. This plan is about adapting to volume context on a specific segment and a specific geography to better focus on growth opportunity. Our objective is all about competitiveness, cash generation and asset efficiency.

Before giving the floor to David, a quick overview on Q4 and full-year results.

As seen from a few quarters now, we are recovering volumes quarter after quarter. Q4 revenue is down by 7.1% year-over-year to EUR 763 million, with an organic growth at minus 4.2% year-over-year, which is giving a full year revenue down by 3.6% year-over-year to EUR 3.331 billion, with organic growth at minus 2.8% year-over-year.

About EBITDA, Q4 adjusted EBITDA is EUR 161 million, minus 20% versus last year, with a margin of 21.1%, minus 341 bps versus Q4 last year, giving a full year adjusted EBITDA of EUR 692 million, minus 17.8% compared to last year, with a margin of 20.8%, which is minus 360 bps compared to last year.

Net income is EUR 93 million, reflecting a minus EUR [ 27 ] million noncash after tax impact of exceptional asset depreciation, mainly from Germany and in line with the industrial adaptation we are planning.

About net debt, our leverage is ending at 2.7 versus 2.6 at the end of September and 2.1 end of '24. Subject to the approval of the general assembly meeting of shareholders scheduled on April 24, the Board is proposing a dividend of EUR 1 with options for payment in cash or new Verallia shares. Please note that BWGI and BPI have committed to opt for share payment, meaning that the maximum cash out will be of EUR 20 million for the group.

And finally, about our financial indicator, this is what I have just mentioned. So we are on track and especially with good progress on the external usage.

So let's see now in details the numbers with David.

Thank you, Patrice, and good morning, everyone. I will now walk you through our Q4 and full year '25 results following the same course as usual, i.e., starting with revenue, then EBITDA and then cash.

So first of all, revenue bridge for Q4, which, as a reminder, isolates Argentina, as we've now done for quite a few quarters. As you can see, Q4 revenue was EUR 763 million, down from EUR 821 million in Q4 '24 despite positive volume growth. Sales volumes were up again in Q4 for the sixth consecutive quarter, though at a slower pace than in Q3.

You may be surprised to see a negative volume lag on the bridge when volumes are actually up. This is due from a one-off in Q4 '24 that did not happen again this year and accounted for slightly more than EUR 10 million of decline or 1.5% of growth. Without this one-off, the volume lag would be positive and organic growth would actually be -- so rather than the 4.2% negative that you see here, would actually be in line with the organic growth for the full year of around minus 2.8%.

Moving on to price/mix. As has been the case through 2025, this price/mix impact is the main negative driver of the bridge, and it amounted to a negative EUR 36 million in Q4. However, it is worth noting that this impact has been phasing down through the year as price/mix was negative by EUR 59 million in Q1, down to EUR 52 million in Q2, EUR 43 million in Q3 and now EUR 36 million in Q4.

The only other material impact that we see here relates to Argentina, whose contribution was affected by the continued devaluation in the peso, and there was no other FX or perimeter movement in Q4.

So what does that mean for the full year? The overall momentum was broadly similar in FY '24 versus Q4, with positive organic volume growth contributing EUR 78 million, but being offset by the negative price/mix impact of minus EUR 189 million. So revenue for the full year amounted to EUR 3.3 billion, down 2.8% organically. Like we said, the volume impact was indeed positive, 4 quarters of positive volume growth, fueled in particular by strong activity in food and NAB.

The negative price/mix was largely due to the carryover impact from the 2024 price reductions, but went actually down gradually through the year, as we highlighted earlier, minus EUR 111 million in H1 and EUR 78 million down in H2.

As for other factors, FX mainly related to the Brazilian real, perimeter to the contribution of Corsico, which, as a reminder, affected H1 only, and Argentina was down on adverse FX.

Now going quickly region by region. So let's start with SWE. We actually had pretty strong and consistent activity volumes through the year, fueled by strong performance in NAB. And I think all segments achieved positive like-for-like volume growth in the year with the exception of sparkling wines.

This was, however, more than offset by negative price/mix development, and that led to a negative 3.8% organic growth and full year '25 revenue of EUR 2.2 billion. Reported growth was 1.6% negative after factoring in the 6 months of extra revenue from Corsico.

NEE faced a difficult year with both lower volumes and selling prices, especially in Germany. Food jars performed well. But most other segments, not so much with a slowdown in activity in Q4, especially in Germany, mostly beer and sparkling. Spirits remained under pressure in the U.K., but the reopening of our second Ukrainian furnace contributed positively towards year-end, especially in the food segment.

Last but not least, LatAm. So as you can see, very positive organic growth of plus 8.5%, fueled by the volume growth that we saw, especially in Brazil and as usual, pricing in Argentina, but being more than offset by the strongly negative effect in both Brazil and Argentina, leading to a 10% lower reported revenue at EUR 384 million.

And I just wanted to highlight before we move on, in Brazil, the strong contributions from spirits and wine, supported by the Campo Bom furnace opening midyear, and that more than offset the slower beer demand that we saw in H2.

Let's now move to EBITDA, starting again with Q4. So Q4 adjusted EBITDA was down to EUR 161 million. Margin was 21.1% down year-on-year, but higher than the 9 months '25 margin, which stood at 20.7%. Activity impact was again positive in Q4, fueled by a combination of higher organic volumes and some inventory buildup that took place towards the end of the year. Spread remained negative in Q4 by EUR 53 million, mainly driven by lower prices and mix. But overall, as we said, spread again improved through full year '25.

On the other legs, net productivity contributed EUR 10 million. Argentina was down on negative FX. And the other leg was negative as the SG&A reduction was offset by the nonrecurrence of a number of positive one-offs that we recorded in Q4 '24.

Moving on to full year. So the chart looks a bit the same here with positive activity growth and productivity offset by negative spread and FX. Activity contributed strongly, plus EUR 60 million with broad-based growth, especially in food and NAB and like we said, some positive inventory variation.

Spread had a very strong impact, a negative one through the year or minus EUR 236 million. But like we said, softened materially through the year, EUR 143 million negative in H1, EUR 94 million negative in H2. Net productivity contributed in line with our 2% cash cost reduction target. So here, 2.1% or EUR 45 million. So we've done the job again on this item, focusing on what is within our control in a difficult market environment.

The other leg was positive in full year unlike Q4, with positive perimeter and SG&A reduction, partly offset by the negative impact in Q4 that I referred to earlier. Lastly, FX weighed on EBITDA through the decline in both the Brazilian real and the Argentine peso, again, Argentina being recorded separately. So the bottom line from this slide is profitability down year-on-year, but still solid, above 20% and in line with our revised '25 target.

Looking at our geographies. So let's start with SWE, and I think we'll move a bit faster here. Main message again, EBITDA down year-on-year to EUR 461 million, but with a still solid margin over 20%, positive activity contribution, strongly negative but gradually moderating price/mix and productivity delivering in line.

