Buenos días y bienvenidos a la presentación de resultados del año 2022 de Vidrala. La compañía estará representada por Raúl Gómez, director financiero, e Iñigo Mendieta, responsable de relación con inversores. La exposición se realizará en inglés. En el turno de preguntas, se recomienda realizar las preguntas en inglés, aunque se atenderán también preguntas en castellano. En la página web de la sociedad, www.vidrala.com, encontrarán documentación de soporte a esta presentación, así como un enlace para acceder al webcast.
Good morning and welcome to the conference call organized by Vidrala to present its 2022 results. Vidrala will be represented in this meeting by Raúl Gómez, CFO, and Iñigo Mendieta, head of IR. The presentation will be held in English. In the Q&A session, questions will be also answered in Spanish. It is strongly recommended to pose questions in English in order to facilitate understanding of everyone. In the company website, www.vidrala.com, you will find available a presentation that will be used as a supporting material to cover this call, as well as a link to access the webcast. Mr. Mendieta, you may now have the floor.
Okay. Good morning to everyone. Thank you for the time that you dedicate to attend this call. As announced, Vidrala has published this morning its 2022 full year results. Additionally, we have also published the results presentation that will be used as supporting material to this conference call. Following this document, we will dedicate the first part of our exposition to briefly explain the figures released today, to devote afterwards as much time as necessary to discuss on the business performance in the Q&A session. We invite you to access the webcast through the link available in our website.
Starting with the main magnitudes, in the full year 2022, we achieved as most relevant business figures, revenues above EUR 1.3 billion, an EBITDA of EUR 270 million, and a net income equivalent to an EPS of EUR 4.997. Net debt at the end of the year stood at EUR 157 million, which is equivalent to a leverage ratio of 0.6 times the reported EBITDA. Turning to slide four, we look at the top-line performance, analyzing the annual variation of revenue broken down by concepts to arrive at the reported figure of EUR 1,345 million. As it is shown in the graph, this figure is the result of an organic growth of 23.9%. Incorporating the effect of the currency, the reported variation amounts to 24.1%.
Following the order of key business figures referred to at the beginning, we analyse with exactly the same breakdown the variation of operating income. 2022 full year EBITDA amounted to EUR 270.4 million, reflecting an organic growth of 1.1%, and in reported terms, a EBITDA increase by 1.0% in the period. These operating figures resulted in an operating margin, EBITDA over sales, of 20.1%, which represents a contraction of approximately 460 basis points compared to 24.7% registered in the previous year and as a consequence of unprecedented inflationary pressures in glass manufacturing costs.
If we take a detailed look at the performance by semesters, we can see the benefits of internal energy cost mitigation actions, a sustained solid manufacturing performance, the first effects of our investment plan, and a progressive adaptation of our sales prices. Going down through the income statement, net profit obtained in the year 2022 amounted to EUR 153.7 million, equivalent, as mentioned before, to EUR 4.97 per share, which reflects an increase of 6.9% over the previous year. Finally, net debt at the end of the reported period closed at EUR 167.2 million. A figure that is a consequence of a cash generation that was affected by exceptional working capital movements, which was already anticipated, our firm commitment to shareholder remuneration, and increased efforts regarding share buyback programs.
As a result, the leverage ratio, as seen in this slide, stands at 0.6 times EBITDA. Before turning to the Q&A session, I pass the word to Raúl so that he can extract the main conclusions for highlights and make additional comments that he considers appropriate.
Thanks, Iñigo. Thank you all for your time attending this call today. Well, as a brief conclusion, the year 2022 soon turned out to be a quite a complex year for our business. Distorted by the abnormal cost inflationary pressures, mostly in our case, concentrated on the energy factor due to the events seen between Russia and Ukraine. This unusual context in 2022 caused a collateral inflationary implication and temporarily distorted significantly our margins and impacted our cash profile. That was particularly evident during the first and the third quarters of the year in coincidence with the worse conditions in the energy markets.
Progressively along the year, our internal actions, as Iñigo said before, to better manage our cost, our sustained solid operational performance, the benefits from our long-term investment plan, and the gradual adaptation of our sales prices helped us recover margins and finally even exceed our most recent guidance. All in, we will consider that our margins today are consolidated at levels more or less consistent with our historical records, is slightly above 25% and should remain safe at this level for the starting of the year 2023. In any case, beneath this, particularly volatile year, particularly volatile profitability conditions lies quite solid underlying fundamentals for our business. Demand for glass packaging is growing globally, supported by external dynamics linked with consumption habits, premiumization, health, sustainability, and demographics. That means that the consumers worldwide are increasingly choosing glass as a packaging material.
