Good morning to you all and thank you very much for joining us for Elopak's third quarter presentation. My name is Thomas Askeland, and I am head of investor relations in Elopak. Our presentation today will be held by our CEO, Thomas Körmendi, and also our CFO, Bent Axelsen, and will be followed by a Q&A session straight after the presentation. Please use Ask a Question functionality in the webcast and submit your question in writing. The presenters today will be CEO Thomas Körmendi and CFO Bent Axelsen. Without further ado, I will now hand over to our CEO, Thomas Körmendi, to take us through the business performance of the group for the quarter. Over to you, Thomas.
Thank you Thomas and a warm welcome, all of you, also from me. I will first provide a business update on how we have performed during the last quarter before I hand over to our CFO, Bent Axelsen, who will take us through the financials. Both Bent, Thomas, and I will be available to respond to questions in the Q&A following the presentation. Firstly, we are really pleased to report a strong third quarter, both in terms of revenue and profitability. Additionally, we are in fact delivering on all the elements of our sustainability-driven growth strategy. The main highlights this quarter are, number one, strong revenue growth of 13% compared to Q3 of last year. I will provide more details on the revenue development shortly.
Number two, profitability has continued to be solid at EUR 32 million in the quarter, which is yielding a high year-to-date EBITDA margin of 14.1% despite the current inflationary pressures. Number three, we are really glad to report that our plants continue to perform very well in the quarter. Fourthly, our sustainability-driven strategy is on track to deliver new, innovative, sustainable products to our customers. In fact, today we can announce a breakthrough deal in the huge fresh dairy market in the U.K. Some of you may also have experienced the soap cartons, which are actually now on retail shelves all around Norway. Fifthly, of course, on the October 12th, we announced an important strategic acquisition for Elopak, and I will provide some more information around this later in this presentation.
All in all, we have delivered a resilient performance, and I am especially satisfied with the consistency in our profitability for the third quarter as well. Now, let's move then to the revenues. Our revenues are up by 13% or EUR 27 million. Adjusting for currency translation effects between U.S. dollar and euro, the increase is more around EUR 30 million. In EMEA, revenues were primarily driven by sales of larger filling machine projects compared to last year. Also, revenues continued to grow in the aseptic cartons, both in dairy as well as in juice. In Americas, the main reason for the increase relates to a positive product mix of, and growth in caps and closure sales. We are in fact also seeing now, finally I can add, sales to school milk is growing again post COVID-19.
For the whole year, we are now ahead of last year by 1% or 2% on a constant currency basis. Let's now move on to our business performance in EMEA. Our quarterly revenue performance in the third quarter is very strong compared to last year. In fact, up by 15% compared to a relatively modest Q3 last year when customers reduced their safety stock due to COVID-19. On a year-to-date basis, our total revenue is now up by 1% compared to last year, and we expect this positive trend to continue into the fourth quarter as well. In the third quarter, we are very pleased to see a continued healthy growth in our aseptic volumes, both for our Pure-Pak Aseptic and Roll-Fed products.
The aseptic business is one of our strategic growth pillars, and it's encouraging to see that our efforts are also yielding financial impact. Our filling machine sales in Europe is also high in the quarter as a number of large projects were commissioned during Q3. In addition, we have signed some important agreements in the quarter to drive the plastic to carton conversion. Filling machine sales is a key lead indicator, and we are particularly encouraged to see the growth into higher capacity machines. Due to the current high raw material and utility prices, we will continue to implement price increases to offset the higher costs for the next year and expect the financial effects to come through mainly from January. Now, let's turn to Americas.
Being a strategic growth pillar, we are glad to report revenue growth also in Americas, up by 8% on a quarter-on-quarter basis and 15% on a constant currency basis. Year -to -date, revenue is still behind last year, primarily due to the lower Roll-Fed sales in the first half of this year. The main drivers for the revenue growth in the quarter is an attractive mix effect in our carton business and strong sales in our caps and closure business. As I said, we're also happy now to report that sales to the school milk segment is finally growing again. An important feature in our contracts in Americas is the pass-through mechanism in both our supplier and customer contracts. We effectively have a natural hedge protecting our margins, but with a slight time delay in our price adjustments to customers.
Operational performance in our plant in Montreal continued to be strong and is also contributing to the good performance in Americas in the quarter. Most of you have probably seen this slide in one of our many previous presentations showing the five basic elements of our sustainability-driven growth strategy. We are in fact delivering on all five growth pillars. Firstly, in our Americas business, we are pleased to report revenue growth of 8% compared to the third quarter last year. Secondly, aseptic growth remains strong in the quarter, both for our Pure-Pak cartons with our unique proprietary system and our roll-fed business by 8% and 19% volume growth respectively. Thirdly, in October, we announced the Naturepak acquisition, broadening our geographic footprint to high-growth markets in MENA. Let me just briefly come back to this in just a second.