More challenging situation in NEE with EBITDA down by 30% to EUR 104 million, with margin down substantially as well. We did see the positive impact from the fixed cost reduction plan implemented in Germany, but this was largely offset by lower volumes and negative spread, including some softer activity in H2, especially in Germany.

Two bright spots that I think are worth highlighting. First is the improvement in Ukraine with the reopening of our second furnace and then the very strong delivery on PAP, again, focusing on what is within our control.

Lastly, LatAm. So as we saw on revenue, we had a strongly negative impact from FX and EBITDA was up 3% organically, but down 14% reported to EUR 127 million. EBITDA was supported by strong activity, especially in Brazil and again, productivity, though spread was slightly negative.

I think we would like to reiterate the very strong profitability of our LatAm business. So 33.1% margin in '25, close to the 2024 levels. This business keeps growing, and it now accounts for nearly 20% of the group's EBITDA. I think the exact number is 18 despite the FX headwinds.

Now moving to cash. Let's start with one of the key drivers, which is CapEx. So obviously, in a difficult market environment like the one we're facing, keeping CapEx under strict control is obviously key to protect our cash generation.

So in this context, Verallia's total booked CapEx was down significantly in 2025 to EUR 259 million or 7.8% of sales. This was made possible by a strict control on our expenditures as well as a light furnace repair schedule, which led to a lower recurring CapEx.

At the same time, we continued to invest in our strategic CapEx for the growth of our business and our decarbonation plan. Strategic CapEx remained close to EUR 100 million, so EUR 97 million, 2.9% of sales.

And as a reminder, we commissioned 2 new furnaces in Brazil and Italy. We opened our first hybrid in Spain in Zaragoza, and we're working on the second hybrid to be opened in France in '26 in Saint-Romain. Looking forward, let's keep in mind that we have no new capacity investments coming up. And more generally, we intend to keep our CapEx under strict control.

How does that translate into cash flow generation? So the main highlight of the year on the free cash flow is basically it doubled in '25 to EUR 166 million despite a substantially lower year-on-year EBITDA. This was achieved through the tight CapEx that we just referred to as well as a lower working cap outflow versus '24 despite some inventory buildup towards year-end.

CapEx conversion remained very high at 62.6%. It was actually up 100 bps year-on-year and operating cash flow was close to that of '24. Free cash flow doubled eventually as interest paid was broadly in line with '24 and cash tax went down sharply.

As a reminder, other operating impact mostly includes the IFRS 16 charge and some restructuring costs. We had, I think, EUR 16 million of them in '25, mostly relating to Germany, and without which free cash flow would have been EUR 182 million.

Looking at our leverage now, net debt was broadly stable in full year '25, so up EUR 63 million from year-end '24 after the payment of EUR 200 million of dividends in May '25. Net debt was actually down in H2 with EUR 100 million of free cash flow generated and amounts to EUR 1.86 billion at the end of '25. Leverage is up year-on-year to 2.7x. This is mostly due to a lower LTM EBITDA, and it is broadly flat against September '25.

And lastly, turning to our financial structure and liquidity. I think you know this chart pretty well by now. There have been some changes this year on the back of BW's public tender offer. The bulk of our gross debt now revolves around 5 bonds.

The first two are the SLBs issued in 2021. They were callable, as you know, following the change of control, but there are still EUR 170 million of them outstanding at year-end, which is quite nice given they are pretty low rates.

The third one dates back '24 for EUR 600 million. And the last two bonds were issued, as Patrice mentioned in introduction, in November '25 to refinance the bridge loan that itself helped refinance the SLBs that were called further to the tender.

So two points to highlight as the bottom line. The first is we have very strong liquidity at EUR 870 million, including nearly EUR 400 million of cash at year-end. And we also had a very strong maturity profile with no meaningful maturity until '28.

With this, I'll hand over back to Patrice. Thanks for your attention.

Many thanks, David. So let's move to the outlook. As for the past 2 years, the key topic for the outlook is market environment. What could we expect for 2026? When we analyze some key customer comments or feeling about the demand plus all the market intelligence we have, it invites us to be cautious. We could see some positive expectation for nonalcoholic beverage and food, but stability or slight decline for the other segments. So all of that is pointing to market stability in 2026.

And to be more specific, we expect a continued soft end consumption backdrop in Europe, with LatAm likely to outperform. Geopolitical and trade uncertainties will persist and drive volatility for sure.

The price carryover effect from prior reductions will gradually phase out, which will ease pressure on inflation spread. And the European furnace closures continue is pointing to industry overcapacity reduction. Just as a reminder, we know that since the end of '23, '22 furnace closures have been announced.

Overall, stability rather than an upturn is our base case for 2026. Therefore, for 2026, with this market environment we have just described, we aim to deliver an adjusted EBITDA around EUR 700 million and the free cash flow around EUR 220 million, excluding the planned restructuring cash out.

I want to tell you that we do enter in 2026 with discipline and confidence with strong focus on our competitiveness, cash generation and deleveraging. We plan to strengthen our competitiveness by implementing our capacity adaptation plan, delivering enhanced PAP savings and keeping CapEx under strict control around 8% of sales.

Thanks a lot for your attention. And now let's open the Q&A session.

[Operator Instructions] the next question comes from Francisco Ruiz from BNP Paribas.

I have three, if I may. The first one is on the outlook. I mean, with volumes more or less stable and stability in prices with more than EUR 50 million or around EUR 50 million coming from PAP, why are you still expecting a flattish EBITDA this year?

Second, on the restructuring plan. Would appreciate if you could give more detail or tell us when you are going to release this detail in terms of the savings that you're expecting, the cost of this, how it's going to be mainly performed during this year and the following? Need More information on this because it's a substantial plan.

Last but not least is on the inflation, on the cost inflation, on Q4, we have seen a 4% cost inflation versus last year when we have seen a decline in energy. And theoretically, your energy bill should be lower than in previous quarter as a result of the rolling forward of the hedges that you got. So I don't know if you have an explanation for this. And if you could give us what's your expectations for energy for 2026?

Okay. Thanks a lot, Francisco, for the three questions. So about the outlook, I think you made a quite clear analysis. But first of all, let me tell you that lessons learned from 2025, I want to be cautious. I want to be cautious, taking the lessons learned on the volatility of the environment. So on the activity, I have explained our case, base case for 2026, flat in Europe, some up in Latin America in a much more dynamic market.

About spread, so we're going to still have some carryover effect, but like carryover effect from '25 to '26. And we are planning to have a spread normalizing towards zero with still a big question, which is a mix impact because you know that in our spread, we have mix plus price and inflation. And we have seen lately that the mix was quite negative, and this was the case in 2025.

About PAP, so we are going to deliver and push for higher delivery. And we have the ForEx in front of that, which is always down and pushing down the EBITDA compared to last year. So again, we want to be quite realistic, and we want to really focus on self-help measure, what we do really control. And then if we can get additional upside, we'll see. But as we speak, this is what we are proposing as a commitment to be around EUR 200 million.

