Afternoon, and welcome to the conference call organized by Vidrala to present its 2026 third quarter results. Vidrala will be represented in this meeting by Raúl Gómez, CEO, Galo Álvarez, Chief of Sustainability and Corporate Development, and Unai Alvarez, Investor Relations. The presentation and the Q&A session will be held 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 supporting material to cover this call, as well as a link to access the webcast. Mr. Alvarez, you now have the floor.
Good afternoon, everyone, and thank you for taking the time to attend today's call. Earlier this morning, Vidrala published its results for the third quarter of 2026. Alongside these results, we have made available a presentation that will serve as a guide throughout this call. We will start with an overview of the key figures released today, followed by a closer look at the new share buyback program we are proud to announce today. We will then share some closing remarks on the quarter before opening the floor to your questions. Before we walk through the key financial figures, please note that the business acquired in Chile has been consolidated into our results from 1st of January of 2026. To ensure comparability, we also present like-for-like figures with 2025 restated on a pro forma basis to include the results of the acquired business.
During the first nine months of 2026, we obtained revenues above EUR 1,146 million, an EBITDA above EUR 338 million, a net income equivalent to earnings per share of EUR 4.99. Cash flow generation remained solid over the period, allowing us to further reduce net debt to EUR 200 million at the end of September of 2026. This represents a low leverage ratio of 0.4x last 12 months pro forma EBITDA. Let's take a closer look at revenue. This chart shows the year-on-year sales bridge on a comparable perimeter basis, leading to reported sales of EUR 1,146.5 million. Organically, at constant currency and on a like-for-like perimeter, sales declined by 3%. This reflects the anticipated price adjustment of 1.2% when volumes continue to show a gradual and sustained improvement, supported by a robust performance in South America. Moving on to the next slide.
EBITDA for the first nine months of 2026 reached EUR 338.5 million, reflecting an organic variation of minus 0.5%. This performance underlines the resilience of our industrial model and the benefits of our geographical diversification strategy in a challenging macroeconomic environment marked by persistent inflationary pressures. This operational performance delivered a strong EBITDA margin of 29.5%, up 20-27 basis points year-on-year, as we further strengthened our profitability in an adverse market context, reflecting the disciplined execution of our cost control initiatives and the structural competitiveness of our asset base. We now turn to sales and EBITDA evolution by business unit. Europe, U.K. and Ireland, and South America, which includes operations in both Brazil and Chile. As anticipated, we navigated a still weak demand environment in our European mature markets, where South America delivered a strong performance underscoring the value of our geographical diversification.
Across all regions, margins remained resilient, supported by our ongoing footprint optimization and disciplined cost management, further enhanced by an ambitious distinctive investment program. I will now hand over to Galo, who will take you through our balance sheet position.
Thank you, Unai. Let's have a look at the evolution of our financial position. Net debt stood at EUR 201 million at the end of September, 0.4x last 12 months pro forma EBITDA. That is EUR 51 million lower than in June, and it compares with a peak of EUR 273 million in March, after we paid EUR 75 million of enterprise value for Vidrala Chile. Free cash flow over the first nine months was in line with our expectations. As every year, our cash profile is weighted to the second half, so we remain on track for the full year figure of around EUR 200 million. We generated that cash while running an investment program that is, by design, above historical levels. We have chosen to invest countercyclically when others were holding back.
We are accepting higher CapEx today to secure structurally lower OpEx for years to come. Let me repeat the logic behind this. Customers choose us because we serve them at the most competitive cost. That cost position sustains margins and cash. We reinvest the cash in a broader, better invested footprint, which further lowers our cost and strengthens our customer offering. The balance sheet lets us do all of this while returning cash to shareholders. Turning now to shareholder remuneration. This chart shows the consistency of our distribution policy over time. Vidrala has raised its dividend every year, and 2026 extends that record. Dividends paid this year totaled EUR 62 million, up 15% on 2025 after adjusting for the bonus share issue completed in November 2025. The buyback program in progress covers 3% of the share capital, up to EUR 90 million, and these shares will be redeemed.