Food and beverages global brand owners motivate us to invest, serve, and follow them appropriately. In my conclusion, glass has a bright future. Consistent with these dynamics, we are preparing ourselves for the future. We are trying to make our business profile evolve, boosting our cost or competitive differentiation, growing, expanding our range of services, and diversifying our geographical activity. As an evidence of this, since the end of January, as you may be aware of, our subsidiary in the U.K., Encirc, is the owner of the quality filling facilities and the logistic infrastructure in Bristol, known as The Park, that has been acquired to the great, wonderful global wine producer, Accolade Wines, a company owned by Carlyle. The business rationale behind this deal is, in my opinion, quite illustrative to understand our strategic approach.
The integration of this business is an example of pure verticalization that improves logistics, derisk operations, minimizes carbon footprint, helps our customers grow, reinforces Encirc's unparalleled approach, business approach, secures long-term sales, and finally makes us even more different. Moreover, probably more strategically relevant for us, two weeks ago, Vidrala announced the acquisition of a minority stake in the Brazilian company, Vidroporto. This really represents a relevant step for us, an example of a very deliberate strategic action. Brazil is a fast-growing market for the glass packaging industry, a target region for growth, investment, and expansion for most of the global beverages brands. Vidroporto is a well-known company for us, a renowned, highly competitive player in this interesting region.
We are there with a long-term perspective to help support its legacy, Vidroporto's legacy, and secure its future as they need under our long-term credited industry intentions. It is not by coincidence, in my opinion, that all stakeholders, from shareholders to customers, management, employees, suppliers, banks, government, administrations welcome us in our entry in Vidroporto's share capital. Thank you.
Okay. This completes our exposition. We now give way to the Q&A session.
Ladies and gentlemen, the Q&A session starts now. Questions by phone will be answered first. If you wish to ask a question, please dial star one one on your telephone keypad. Thank you for holding until we have our first question. Ladies and gentlemen, let me remind you, if you wish to ask a question, please press star one one on your telephone keypad. Thank you. The first question comes from José Antonio Suárez from CaixaBank BPI. Please go ahead.
Hi, good morning, Raúl and Iñigo. Thank you for attending my questions. Regarding the results, I wanna clarify if you could bring us, for example, the weight of energy and cash cost that has been in 2022. Also if you could elaborate which is the level of inflation in cash costs excluding energy you are expecting for 2023, and also the level of CapEx over sales for the coming years.
A question regarding margins, because we wanna know a little bit the rationale what has changed, because in your previous guidance you have over exceeded, and should we expect for 2023, given the levels of mid-term prices, if we could achieve levels, even if gas stays low, we can achieve levels pretty intense because with the 55% numbers we have right now, you could even reach levels around 3% margin EBITDA. Could this be feasible? Could you explain, give us some visibility about these numbers a little bit, the rationale, what could we expect from this level for 2023?
Okay, thank you. Let me start with your comments regarding inflation. Well, let's say that under the current conditions, despite the energy factor is today more relaxed than a year ago, because a year ago energy inflation was really abnormal. Energy is still pretty expensive for us under an historical perspective, okay? More than three times higher than historical levels. I refer to the prices, market prices for natural gas or electricity. More important, above the energy factor, inflation is unfortunately consolidated all across the industry. I will say all along the economy in many other cost inputs, from salaries to raw materials to services. We unfortunately are still seeing inflation everywhere in the business.
We are not yet seeing any real symptom of a deflation as we need. Okay. Having said that, we are still seeing inflation excluding energy of double digit, sustained in 2023. Okay. That will be the first argument for us to maintain our pricing dynamics. Okay. Having said that, going to another of your question regarding our margins and the visibility of our margins. Okay.
Let me please first say that our margins during the last quarter of the year, that I understand has been somewhat surprising, reflect some non-recurrent benefits in our energy costs derived from internal actions, the switch from gas to diesel in some of our sites and some other internal efficiencies that help us extraordinarily capture energy costs below market levels during the last quarter of the year. Okay. Considering costs at market prices, as we consider is more representative of normal market circumstances, let's say that our recurrent normal margins in the quarter, in the last quarter of 2023, are around 25%, the EBITDA over sales.
This is our starting point in 2023, and this is until we give you further details of our guidance in April, the first and the best reference for our margins in 2023. We do consider safe this level of margins, no less, no more.