For the restructuring plan, so I think we'll be back to you in Q2 for our Q2 results with much more details. What I can tell you, as we speak, the intent is to have this plan implemented in H1 to take about 50% of the positive impact in our numbers this year and full 100% of impact next year for '27.

The cost of it, obviously, we have negotiations which are starting both in France and in Germany, and we need to let go this properly and according to the social responsibility we want to clearly have with our people there in Germany and in France to finalize and comment definitively.

Cost inflation, maybe David can comment.

Patrice, just one thing. I mean, you said that 50% of the plan will be -- the savings of the plan will be this year. This is included in the EUR 700 million guidance?

It is about, yes.

Okay. So to your question on cost inflation, I think, in Q4, we had some positive items in Q4 '24, like I mentioned, in the form, I think, of tax credits, which didn't happen again this year. And I think that mostly explains the indeed the slight increase in the cost base. Otherwise, it will be, I think, broadly flat.

Having said that, two items worth keeping in mind. As usual, we did indeed have some relief in '25, including on credit and to some extent, on energy. But we also had some inflationary pressures, I mean, as usual, from personnel costs in particular. And as a reminder, too, I think we still had our -- some of our '22 hedges valid up until the end of the year. And so we'll only see the, say, the benefit from the end of these starting '26.

And about the guidance for energy in '26, please?

Sorry. Guidance for energy?

Energy cost in -- I mean, on the rolling forward your hedges, I mean, how much do you expect the energy bill to be reduced in '26?

This is not a number we are going to provide. What we could tell you is that we are hit and it was a headwind for us in '24 and in '25 based on our hedging policy. What I can tell you is that the penalty we had in '25 is behind us when we are entering in '26. So we have our energy costs, which are going down.

And if I want to be a little bit more precise, we're going to be at market level for '26. Obviously, depending on the volatility, we see a lot of volatility. But as we speak, globally, we are there.

So that means how much versus this year? I mean, a gross figure in terms of variation, is it 10%, 15% lower?

I think we really want to speak more -- think in terms more of spread, to be honest, at the end of the day of the year, that's what's going to matter.

The next question comes from Jean-Francois Granjon from ODDO BHS.

Yes. Four questions from my side. The first one, could you give us some more color regarding the negotiation you have currently with -- for the pricing with your customers? Can you implement some new price increase or not?

The second question concerns the spot effect. So I understand that the carryover should be lower compared to the previous year, but do you expect a negative price mix effect?

The third question concerns the cash out expected coming from the restructurations. This should impact, I think, the free cash flow. So could you give the amount the cash out expected this year? And the last question. So you confirm the CapEx level at 8% of the sales. So do you expect minus EUR 300 million CapEx for all CapEx in 2026?

Okay. So about negotiation on pricing, I mean, obviously, we are not commenting in detail the pricing evolution and what we are negotiating with our customers. So what I can tell you is that compared to '25, we still have some slight carryover effect. We're going to have, depending on the geographies and depending on the segment, some slight price decrease.

But what is much more important for us, we do expect a normalization in towards zero. The big uncertainty we have is mix. As you know, it's quite complicated to estimate the mix. And what we have seen in '25, it was already the case in '24 is that mix is pulling down the financial numbers was negative.

About cash out for our adaptation plan, industrial adaptation plan. Obviously, negotiation is going on, and it's going to take a few weeks and even a few months for.

What we do expect? I can tell you the order of magnitude is going to be restructuring cost, most of it being social cost between EUR 40 million to EUR 50 million and most of this impact in '26. Some will come in '27, but most of it in '26.

CapEx, yes, we do confirm CapEx that due to the market environment, due as well to some CapEx deflation and negotiation we are able to do, we do see our CapEx maintaining the level around 8% of our sales. This is what we see for '26 and certainly onwards as well for '27, but this is what we see.

Just a question regarding the mix effect. Could you just remind us the main difference in terms of mix between the different segments with sparkling wine, non-alcohol beverage, et cetera?

It's -- that's a tricky one, to be honest, because there's -- I mean, some segments are inherently better priced than others, but it is also enhanced complexity in certain products. So I'm not sure we can have like a generic answer to this one, unfortunately.

The next question comes from Saul Casadio from M&G.

Just have a couple. The first one with regards to your -- the restructuring plan that you are considering. What is approximately the capacity as a percentage of your capacity that you -- that will be taken out as a result of this plan if it's implemented in full? That's my first one.

The capacity we are speaking about here, so meaning SN, 1 furnace in Cognac is around 200 kilotons per year. 200 kilotons per year. So to our full capacity, it's about 3%?

It's around 3%. As a reminder, we have around 60 furnaces in Europe, and we're going to be shutting down the 3, subject obviously to...

I think what is important to mention on top of this adaptation plan, you do remember that, obviously, market is down since the end of '23. And at the point of time, there was a big question about the market recovery. And we are expecting, to be honest, the quickest recovery of the market, and we were working on making adaptations, short-term adaptation to better try to understand if we are facing some [ conjunctural ] market situation versus structural market situation.

Now it's clear that we came up with the conclusion that in Germany, due to the overcapacity we observed and the market dynamics, it's no more [ conjunctural ], but it's much more structural. And for us, it's really to redeploy the business in Germany on 3 sites, 6 furnaces for better qualitative and contributed business. This is really the strategy.

When we speak about France, it's about the same. But in France, we had some conjunctural cold start, temporary shutdown and all of that. But here, we came up to the conclusion as well that what we have seen in Cognac after booming volumes in '22 -- in '21, '22 is that it was not really structural as well, and we are much more normalizing and we are back to '18, '19 volume.

So which is why we decided as well to make a structural decision to adapt there. And as the furnace is coming to the end of life, there is no rationale to reinvest on this furnace for this market.

Okay. Just to clarify, I have understood correctly. So if we put together the capacity of the French, German -- sorry, the [indiscernible]. If we put all together, the U.K., the French and the German, that represent roughly 5% of your total capacity?

3% the capacity. You're close to fly, kidding. Now to be precise, the capacity reduction is in Germany, in France, if I want to be precise. In U.K., it's not a capacity reduction, it's a closure of one furnace and the reopening of another one, but -- which is much more efficient in terms of competitiveness, in terms of cost and in terms of CO2 emission. Is it clear?

Yes. No, it is clear. Will you consider more actions because your competitors have done more on the supply side in terms of taking out capacity? Is it likely? Are we likely to see more on this side?

I mean, so it's all about the geographies and the segments we are in. Obviously, so the geography which is suffering much more and which really has overcapacity is Northeast Europe and especially Germany. So this is why we have taken measures there.

And if I'm back to what we had in '22, in '22, we are operating 10 furnaces. And here, we are planning to move to 6. It means we have done already part of a job in '24 and in '25. So in Germany, moving from 10 to 6 furnaces. So the job has been done, I would say. And in France, so we are making this decision for Cognac, which is really a specific segment in which, I mean, we need to face reality.