Today, we announce a new program for a further 1% of the share capital, up to EUR 30 million, also for redemption, which will start once the current program is completed. This new program adds to the dividend and keeps shareholders at the center of our strategy. It reflects our confidence in the business and its long-term prospects, and it fits our capital allocation discipline, returning cash to shareholders while continuing to invest in growth. Taken together, dividends and the two buyback programs amount to EUR 182 million committed to shareholders in 2026. This is a deliberate effort this year, and we make it from a leverage of 0.4x while keeping the investment program intact. It reflects our confidence in the business and in the cash it generates. Finally, let me turn to the outlook for the full year.
Nine months in, performance is consistent with what we told you in April and July, so we reiterate our 2026 guidance. First, EBITDA of around EUR 450 million, consolidating operating profits and margins despite the macro conditions and intense competition. Second, EPS growth above 5%, supported by operational performance, the earnings accretive contribution of our broader geographic footprint, and the share buybacks. Third, underlying free cash flow of around EUR 200 million, excluding restructuring costs while we complete our CapEx program. Raúl, over to you for the closing remarks.
Good morning. Thank you, Unai. Thank you, Galo, and thank you all connected for your time in attending this call. Hope you appreciate the new timing of our conference calls, and particularly you, South American, our growing South American stakeholders. Our results today must be read in perspective. I invite you to look at them in context so that I can explain the work we are doing and the future that lies ahead of us. Inflation is high, and inflationary pressures are growing everywhere. Business conditions are tough, tougher than expected across the whole food and beverage industry, especially in Europe, and probably across the whole consumer world. Even so, despite that, we have protected our margins. That is cost control, and this is part of our culture. It is structural for us. It is the Vidrala DNA.
Still, we chose to invest more than ever with a clear focus on our customers. For you, this will mean a well-invested industrial base, visibility regarding our capital allocation. This is how we manage our assets. We are basically doing things in advance, acting today to prepare for the future. We have also expanded into South America. It is not just a new region for us. It will make us more relevant to large global multinational customers. Big thing for us. Together with our traditional footprint, the new Vidrala will gain market share and create value for our customers worldwide. In fact, our new international growth will benefit our traditional markets. We will see it. You will see it. Most important of all, our product, the glass bottle, the glass jar, today has a brighter future than ever. New markets, new products, new consumers.
The world, as we see it, will prefer glass. It will be the ultimate sustainable packaging material, much more competitive than in the past. As the industry rebalances, as capacity adjusts, this will benefit all of us, glass makers, brand owners, and consumers. Finally, in our results made public today, it is clear we keep on generating cash. Our balance sheet is solid, and our debt is under control, guided by our three main critical business principles, customer, cost, and capital. This is why today we confirm our guidance for the year, and this is the basis on which we are building the year ahead in a world that today offers a lot of opportunities for a company like ours.
Finally, let me end saying that behind every number we have shared today, there are people, our people, highly talented colleagues worldwide, now united as one team under one Vidrala identity. I like to say that we are stronger together, and today, more than ever, the future belongs to us. Thank you very much. That brings us to the end of our prepared remarks, and we will now begin the Q&A session.
Ladies and gentlemen, the Q&A session starts now. Questions by telephone will be answered first. If you wish to ask a question, please dial star five on your telephone keypad. Our first question comes from Francisco Ruiz from BNP Paribas. Your line is now open. Please go ahead.
Hello, can you hear me?
Paco, we are hearing you perfectly.
Okay, good. I have two questions. In this volatile environment that you have described, Raúl, a key priority for you and mainly for other players is pricing for 2027. With the current inflationary tensions, how do you see pricing and how do you see all the competitor situation, which need to increase prices probably more than you? Do you think that it is going to be a substantial price increase next year, or it is going to be mainly a flattening year? I mean, to know your thoughts. The second question is on capital allocation. I appreciate the great performance in terms of the shareholder remuneration, but there are several players under these financial difficulties which are closing and could be willing to sell assets.