Fourthly, plastic to carton conversion is happening, and I'm going to share with you some convincing proof points shortly. Fifth, as indicated by our strong result, we continue to deliver consistent operational improvements to support our commercial excellence pillar. Plastic to carton conversion. Freshways, which is U.K.'s largest independent milk processor, recently signed an agreement with Elopak for the supply of two fresh filling machines, high-capacity filling machines for their fresh dairy products. In Q2 2022, Fresh will launch their brand Love Milk in Elopak Pure-Pak cartons. This customer win in the U.K. is an important milestone to show that plastic to carton conversion is actually happening in the U.K. We've already seen other customers in the U.K. moving into cartons for their high-value dairy product, such as lactose-free and flavored milks, but we are now seeing this trend also materializing in the regular white milk segments.
We expect that the current sustainability trends driven by consumers and growing evidence that carton is a more sustainable packaging material will continue to drive volumes from plastics into cartons. Now moving south, and let's move towards our new markets. On October 12th this year, we announced that we have signed an agreement to acquire Naturepak Beverage Packaging. This represents a landmark transaction for Elopak, delivering on our strategic ambition to broaden our geographic footprint and target high-growth markets. Naturepak is the largest provider of gable top cartons in the region with high-quality production assets and a strong position in the fresh segments in the MENA region. The company has a very good strategic fit with Elopak and an established customer base in the region, which we will aim, of course, to develop further.
In particular, we seek to broaden the offering of Naturepak with end-to-end solutions, including the full fresh portfolio of Elopak, as well as our aseptic products to customers in the region. Now, as mentioned earlier, the acquisition will be accretive to Elopak's growth and margins, and we will come back with more details on this when the transaction is completed. The most important feature of this transaction is the access to growth markets, both for our fresh as well as for our aseptic products. The transaction is pending approval of the competition authorities, which we expect will happen during first half of 2022. The MENA markets for liquid food packaging are already well developed for both fresh and aseptic segments. Now, in the relatively busy chart on this slide, we show the size and fresh and aseptic split of some of the key markets in the MENA region.
Naturepak's main market is currently in the Morocco fresh dairy segment, but also areas like Mauritania, Saudi Arabia, and United Arab Emirates are important markets today. Naturepak does not have any presence in the aseptic markets in the region and also no production capacity for aseptic yet. Now, on the left-hand side of the chart, we show you the CAGR growth for the next five years, and the market data suggests that the underlying volume growth for liquid cartons in the MENA market will be somewhere around 3% for both fresh and aseptic segments. The main drivers here for the growth will be the underlying population growth, general income growth, and urbanization trends. In the Middle East and North Africa, many countries have put sustainability as a major topic in their national programs.
The implementation of these programs is yet to come, but we do expect the sustainability trend to drive increased demand for sustainable packaging in the years to come, also in this part of the world. We clearly aim to grow, further grow this business in the coming years in both fresh and aseptic, utilizing our extensive product range and our technical expertise for the benefit of the customers in the region. Let me now hand over to Bent, who will take us through the key financials. Please, Bent.
Thanks. I will now take you through the financial section, including the outlook for the full year. The Q3 adjusted EBITDA of EUR 32 million is up 8% from same quarter last year. Our EBITDA margin of 13.4% is slightly down, both because of raw material increases, but also due to increased sales of filling machines. Filling machines generally have lower margins compared to our blanks and closures, and could, for an isolated quarter, cause variations in our calculated EBITDA margin. However, selling filling machines is a leading indicator for future growth. On a year-to-date basis, our EBITDA margin is at solid 14.1%. Let's talk about our regions. In EMEA, the adjusted EBITDA is down around EUR 1 million. The increase in raw material cost is the main reason for this margin decline.
We continue to grow the aseptic business in Europe, which combined with other mix effects contribute to higher average prices. These positive mix effects plus operational improvements have to a large extent compensated for increased raw material costs. Over to Americas. In Americas, adjusted EBITDA increased by EUR 1.9 million. The improvement is predominantly a result of better product mix and continued growth of closures. As we have shared earlier, the raw material indexing in customer agreements provides margin protection in Americas. Year -to -date for the group, we are now 4% ahead of last year at EUR 99 million. I'm pleased to see that we have been able to manage our profitability. We maintain a strong EBITDA also when we are impacted by factors beyond our control. Let's take a look at our adjusted EBITDA bridge for the quarter from EUR 29 million-EUR 32 million.