And then for South of Europe, I mean, Italy and Iberia, Spain and Portugal; we don't need to adapt capacity there. And I'm not speaking about Latin America, we are on the opposite. I mean we are facing a much more dynamic market. And we have opened for the past 2 years, 2 additional furnace in Brazil, putting our [indiscernible] Campo Bom facility from 1 to 2 furnaces.

And this move -- I mean, just to reiterate what said earlier, this move is really consistent with what's been happening in the market. If you look at the, I think, 20 or so furnace closure announcements that have taken place over the last 2 years, most of them relate to, let's say, Northern Europe, so Germany and Benelux in particular.

Okay. And just a quick follow-up on this one. In terms of the industry, considering all the closures that you have mentioned, how much do they represent of the European capacity? How much capacity has been taken out in the industry over that period of time, roughly speaking?

Sure. So the European market, I mean, if you really look like at the broad scope definition, is around 20 million tonnes. And we -- so a furnace on average tends to be around 100,000 tonnes. There's been -- so including ours, I think we're now at 22 furnace closure announcements, so around 20. So basically 10% of European capacity.

Okay. That's good. And my last one, if I may, is on your IG commitment and clearly noted what you have done on the dividend in terms of reduction and the option to take it in a share form so reducing the cash out. Question is, do you think that will be enough to stay IG? Or do you need to do more to maintain your rating?

Yes. This is our plan, and this is why we have proposed with a fully -- in full responsibility this dividend option. And according and we see where it could put our leverage at the end of the year if we do the job, I mean this is a nice trajectory, which will keep our investment grade, for sure. This is the plan. This is one of the key commitments we have, especially working on the cash as well.

There are no more oral questions at this time. So I hand the conference back to the speakers for the written questions.

All right. Well, thanks a lot. So we have quite a few written questions. Having said this, as is often the case, some are pretty much the same as the one we had in -- on the call. So let me just have a look.

Okay. So let's start maybe with the first question from Matt. Two questions. So first one is with the closures, will you be able to restore the EBITDA margin with increased capacity utilization? Or is this a preventive move from you to stop the decline going forward? Second question on the demand side, do you see a changing mix in the past couple of quarters could affect the profitability in the future?

So on the first question about restoring the EBITDA margin, obviously, it's part of the objective, improving competitiveness and over time, restoring and improving our margin, EBITDA and margin. This is part of it.

I do believe that, I mean, since '24 with the market downturn in '23, we are in a kind of low cycle. Frankly speaking, we are expecting a much more quicker recovery. But what we are quite confident in is this cycle will go up. So we move from a low cycle to a better cycle.

When we see the overcapacity being reduced over time, especially in the main countries, we do believe that it is going to support a better asset use. And all of that with one key objective, which is restoring and improving margins, and this is what we want to do.

On the demand side, so this is what we have explained and we are part of that. What we see globally is that we see that nonalcoholic beverage and food are much more segments which are showing opportunity of growth. And we see that on the other, it's much more flattish. Or even on still wine, it is declining depending on the countries. So obviously, there is a mix of segments.

And what is important for us is to make sure that we are focusing as well our sales effort, our product offers, our innovations on this growing segment. And food is clearly one. And this is why, by the way, in Italy last year, we did open additional capacity dedicated to food, which will bring some upside starting in '26 and in the years to come. So this is what we see here.

Thank you, Patrice. Another question from [ Claudio Dier ]. You talked about a normalization of the spread towards zero in '26. Is this comment made looking at the full year? Or does it mean that you plan to be towards zero at the end of the year, for example, Q4 '26?

Our ambition here is speaking full year. And again, with the caveat of the mix for which the mix which is weaker for control, but the full year is our objective towards zero.

Two questions from [ Andrea at Freight ]. Can you provide a guidance for leverage by end of year and for '27? So a question about IG. I think that one was answered already.

And one question about visibility on the margin in Q1 '26. Is it sequentially stable, up or weaker?

I think on leverage, frankly, I think you have -- you can -- we clearly expect it to come down. I think you can fairly easily do the math. We are planning for around EUR 220 million in free cash flow minus the restructuring cash outs that Patrice referred to. On the other hand, we have a maximum cash out of EUR 20 million on dividend. So that gives you an idea basically of the deleveraging prospects.

And I think on the margin in Q1 '26, I don't think we want to comment necessarily on that one. Maybe just keeping in mind that last year was quite a low point in the year. In Q1, I think we were at 18%. So there's clearly room for improvement there.

Okay. Just to see whether there's a few questions, but I think a question from [indiscernible]. Pricing and volumes in 2026 by region, I don't think we're not sure we want to go much further on this one. The cost of the capacity shutdown we've covered. And indeed, I confirm that the EUR 220 million free cash flow target excludes the restructuring cash out.

With that, we have no further written questions. I don't know if there is anything back on the call.

The next question comes from Jean-Francois Granjon from ODDO BHF.

Just one last question from my side. You mentioned the target to come back to a more normative level for the EBITDA margin. What is this level? I see in the past on the low end, you have reached a 20%, 21% EBITDA margin. After that, you are more on the magnitude between 24%, 25% with an exceptional year in '23 to reach more than 28%. So what is for you the normative level for the group, I would say, 24%, 25% or lower than that?

Jean-Francois, so this is a very good question, and you're going to have to be patient a little bit. We'll be back to you at the Capital Markets Day at the end...

For sure.

But I mean, this is the name of the game of how we can improve the efficiency of our business step by step and normalizing the situation after this quite volatile and difficult to manage the top line level. So obviously, '26.

And this is why, again, we want to be cautious with the top line, self-concentrated on making our job on what we do control. And then -- so obviously, improving the margin and then moving towards step-by-step and incremental improvement a year. And we will be back to you for the Capital Market Day with much more detail.

Okay. So I think we are done. So thanks a lot for your attention and for your continued engagement with Verallia. So again, we are entering in '26 with clear priorities, competitiveness, cash generation, deleveraging and the implementation of our industrial footprint adaptation in Europe. And all of that with disciplined capital allocation. So thanks a lot. Have a good day and speak to you quite soon for Q1 results. Thanks a lot.

Thanks.

Ladies and gentlemen, welcome to the Verallia 2025 Third Quarter Financial Results Analyst Call. The call will be structured in 2 parts. First, a presentation by the Verallia Group management team represented by Patrice Lucas, the CEO; and Nathalie Delbreuve, CFO. Afterwards, there will be a Q&A session. [Operator Instructions] I'll now hand over to the management team. Please go ahead.

Good morning, everyone. Thanks for joining us, and welcome to our Q3 financial results call. As usual, Nathalie and I will go through our presentation, and then we'll have our Q&A session. I will share with you some key highlights of our quarter, and Nathalie will present in detail our numbers, and then I will come back on the outlook for 2025.