Do you think that the current opportunity is much better than in the past, or you think that these competitors will be able to go through out of slump without any disposal?
Thank you very much, Paco. Let me start with pricing. I will not speak a lot about our competitors, okay? Just please keep in mind that the competition is high. We are living in a highly competitive environment, and this is probably that is nothing but healthy for our customers, okay? I could speak about our customers today, but I will not, okay? But it is clear that inflationary pressures are much greater than we expected at the beginning of the year. Inflation is higher than we all imagined just a few months ago, much higher. And inflationary pressures are probably one of the most decisive factors in the short term for the food and beverage industry or for the consumer world. Therefore, even though this is probably a supply-driven inflation, we will, Vidrala, be forced and motivated to adjust our prices up.
In our case, we will do so in a balanced and consistent way, seeking to balance our future and our present, our market shares, our customers' expectations, and the competitiveness of our products, okay? We need and we deserve to regain market share, but we will keep our margins safe. We will make no mistake. We will adjust our prices, we will protect our margins as we have done in the past, and we will do everything possible to keep operating commercially with discipline, building our solid competitive starting position.
Yeah, if I may add more color to this, Paco, we will for sure pursue a disciplined approach as we have done in the past, which means we foresee no negative spread between prices and our own cost structure, which can be very different to the cost structure of our peers. This said, we foresee prices growing at CPI levels in every region for 2027.
The second question is probably not regarding capital allocation. It is more regarding our approach to M&A. Well, it is very evident we cannot avoid this evidence that the industry is undergoing a process of consolidation. We are very aware of what is happening in the marketplace in our competitors, and I am convinced that this consolidation, whatever is the result of this, will be good for the product, for the industry, for our customers, and particularly for us, because it will lead to a more balanced situation. That does not mean that we are to play a leading role in that process. We know what our role is. We will carry it with a strict discipline. We will never compromise our solid financial position because we consider it as a structural advantage of our business model.
You can be sure that we analyze, and we will continue to analyze every growth opportunity that can help us create value. I know you know I always say the same. Whatever we do, you will not be surprised.
Okay. Thank you.
Our next question comes from Enrique Yáguez, from Bestinver Securities. Your line is now open. Please go ahead.
Good morning, Raúl, Galo. I have three questions. The first one is about the installed capacity in the sector. It seems that the capacity closure announcements made by some of your competitors seem to be coming to an end. Do you think that the situation in your main markets is now balanced, or do you foresee the need of further capacity adjustments? The second one is regarding your U.K. business. I do not know if you could provide an update about the restructuring process. I noticed also that you made a rebranding of this business unit. The third one is a follow-up question about the M&A. Would you be willing to expand to new regions such as Africa? Thank you very much.
Thank you, Enrique. Let me end with your final question. What a surprising question, Africa. We will see. Everything is on the paper. Everything is on the table. It is our obligation to analyze whatever opportunities that happen in the future. But again, whatever we do, we will maintain a solid balance sheet, and I promise you will not be surprised. Hope that is clear enough. Your first question is how we see capacity in the industry.
I understand that you refer to how we see capacity in Europe, including the U.K., because South America is in a completely different place. I have the feeling that the industry is getting more balanced. But we will see the proof of this in the pricing dynamics that we are to start soon. As we said before, we have the obligation to adapt our prices to the new, much more inflationary than expected environment.
If we do this with success, that will be a proof of evidence that the industry is getting more balanced as we think. The last question, and the question that I like more to answer now, let me enjoy a little this answer. The rebranding of Encirc in the U.K. should be seen as a further proof of our firm confidence in this business. For you, it should simply mean that, an evidence. We are restructuring our competitive position in the United Kingdom. This is requiring significant sacrifices, which are being managed with strength and discipline by our people. Look at the stability of our margins despite the weakness in our sales and the inflationary pressures. This is what lead us to update the name change today. It is very intentional.