Finally, José Antonio, in terms of CapEx, we're expecting for this year, 2023, CapEx in the range of EUR 140 million-EUR 150 million, okay? Which is related to the project in Portugal that we are currently executing as was already anticipated, and the rest of concentration of CapEx maintenance, nothing especially extraordinary in this year, 2023.
Sorry, regarding the weight of energy cost in 2022, and if I can do a follow-up. The 25% margin you're saying to maintain, given that even without the one-off cost that it would be around 25%, you have implemented a 15%-20% price increase for the year. Also, prices of gas has fallen like 2/3 for the mid curve. I think right now it's around EUR 50-55 MW, and it was like 78 or something like that in the fourth quarter. You should also implement this improvement, despite you have a 10% level of inflation should at least improve the margin.
I'm trying to wonder, even with a 10% inflation increase in other costs, shouldn't at least we expect a little bit better in the margins because energy levels are like much lower during your implementing price increases. Even with those price increases lowering prices in gas, we should expect the 25% you're saying for the upcoming year. That's right?
Yeah, you are right. Let me clarify a little bit on this, okay? Let's consider that energy accounts for approximately 1/3 of our operational OpEx cost structure. This 1/3 is, let's say, the energy prices are double in comparison with two-year ago prices. That is, let's say between 40%-50% below 2022 levels, okay? The remainder of our cost structure, 2/3 of our cost structure is comprised by different factors where we are still seeing quite high inflationary pressures of double digits. The mathematical combination of this will give you a result of still, unfortunately, positive inflation into, in 2023, okay? We won't see a real deflation in 2023. Not yet, okay?
The good thing is that our inflation in 2023 will be quite more relaxed than in 2022. Having said that, understanding how this explains our pricing initiatives, let's say that in the industry, the pricing environment remains quite constructive, and our initiatives are successfully helping us recover last year inflation. Let me remind that in the year 2022, we suffer very significant margin deteriorations, okay? Because of inflation, not pass-through prices, okay? These conditions, these pricing dynamics will remain safe at least over the next two quarters following the price review dynamics typical in this industry that normally capture cost, past cost conditions, okay? Looking beyond summer or looking to 2024, prices will unavoidably and progressively reflect underlying or real cost conditions, whatever they are. Please let me remind that there is still a lot of inflationary pressures above the energy factor.
A quick follow-up from CapEx from EUR 140-EUR 150, how much will be recurring CapEx? Just to clarify for 2023, if you wouldn't mind.
This is everything to recurring CapEx, excluding between EUR 20 million-EUR 25 million, José Antonio, that will be mainly related to sustainability.
Perfect. Okay. Thank you very much, Raúl and Iñigo.
Thank you. The next question comes from Fraser Donlon from Berenberg. Please go ahead.
Hi, Raúl and Iñigo, thanks for the presentation. Just on pricing, I guess, how do you assess the outlook for 2023 being that maybe some of your competitors could have hedged energy at higher prices and now you kind of benefit from that. Do you kind of feel that you're particularly competitive and that maybe you could have more, let's say, upside optionality on pricing than we other might anticipate? Then the second question was just on, I would say, capacity additions in the industry. I'd be super interested to hear your kind of assessment of capacity expansion in the next, I would say, two-three years, so looking to the end of 2025, and how you see that traveling relative to the lack of supply of containers which is in the market today. Thank you very much.
Okay. Thank you very much, Fraser. Well, let's say that the demand across the industry remains pretty stable, okay? Unavoidably less buoyant than a year ago, but nothing really relevant. The main driver for our sales volume performance, probably this is a reference to be applied for the rest of the industry, still is our tight inventory levels in a competitive landscape that I will say remains broadly supply driven, okay. Having said that, despite we are starting production in our new furnace in Portugal as expected, the maximum realistic volume we can and we want to capture in 2023 is, let's say, no more than 1% of volumes growth in 2023.
We could also say that we are very, very clearly and strategically quite protected against potential competitive pressures, capacity additions or potential demand relaxation. This is deliberate. This is very deliberate. Our business targets, let me remind these are based on cost competitiveness and industrial footprint realignment to selectively invest and divest in some of our facilities, energy transition, and in result, margins. Regarding prices, we have effectively started the year with price increases of double digits on a year-over-year variation, as anticipated back in our October call. This is, in some cases, the result of the comparison base as our prices in 2022 were progressively adapted in several different steps. Over the year 2023, as this base effect progressively disappears, our annual price variation will be less evident.