As an introduction, just to remind that Verallia is a global leader in glass packaging. We are #1 in Europe, #2 in Latin America and #3 worldwide. On this chart, you have our ID card. You have on the left, the 2024 split of our sales by segment. One of our strong assets is our customer base, more than 10,000 customers and the diversified and balanced end markets in which we operate. We do operate in 12 countries with 35 plants with 64 furnaces. Please note also that we are running 19 cullet recycling centers allowing us to control about 50% of our needs for external cullet.

Let's now move to some key highlights of our Q3. First one, the first part of the year was marked by BWGI's voluntary tender offer. This process ended mid-August and was successful. You have on this chart the new shareholding structure at the end of September. BWGI went up and has now 77% of Verallia share. BTI went down and has now 3.8%. Employees still have 4.1% of the share capital, and the floating part is now 12.6%. This steps being completed, we will continue rolling out our strategic road map, focusing on creating value for our customers, employees and shareholders. Second key highlight is about our decarbonation road map.

A few weeks ago, we got the certification by SBTi on our net-zero 2040 target. We are the first glass packaging manufacturer to commit to such a target by 2040. We have a robust plan to do so. By 2030, we plan to reduce our Scope 1 and Scope 2 by 46.2% compared to 2019 and and by 90% in 2040. For Scope 3, the plan is to reduce by 27.5% in 2030 compared to [ 2019 ] and by 90% by 2050. Some of our customers have committed to achieving net zero by 2040 and they need our contribution. This commitment is paramount and demonstrates our glass packaging is well positioned as a sustainable solution for the future. This strategic lever is paramount and key for future value creation.

Last highlight is about the confirmation of the commissioning of our first hybrid furnace in Spain, Zaragoza has a substitution of an old traditional furnace technology. The commissioning was successful. As of today, we do operate with 30% of electricity and will ramp up in the weeks to come with the objective to reach 70%. This furnace will bring the 55% reduction of CO2 emissions compared to a traditional furnace. After our full electric furnace launch in Cognac last year, this is clearly an additional step forward in our decarbonation road map. We will take some time for lessons learned and if needed, for optimization. And then we will enter in a step-by-step pragmatic deployment phase aligned with our decarbonation road map towards 2040.

Before giving the floor to Nathalie a quick overview of our results to Q3 result and the 9-month results. As seen in Q1 and Q2, the positive news is that we are recovering volumes compared to last year. But in a much difficult market than what we plan. Q3 revenues is down by 2.8% year-over-year to EUR 846 million. With organic growth at minus 0.6% year-over-year. Giving a 9-month results, 9-month revenue results, down by 2.5% year-over-year to [ 2,565 million ], with organic growth at minus 2.4% year-over-year. About EBITDA, Q3 is at EUR 181 million, minus 14% versus last year, with a margin at 21.3% minus 279 bps versus Q3 last year, giving a 9-month adjusted EBITDA of EUR 531 million, minus 17.1% versus last year with a margin at 20.7%, minus 365 bps compared to last year about '24. About net debt, our leverage is maintained at [ 2.6 ] at the end of September compared to last June.

Let's see now the details of our numbers with Nathalie.

Thank you, Patrice. So let's look at revenue and EBITDA as usual. So you can see here the third quarter consolidated revenue and variance analysis. So we moved from EUR 871 million as reported revenue 1 year ago in Q3, 2024. And we are today at EUR 846 million. As said by Patrice, the organic growth for the quarter is almost neutral at minus 0.6%, minus 0.7%, excluding Argentina. You can see the volume pillar is up by EUR 37.3 million year-on-year despite still challenging market environment. and more challenging than anticipated. We could see, in fact, in the quarter that the activity softened in August in September after a very good start with the good month of July. And looking at segments, sorry, most segments grew year-on-year and especially led by nonalcholic beverages and spirits coming back to growth. The price mix impact on the top line is unfavorable at with minus EUR 43.4 million, driven by lower prices than 1 year ago and still a negative mix.

And then we have FX impact that is continues to be negative. The perimeter impact is almost 0. Just as a reminder, I will come to the 9 months, you will see perimeter impact with [indiscernible] so our additional entity and plant in Italy. It was acquired on the first of July, so in the Q3 doesn't show as a perimeter anymore. So continued volume growth in Q3 despite difficult market conditions. Looking at the 9 months consolidated revenue variance analysis now, we moved from [ EUR 2,635 billion ] to [ EUR 2,569 billion ] The organic growth for the full 9 months is lower than in the quarter are pretty different. The quarter is better than the full 9 months. Organic growth is minus 2.4%. Minus 2.9% excluding Argentina. We have seen continuous organic volume growth on the 9 months supported by commercial initiatives. And all of that, despite the softer market environment, especially in the end of the Q3, as I just commented. Volumes are up in Europe and especially in South and West Europe. And LatAm is positive despite a slower growth in the third quarter. The price/mix is negative in the 9 months, minus [ EUR 164.4 million ]. So it's significant but sequentially, we see a decline in this negative impact. And we -- step by step, we have the carryover [ 24 ] price reduction softening. We continue to see a negative mix over the 9 months. And you have here negative FX impact, but also a positive perimeter impact. So from the six first month for EUR 50.5 million.

So how does this translate into adjusted EBITDA for the third quarter, you have here the adjusted EBITDA variance analysis. So we moved from EUR 210 million in the third quarter down to EUR 181 million in this third quarter. So we can see from the pillars that the spread impact is the main driver, the main negative driver with minus EUR 40.6 million. We have lower prices and negative mix as we explain this is beginning of the year. But as I was saying, it's gradually easing. It was minus EUR 85 million in Q1, minus EUR 60 million in Q2 and which saw minus EUR 41 million in Q3. Then we -- despite that, we benefit from the volume growth and the solid Q3 performance in activity. We have EUR 7.9 million positive impact of the activity. Despite her start-up costs and ramp-up costs from our 2 new plants, one in -- furnaces, sorry, one in Campo Bom in Brazil and mainly for wine. And one in Italy, mainly on food. And also, as Patrice explained, the hybrid furnace in Zaragoza in Spain. The net productivity continues to deliver 2% cash cost cash production cost reduction and some negative other mainly due to some one-offs, exchange rate is negative and Argentina as well. So the adjusted EBITDA margin that you see on the top right is 21.3% for the quarter.

So -- for the 9 months, this leads us to EUR 531 million adjusted EBITDA. It was EUR 631 million in 2024. And you can see all the pillars to the activity, Pilar being positive. We have growth across all regions with volume growth continuing despite a challenging summer, so bringing plus EUR 42.1 million. The main negative pillar continues to be the spread for the 9 months, even if softening in Q3 again. The net productivity continues to deliver positive number at EUR 35.5 million and it's 2.2% of cash production cost reduction. The other here is positive and includes the 6 last months of [ Portico ] also the perimeter impact. And then you have FX negative. FX negative is mainly coming from the Brazilian real. And Argentina is presented a size. So we have a continued positive activity on the 9 months, but offset by mainly negative spread. So here, you can see the group net debt evolution and the leverage. So the leverage is stable versus end of June at the end of September with 2.6x and the net debt is [ EUR 1.920 billion ] and [indiscernible] Here, you can see our financial structure and liquidity at the end of September. So several comments here. You can see the first 2 lines are the sustainability in bond that we issued in 2021.