It is not coincidence, and I hope it gives you a clear sense of how confident we are in the future. Vidrala UK, a great business made up of great people in a great place with a great future. Welcome, Vidrala U.K. Congratulations to all our Irish and British people.
Yes, I would.
Galo?
If I may, I would add that the ongoing operating restructuring and industrial improvement has made Vidrala U.K. and Ireland a much more solid competitive player in the country. In fact, we foresee that for 2027, Vidrala U.K. and Ireland will be the business unit of highest growth, both in volumes and results for 2027.
Thank you very much for your answers. Can I make a follow-up question about the U.K.?
Of course, Enrique, go ahead.
Yes. Well, recently, the U.K. government has announced measures to restrict the import of Chinese packaging. Do you foresee that they might extrapolate these measures to other countries, such as, I don't know, Turkish imports, or there's not anything that might sign to this potential decision?
Good question. We are fully aware of this news. This is something that we have been trying to build with politicians, administrations, and this is just a good minimal starting point. The industry in Europe and in the U.K. needs to be defended against unfair trading conditions, and hope we are able to deploy this in other countries. I don't know, Galo, if you can help me about what we could expect in other countries like Europe or from other countries different than China.
Yes. Precisely, you might be aware of the process, the TRA, which is the institution that protects trading in the U.K. and unfair trading conditions from foreign, in this case, glass suppliers. It is public data that there is also an ongoing process coming from TRA to explore the fairness of Turkish glass imports into the island. We are foreseeing a decision in the coming months. That will be expected in the U.K.
Thank you very much.
Our next question comes from Ignacio Romero from Sabadell.
Yes. Hi. My question has already been answered. Sorry, I haven't been able to cancel it.
The next question comes from Fraser Donlon from Berenberg. Your line is now open. Please go ahead.
Hi. Thank you for the presentation. It is Fraser here from Berenberg. I just wanted to ask a question on the U.K. You sounded quite positive on volumes into 2027. What visibility do you have here in terms of new customer acquisition or contract wins, maybe some customers coming back into glass or back to Vidrala? The second linked question was that I think I saw that Vidrala U.K. has a kind of permission to expand slightly the warehousing, et cetera, at the facility near Manchester. Could you give a bit of color behind that? Is that backed by specific customer wins, or is it more of a kind of operating cost saving, which could arrive in the years ahead from this investment? Thank you very much.
Thank you, Fraser. Let me take this one because today I really enjoy speaking particularly about Vidrala U.K. Well, first, it is very evident that over the last three years, we had lost a number of businesses with a number of critical customers, and we are now progressively regaining them. We are fully aware of our numbers, of our sales volumes numbers in the U.K., and please keep in mind, hopefully, you saw that very clear message sent by Galo on that sense. As we steadily regain market share, and given that we consider organic demand to be largely under control, even if shorter than initially expected, my conclusion is clear. Vidrala U.K. will grow significantly next year, and we will start showing the intrinsic and real value of this business that is a core part of the Vidrala Group. Vidrala U.K. is a core part of the Vidrala Group.
The second question is regarding our investments in the U.K. You know that we have a large, highly scaled facility in Manchester. This is a unique state-of-the-art glass-making facility. It is much more than a glass manufacturing site, and we are investing in a much better developed logistic network for the future that will give us cost savings, not only customer service. But it is too soon to make this cost-saving public. We will do it. I know that you will remind us, give us at least two years, because this is the time we need to evolve in these investments. Okay? This is an investment that will take between two to three years.
Perfect. Thank you, Raúl.
Ladies and gentlemen, please be reminded that in order to ask a question, you should dial star five on your telephone keypad. Our next question comes from Manuel Lorente from Santander. Your line is now open. Please go ahead.