We'll also capture underlying cost conditions if they turn to be more relaxed, as we need, okay. Having said that, let's say that we feel confident in our ability to finally reflect a double-digit increase in prices for the full year 2023, okay. No more, no less, this double digit is still a good reference for our expectations.
Perfect. Thank you.
Thank you. The next question comes from the line of Michele Fila from Jefferies. Please go ahead.
Good morning, Raúl and Iñigo. Thank you for taking my question. I have two. The first one is on energy. My question is that now that the risk of energy shortages is quite marginal and energy costs corrected from 2022 peaks, what's the plan in term of keeping the switch from gas to diesel? Can you remind us what's your growth or hedging level for energy into 2023? The second question is on the Vidroporto acquisition. Do you have, by any chance, any time estimate by when the legal disputes involving the family ownership might be resolved to make clear when you'll probably can integrate the full business into the group? Thank you.
Hi, Michele. Thank you. Thank you for your questions. Regarding hedging, as we published in the business risk section of our management report, we are today at hedging levels around 55% for the year 2023, and 13% for the year 2024. Okay. On top of that, please understand that around one-third of our contracts with customers are linked to price adjustment formula. That should also give us some level of protection. In some regions, we still have some government measures to protect or to mitigate the elevated energy cost inflation. Okay. The levels in terms of hedging are the ones that I have just mentioned.
Yes. Just to complete this, let's say that current market levels on natural gas prices, levels that we are progressively fixing in our hedging initiatives, should eliminate the likeliness or the opportunity to switch again from natural gas into alternative energy sources like diesel, gas oil, or fuel oil. Okay? This is what we want to happen. Okay? Your second question is regarding our story in Brazil, in Vidroporto. Well, let's say that or let me say that we are very comfortable with our very conscious position as a minority shareholder, and we are prepared to remain in this position the time needed or whatever it takes. We do have very clear and transparent intentions to acquire the remaining 70% and become the sole shareholder of Vidroporto.
We do believe that this is our partners, their want, shareholders, management, customers, as I said before. We understand that this transaction is not yet possible because the holding company that owns the major shareholding of Vidroporto is under some legal restrictions to sell this holding company with other party. We will wait the time that is needed to complete this transaction once this situation is clarified. When or how long will it take? We don't know, and we can't control. It may be take months or weeks, and this is okay for us. We are a very long-term industrial partner, and our entry into Brazil is part of a long-term deliberate strategy. Okay? Let's be patient, please.
Okay. Thank you for the color. Just if I may, one follow-up on the first question. The other levers, like the governmental support in term of energy costs, are they included in that 55% hedging level that you mentioned? And sorry if it was not clear to me, but, like, are you currently still 20% on diesel, or, like, did you go back on gas? Because that is what, like, was part also of my question. If you're still keeping the diesel, like you mentioned, like 20% of consumption.
Yeah. Just to clarify, we are full back using natural gas. We are full back in natural, in our natural, normal consumption habits. This is good news, and this is because there is no more an opportunity to switch between natural gas and diesel. This is because we have started to see some relaxation, some stabilization in natural gas markets in Europe. Okay? The level under which we are protected, the level under which we have fixed prices to this 55% of hedging levels that Iñigo mentioned before, are not significantly different to the market levels that you can see, that you can see today. We are pretty comfortable with our level of protection, with our hedging levels, and with our level of competitiveness in that sense.
Okay. Thank you.
Thank you. Ladies and gentlemen, there are no further questions over the phone. Dear speakers, back to you.
Thank you, Lydia. There are no further questions by telephone. We are taking a look at the questions received via webcast. We believe we have answered all of them, but just to make a quick summary. Okay. Ask for hedging structure for 2023 and 2024. As mentioned before, we are hedged at levels of 55% for 2023, and 13% for 2024. Okay. Ask also in terms of expected sales growth for 2023. Well, theoretically, our top line performance in 2023 should be driven by prices. We are saying that we see prices, as of today, above the double-digit in any scenario.
In terms of volumes, as mentioned before by Raúl, we expect volumes to be flat to slightly positive in 2023, mainly driven by supply conditions more than demand conditions. Okay. I think with this, we should have answered also all the questions received via webcast. Once again, thank you for the time that you dedicate to us, and just remind you that we remain at your complete disposal for any further questions that may arise. Thank you very much.
Thank you very much.
Ladies and gentlemen, thank you for your participation. You may now disconnect your lines.