As a reminder, following the change of control there was a possibility for bondholders to ask for reimbursement of these bonds. But you can see that we still hold a nice amount both of them, EUR 100.7 million for the first one and EUR 70.3 million for the second one. And as you can see, they have a very nice nominal rate, a low one. So this is very good news for the group and for the confidence that our bondholders have in the group. The rest was refinanced a bridge loan that you can see at the end of this table. And you can see EUR 838.4 million grown on this bridge. And then, of course, we will prepare a refinancing of this bridge. At the end of September, we have available liquidity of EUR 835 million.

Okay. So let's move to the outlook. As we have just commented. So in Q3, we did enjoy again after Q1 and Q2, the volume growth in July, August and September. But we are expecting more based on the trend on Q2 consumption. And in Q3, consumption has suffered impacting as a consequence of the glass demand. And I want to share with you some fact-based data. Here on this chart, you have the data from Nielsen about the off-trade consumption in Europe of beer spirits and carbonated some drinks. These data over the last 4 weeks period period evolution Europe over here. To make it clear, if I take on the graph, the debt September 7, the off-consumption of beer for the last 4 weeks of September was down by 5% and minus 2.9% for spirit and minus 2.5% for carbonated soft drink.

What is this graph showing is one that off-trade consumption of beer was quite positive for mid-May to mid-July and very positive on carbonated soft drink for the same period, With potential positive outcome for the summer to come. Two realities totally different since July all categories turned negative with a sharp negative turn on evolution, especially in beer and carbonated subjects. No need to say that uncertain environment remains the norm with a slow global economy, geopolitical and trade tension or waiting as well on the consumption and creating the very volatile environment. As for our outlook assumptions, sorry, as a summary for the market and activity trends. Despite a good month of July. We had a poor summer compared to our expectations. In Brazil, after a strong H1, we see the market softening and especially the beer market. Mix and spreads continued to be negative even if the spread is softening as it has been clearly explained by Nathalie. And we are still facing a difficult situation in Germany due to the market condition and the overall environment.

Finally, about capacity, we continue to see permanent capacity shutdown across Europe, with latest announcement in Q3 in Europe, in Germany and Netherlands, this means that since late 2023, up to 18 furnaces are contributing to capacity adjustment. Facing this overall situation, we keep our focus on self-help measures and cash flow generation. For Q4, uncertain and volatile environment will remain the norm, and we see a delay recovery in market conditions compared to our previous expectations. However, as recorded since the beginning of the year, we expect a continued pickup in activity compared to last year, again, despite soft demand, but supported by our furnace openings or additional capacity well positioned in Italy on the wine business -- on Brazil sorry in the wine business, and in Italy on the strategic food segment. And as well a positive effect, which will come with the reopening of our second furnace in Ukraine.

priority will be to keep on our focus on strict control -- cost control and CapEx management to support cash generation. And last, we are keep on preparing the future with our Zaragoza hybrid furnace, which will keep on ramping up being clearly a new milestone for us.

As a conclusion, based on one, the material deterioration in market conditions in August and September. The expected pickup in profitability in Q3, which did not materialize. Three the fact that we see a delay in market conditions recovery. And despite the continued organic volume growth for us in Q4, we have decided to adjust our outlook for 2025. We plan now to close the 2025 with an adjusted EBITDA of around EUR 700 million with a free cash flow around EUR 150 million. On short term, again, we will keep our focus on profitability improvement action plans and cash generation. But we will be back to you to present our midterm strategy next January during our Capital Market Day.

Thanks a lot for your attention, and let's now move to our Q&A session.

[Operator Instructions] The next question comes from Francisco Ruiz from BNP Pariba.

Well, the first one is, if you could help me to understand your warning. So on the one hand, we have -- can you hear me?

Yes. Yes. that's okay.

I have some noise on the phone. So, yes, I mean, in this quarter, you have volume acceleration, I mean to almost 3.9% despite what is happening in the industry. And you have a price evolution in the top line in line what was your estimated I mean, in my opinion, this is more a matter of operating leverage cost structure. So 2 questions here, why operating leverage was so low? Compared to, for example, Q2? And can you give us an idea of the impact of margin by geographies? I know that you are not reporting margin by geographies. But with the low activity in Latin America, we could have much negative mix than initially expected.

The second question here is, theoretically, Q3 should be a quarter in which you will see some deflation in cost I mean at the end of the day, you have no impact of the expensive hedges in 2022 and then local probably better energy and also better soda ash prices. Why we haven't seen this in the net pricing of the company. And last but not least, I mean, I have another 2 or 3, but just one more is why is demand is so weak you have decided to start 3 furnaces, while the rest of our competitors are closing capacity? Thank you.

Okay. So yes, I'll start and don't even to complete with your questions. So first, on what happened in to Q3 and the reduction of our -- the gap versus our expectation. In fact, the gap versus our expectation is truly on volumes and on price mix, I would say even if I will comment on the operating leverage, you're right, it is low in Q3, but don't forget that in Q3, as I commented, we start, we are ramping up, and this is also one of your questions. We are ramping up new furnaces, and we have been working on the hybrid furnace for Zaragoza that is not a new capacity. But when we are in -- so you have 3 furnaces where you have start-up costs, we are ramping up, they are not fully delivering. They are not producing full capacity at all. So it is quite a strong impact in the third quarter, especially. And this was anticipated because it's just a stop of -- in its work in the plant.

But also, yes, even if we have additional volumes versus last year, and you're right, we are very pleased and happy about that. We anticipate did a better summer and this is what Patrice illustrated with the consumption was low. Our customers did not the volumes that they were supposed to ask. In several geographies, the beer segment, especially was disappointing. So we expected, frankly, a bit of summer in that. And the mix also was poor -- poorer sorry, than expected lower than expected. So this is mainly that. On the cost side, in the third quarter, there is no specific element that would be to be noticed really to be noted on the cost element, I'm not sure I understood well your question here. So we are in the same -- we have a very flattish inflation as in the rest of the year. So there is not -- there is no change here.

About profitability by geography, Francisco. As you mentioned, we do not communicate by quarter of the profitability. What I can give you some color about it. In LatAm and especially in Brazil, but as well in Argentina and Chile, we do enjoy very good profitability. So there is no material change compared to what you know, I would say, still difficult in Northeast Europe, as we mentioned, especially in Germany. So there is no big move or change compared to what we saw roughly in H1. About the capacity, the initial capacity. Which is the third question. I mean, clearly -- and I'm going to take some time clearly one incomparable in Brazil, this furnace is a position on segments, we do believe have real potential. And this is what we see really today when we look at the market and the demand. This furnace will be much more focused on -- we'll be focused on wine and spirit. And these are the segments which are facing good momentum right now.