Yes. Hello. Good morning, everybody. Just a follow-up question in terms of pricing expectations for next year. I do not know if I understand properly, but Galo was mentioning that the CPI considerations as a good starting point for next year across all regions. I was expecting, to some extent, a little bit more, let us say, different performance between regions, geographies, due to the different backdrops in terms of natural gas prices and the fact of the different, let us say, weight of the pass-through mechanisms between different regions. So CPI assumptions across the board for the regions is the best guess at this point in time, regardless of these, let us say, two different stands on regions on natural gas and pass-through mechanism.
Okay. Let me take that one. Let us be clear, and maybe I am repeating myself, that regarding pricing for 2027, we will be disciplined. This discipline translates into having not a negative spread between prices and our own cost structure, which for sure is somehow different between regions, and you have to take this into consideration. It is also worth noting that regarding our energy hedging position, which is a crucial part of our cost structure, we want to disclose here that we closed our hedging position before the conflict in Iran. You can imagine that this reflects price levels of portfolio value for the following years, not 2026, but also 2027 and 2028, that are done at similar levels that you can infer if you take a look at the historical hedging price curve at the time before the conflict in Iran.
Thank you. Sorry, Manuel. Sorry, Manuel, and thank you, Galo, for your explanation. Yes, to add on you, please, it is worth to recall that more than 50% of our sales at the group level are secured through mid to term long-term contracts, which includes price adjustment formulas, allowing us to pass through the evolution of our external production cost to our customers.
Yes.
I'm sorry, Manuel. You were going to try something. Go ahead, please.
Yeah. Just a quick reminder of the current hedging position for this year and next year, please.
Sure, Manuel. Well, focusing on our European operations, 90% of the group's expected energy needs for 2026 and above 70% for 2027 are hedged through derivative instruments.
Finally, if I may end with this, Manuel, we want to be very clear in this message, okay? I think that this message is a big message if you consider that Vidrala is probably one of the most competitive glass makers in the most affected region in terms of energy inflationary pressures, that is Europe and the U.K. We will go out for price adaptations. We will protect our margins. We are giving you a minimal guide of the price increases we need. We understand that you see this as low. Please be sure that this is enough for us to keep our margins protected and safe. Okay? 2027 will be better than 2026.
Okay, great. Great to all of you. Thank you.
There are no further questions by telephone. I now hand it back to the Vidrala team, who will address questions submitted via webcast.
Well, we have some additional questions on the webcast we are going to answer right now. The first one, it's about how do we see demand situation in Q4 and in 2027. Well, we are seeing that the evolution in October in all the group regions are completely in line with our expectations to reach the full year figures. We are not anticipating any kind of surprise. Looking ahead to 2027, we are not expecting a market recovery. We are not expecting demand to growth, but helped by our self-help initiatives, we should be able to be at positive volumes, reinforcing our competitiveness position. The second one is on the CapEx figure regarding 2027.
Well, just please remember that we are currently executing an ambitious and distinctive industrial investment program supported by a robust balance sheet, and we are allocating capital with a strong strategic focus, always with our customers in mind and without compromising the financial discipline that has always defined Vidrala. Well, looking into 2027, we are not today providing any official guidance, but please note that CapEx figure into 2027 shouldn't be higher to the one we are expecting in 2026. It is true that unless we announce any capacity expansion project, but in any case, should be announced in the future. Regarding 2027, we've also been asked by the margins evolution, and as Galo and Raúl has reiterated before, we are not expecting that the cost spread mix is going to have an adverse impact on us.
Your assumption on flattest margins are well aligned with our expectations.
Okay. Thank you very much you all for your time. Thank you, Galo, Unai. Hope you found our message clear enough given the circumstances, and please go keep on eating and drinking more in glass. Best for you. Thank you very much.
With that, we end our third quarter results presentation. Thank you very much for joining us, and see you in the next results presentation.