What is much more difficult in Brazil as we speak, especially in July is beer the beer market. And it's known that the winter period there was very cold the last -- the coldest for the past 40 years according to what we know. And obviously, it has an impact on the demand. So there is a clear willingness to keep on developing in Brazil with our fifth furnace. And with that, we are preparing the future. The second furnace in Italy is about the same story. It's a furnace on which we are focusing sales development in jar, food jar which is a segment where we do see potential, we see significant growth this year, and we see according to the forecast we have a significant increase at least above the average of the overall industry.

So obviously why we decided to focus and add this additional furnace. So obviously, it's a balance between the short term and the medium and long term, but as you know, we are focused on long term. And for us, it's taking the appropriate measure of short-term to protect profitability. But at the same time, doing the job to position well the company for the future. So this is the rationale of it. And the hybrid furnace in Zaragoza, it's a different story because here, it's not additional capacity it's to replace a furnace, which was at the end of the life, and we've decided to make clear our first hybrid furnace, our first pilot. Again, here to prepare the future to get the lessons learned of such a furnace to align with what we want to do as a strategic lever for 2040 decarbonation. So this is a rational of our additional capacity. So maybe we have some, obviously, some penalty short term, especially that in Q3, we're ramping up all of that. But it is an upside for tomorrow, and it is aligned with our long-term strategy. I hope it's clear Francisco.

Yes, yes, it's clear. Could you give us a data of what's your level of capacity utilization and the level of full payments? .

Capacity utilization -- it's about the same story as what we mentioned in Q2 in July, the end of July. We are running close to normal, except some slight adjustments, but marginal adjustment everywhere. But U.K. and Germany. And in U.K., we have 1 furnace, which is stopped. In Germany, we have 2 furnaces, which are stopped. And obviously, we are working to see how we are going to optimize that. And this is part of the industrial strategy we're working on to make it clear.

The next question comes from Louise Wiseur from UBS.

Three questions for me, please. What are your exemptions now based on your new guidance of around EUR 700 million of adjusted EBITDA. For the top line in terms of volume in terms of price. And then on the adjusted EBITDA bridge for the price cost spread for the full year? The second question is around the new furnace open [indiscernible] and Campo Bom in Q3 how much did they actually contribute to the volume growth in Q3? And how much would be kind of like underlying volume growth for the rest of the business? And the last question is around the flow through of the volume from the top line to the EBITDA, it was only 22% in Q3 will explain this, I guess, given your comments right now, there's probably some things around like the new furnaces, but it was much better in Q1 and Q2.

When do you expect to see that actually that go to actually improve again?

Okay. Thanks a lot for this question. So about the top line assumptions. As we've said, we do expect a continued growth in Q4 compared to last year. In the order of magnitude of what we have been delivering so far, let's say, despite the market, which is softening. So the gap between -- compared to what we are expecting is that we are expecting a higher demand. So obviously, it doesn't -- and consumption not going down. It has impact on , but we do expect us to be in the same order of making [indiscernible] . On pricing moving forward in Q4, we do not expect any -- change, I would say, any change. What is waiting is mix due to the market -- conditional market environment. So mix will be more negative than what we are expecting initially. So this is some color about the top line moving forward but Campo Bom the impact in Q3 is quite limited that we are ramping up. So it's really partial.

And we are not providing that in details furnace by furnace. Or plant by plant is in a geography, but obviously, it will contribute. Next year, we will have some repair in Brazil, especially in 1 furnace and [indiscernible] and this additional capacity will be able to for us to keep on selling at a good level and obviously, focusing again on the 1 segment, 1 and Spirit segment here.

On the flow-through, so yes, you did understand that the Q3 was a bit specific with these ramp-up costs and not full saturation of the capacity. So it will improve going forward with -- based on this because step-by-step, as we were just saying, comparable with contribute, Asia will contribute more and and they won't have the startup cost any more. And then it's more the country that could impact also because the Q3 is not fully purely mathematical. It's a bit different from countries, but it should improve in Q4 and moving forward.

The next question comes from Francisco Ruiz from BNP Paribas.

Sorry, it's again me. I mean -- more question in the queue. But I have 2 questions. One clarification. As you mentioned, in your press release that -- let me see how you say it. Latin America demand momentum weakened in Q3. But also in the presentation, you mentioned that the Q3 performance has been solid, driven by Europe and LatAm. Could you give us an idea of what is the general performance? You mentioned already Argentina and Chile good Brazil, but the overall or the net effect, if you plus or minus -- and the second question is on the covenants. I mean if we are assuming EUR 700 million EBITDA with EUR 115 million free cash flow for the year, with the dividend you have had, I mean, the net debt should go above or slightly above 3x. Is this a risk for you? Is this a risk for the dividend?

So I will answer the second one, and we have to come back to the first one because I'm not sure we have understood your question on your first question Francisco. So I mean, about the net debt ratio, as you project it and all of that, I mean, Obviously, as we have said, this will be a priority for us to protect that. And to speak about dividend as of today, too early, and this will be part of the broader decision beginning of next year.

We did generate good free cash flow in the third quarter, strong free cash flow. And this is also what we expect for Q4. So the leverage will not worsen by the end of the year. And then dividend next year, it's too early as we say, but we are not talking the 3x

So the first question is -- I have an idea on what had happened in Latin America because in the press release, you see -- you say that demand weakened in Q3. But on the presentation, you talk about the EBITDA contribution of Latin America, which is positive together with Europe in activity? .

Yes, yes. So Latin America, I mean, we're still making good contribution in Q3, obviously. What we are just saying is that in terms of activity, and especially due to the beer market environment and demand. It was much below what we are expecting and below what we saw in H1. So this is what we wanted to explain here. And we were much more in our plans and expectation in the kind of growth similar to what we had in H1, which did not materialize. But even with this environment, we have positive contribution coming from Latin America and certainly due to the fact that we are not just beer focused or beer dependent, I would say.

The next question comes from Louise Wiseur from UBS.

Sorry, can you hear me now? Apologies, I was on mute, sorry. Might be very, very early for you to reply to this, but just trying to get your thoughts on that. And around the pricing, how do you think about this for 2026, given the slow recovery in terms of volumes? Could there be therefore an impact on pricing next year and you will have a bit of pressure from clients to get prices to get a bit more of the volume recovery?

No real comment about pricing, Louise. First, it's too early to discuss about '26. Our focus is really to close with what we have just mentioned. So we are on the way to that work our budget and business plan. So we'll be back to you. What we can say is that we expect market condition to continue to normalize with possibly a slight growth in activity. We'll see that in details. And what we expect is continued sequential spread improvement, but we'll see that in detail and net that to contribute. So we are working on that with -- especially on our midterm plan, and we will give you more color, obviously, during our CMD next January.

And just maybe then I mean just checking, but there was not to be -- I mean Q3 was to be negatively impacted by the price cuts made at the beginning of the year, but no more carryover, has there been some price cuts in Q3 that would therefore impact 2026. Or have you not done any further price in Q3?

Marginally, the main impact is coming from the mix, which due to the market condition is [really]indiscernible] low what we are expecting.

The next question comes from Fraser Donlon from Berenberg.

Good morning, everyone, I have 2 questions. So following on from the pricing question, like on the cost side. Do you see any wins, let's say, in the next 6 to 9 months, whether that's like in the hedging book for energy or soda. And then the second question is just on inventories, like I think you're around EUR 730 million last year. Like do you have an idea of where you can land inventory in 2025 -- then 2025, I should say, given the demand context is, I would say, more difficult than expected -- thanks very much?

Okay. So in the 9 months, as I said, our cost inflation is very neutral in fact. We have in place return on most of the lines back to normal inflation, I would say, for example, on labor costs. We commented that we have a significant reduction in cullet. You know that cullet is more than 50% of our raw material, so it accounts for a large part. And cullet overall prices are -- have been declining in the year. So we have a softening here. So that's the main, I would say, deflating driver and at least overall, our costs to -- through a neutral evolution at the end of September versus previous year.

About inventory, Fraser inventory control is a key topic. And since this demand backdrop, let's say, which started at the end of '23, it is really a key topic for us, and we are on that on a monthly basis to adapt and to make sure that we keep all of that under control. So one, it's a big topic. Our expectation for the end of the year is to be up compared to last year, at the end of last year, but in a controlled way and slightly up versus last year due to the additional activity we have compared to last year. Than what we anticipate for next year. So it's -- it's not slightly and not generally but, I would say, compared to last year. This is what we are planning to do.

Maybe one additional point, sorry, on costs that I should have mentioned is on the energy just to remind that we are not fully benefiting from the spot energy prices decreased because of our hedging policy. This is the last year that we have a portion of hedging from the high year. So it will be an upside for -- it should be an upside for next year.

The next question comes from Manuel Lorente from Santander.

Yes. My first question is on the volume side. I'm trying to address the potential impact on that or the low profitability of the group in Q3. So according to what you have said Patrice on the call, is it fair to say that the vast majority of this 4% volume growth is coming from the new furnaces. And that like-for-like growth will be flattish to slightly negative and then filling the gap to that 4% will imply all the new furnaces or not?

Thanks for the question. No, the contribution in Q3 of the new furnaces is still very low. So like-for-like, we do have an organic growth. We do have an organic, and it's coming from -- it's coming from Europe, but as well from LatAm is quite well.

Okay. So since we have a limited contribution from the new furnaces, so to speak, then the narrative of low margins because ramp-up costs in those furnaces. Might not significantly explain, let's say, the margin deterioration, right? So then you also mentioned the mix effect on that impact on profitability. So when you are mentioning regarding mix, it's more a country mix, a segment mix or both?

So when we comment the ramp-up costs, I understand that the new plant are they are not running fully. So it's just normal. We have usually 3 to even 6 months really run full speed when we started a new capacity. So this is just normal. And at the beginning, you have the cost, but you don't have the full pace against it. So this is impacting the full through when we look at the EBITDA bridge, so it's very specific on Q3. This is also impacting the percentage of EBITDA margin when we look at it because, again, you have a portion of cost, and you have no revenue in France. So it's one driver. It's not the only driver you might and to explain the level of our material EBITDA margin percentage in Q3 or in the 9 months.

Absolutely, it's not the only one, but it is a negative impact still on that. And when we comment the mix impact, yes, it's both. Here, we were more commenting on the mix of the segments and the projects because of the lower level of consumption, people buying more entry products than, again, high-level products. So we have less margin on usualy on some cases on these products. But we also have a country mix. When you have a Latin America a bit weaker than expected, again, in Q3. I guess you know that LatAm is above 30% adjusted EBITDA usually. So it has -- it had some impact so it's a combination.

Okay. Great. And just the last one. The next key milestone -- it will be the Capital Market Day. You mentioned that probably it was too early to talk about 2026. But what we should expect on the Capital Markets Day? Is it going to be a quantitative type of Capital Market Day with medium- to long-term forecast. It will also address some qualitative issues regarding the strategy, a little bit of both?

You said everything Yes, it will be -- first of all, it will be midterm. So it will not just be '26, obviously. So it means we will give and provide some orientation being qualitative and competitive, especially about the sector, how we do see the evolution, the different segments. What -- how we are positioning ourselves on that. It will be a bulk of all of that with some financial substantial data, I guess. We're still finalizing that, working on that. But this will be key milestone after this quite, let's say, this turbine period of '22, '23 high inflation, '24, '25 is the opposite. All the volatility and the demand. So this will be the opportunity for us to use and to explain how do we see the next years. And as a consequence, what you could expect from the company, this will be our intent you said everything.

Thank you. All right. Well, so this is David Placet the Head of IR. I think we're done with the questions on the call, and thanks, guys, for asking all of them. We have, I think, just 2 questions in the writing from Jeremy Period. The first one relates to the -- basically the flow-through between the volume and EBITDA in Q3. I think we've largely touched on that. The second one relates to the spread the question being so last year, spread effect was around minus EUR 200 million. Should we see the same trend happening in '25 full year? Also, do you see any improvements in full year '26. That is the last question.

So on this -- so this full year I think I comment quite largely. On the spread, we have a spread of minus EUR 183 million at the end of September. So we are indeed close to already to the minus EUR 200 million. But as we commented, we have a softening of this negative spread as an improvement quarter-after-quarter, and we were minus 14% in Q3. one element where we are prudent and it's difficult, it's very difficult to forecast, as you know, is the mix impact in this spread for the end of the year. And sequentially in 2026, again, we'll come back with more data, but yes, we should see an improvement, of course, in the spread. That continues to normalize, but slower than expected impact.

Thanks, Nathalie. And actually, we have -- I think I'll take the last one, last minute question from Inigo Egusquiza with capital asking actually what has changed in the company since to go over. So any changes that you've seen or that may occur, etc?

Thanks for this question. I mean, as we said, so BWGI is not new in the company. They are already part of significant shareholder part of the Board. So they decided to go for more -- so it is really a continuation of the strategic plan we have as we speak. And obviously, this will be updated with assembly. But this is a much more holding and key focus on managing the short-term profitability and preparing the future as well. I know that BWGI has the DNA of the company is really long-term oriented. So is going to be a step-by-step evolution if we did, but that's really on the key business factor and how would we see the industry. So the key word is continuation, more of the same and creation value and testing the environment.

Great. Well, thanks, Patrice. Thanks, Nathalie. I think that's it on my end.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thanks a lot. So thanks to all of you. Let's for us focus on delivering and testing the situation and moving forward to Q4. And obviously, next milestone is CMD. It will be a pleasure for us to have this opportunity to share our view here and much more midterm orientation. Thanks a lot, and have a good day.