As you can see from the chart, the improved revenue mix is close to mitigate the raw material cost increases. The total raw material cost developed in line with our expectations. Polymer prices stayed at a high level, while we have seen continued increase for aluminum, utilities, and also pallets. We hedge the majority of our polymer and aluminum exposures, either financially or through clauses in our customer contracts. The improved operations of EUR 3.4 million is a combination of lower waste and various cost reductions. The FX effect is basically the translation effect between U.S. dollar and euro in the American segment. Not surprisingly, raw materials play a big part in our EBITDA bridge. While these effects are challenging short term, fundamentally, the carton industry will benefit from sustained high plastic prices.
Let's move to our financial position, which is further strengthened since Q2, driven largely by our EBITDA performance. Our leverage ratio will increase short term after the completion of the Naturepak acquisition. As Thomas mentioned, the Naturepak acquisition supports both revenue growth and EBITDA margins. More financial information will be made available after the closing in line with IFRS requirements. Now to the outlook. In the Q2 presentation, we guided that full year revenues would be in line with last year. We now believe that revenues will be above last year around our midterm guiding. The uncertainty on raw material cost for the remainder of Q4 is now mainly related to utilities and other raw materials, as we have seen polymer prices stabilize. For 2021, we expect a full year adjusted EBITDA level above last year, although with EBITDA margins slightly below.
All in all, we are raising our guidance for 2021 compared to what we communicated in Q2. With the long-term fundamentals with plastic to carton conversion, we remain confident in our midterm guidance, including our dividend policy which remains unchanged. This concludes the financial part, so, back to you, Thomas.
Thanks, Bent. To summarize it all, I'd like to leave you with the following key takeaways from our presentation. Firstly, we are really pleased with the third quarter, especially the significant revenue growth compared to the third quarter last year, as well as EBITDA improvement. Moreover, we are delivering on our strategic plan on all of our five pillars. The Americas business is delivering growth both in revenue and EBITDA terms. The aseptic growth continues, and we have made significant step to advance our market presence in MENA through the Naturepak acquisition. Plastic to carton conversion is happening, and Freshways in U.K. is a very convincing example of this. Not the least, we continue to deliver strong performance in all of our plants.
Elopak has delivered a strong third quarter, and we aim to keep the positive momentum into Q4 on track to make 2021 the best year for the company so far. Thank you for listening, and we will now continue to the Q&A session. Over to you, Thomas.
Very well. It's time for the Q&A session, and I'd like to remind you again that you can use the ask a question functionality in the webcast to still ask questions as we go along. Let's start out with some of the questions that have already come in, and the first questions will be from Simon Os, Analyst in DNB. We'll start out with a question to CFO Bent Axelsen. What was the implied margin guidance for the fourth quarter this year, and how should we think about this in relation to 2022, Bent?
Thanks for the question. I would like to refer to the full year guidance, where we are saying that our revenues will be higher compared to last year. We're also saying that our EBITDA margin will be slightly below last year as we guided in the Q2. In total, we are expecting that the EBITDA level will be higher compared to last year. As far as 2022 goes, we believe that we will perform resiliently despite the raw material turmoil and the inflationary pressure, and I would like to leave it with that at this stage.
Very well. Two questions in relation to the Naturepak acquisition, also from Simon Os in DNB. What is the contribution from Naturepak in your 2021 financial year guidance? Second question, what is the EBITDA margin for Naturepak, Bent?
Thanks. Naturepak will not affect our numbers for 2021. They will come into our books sometime in 2022 after the closing. As far as the Naturepak margin goes, we are not disclosing the specific margins for Naturepak, but I would like to remind what Thomas said, that this acquisition is accretive to the Elopak EBITDA margin.
Very well. Final question again from Simon Os in DNB, what was the mix between volume and price growth in the third quarter, Bent?
I'll take that as well. I think the biggest impact for Q3 is the mix effect, and it's very much driven by the growth in the aseptic segment, where we have higher margins compared to the fresh. The following effect will be the growth in Roll-Fed business in Q3. Then finally the volume impact for the aseptic business. The mix effect is the biggest contributor to Q3 EBITDA increase.
Very well. While we're on sort of mix effects, a question from Martin Melbye in ABG goes to Bent as well, I think. It's about the EBITDA bridge, and Q4 dynamics. Can you say something about explaining the Q4 dynamics with reference to the third quarter? Anything on seasonality, raw material, and mix that we can say about the fourth quarter compared to what we have now seen in the third quarter?
Yeah. Thanks for the question. With regards to Q4, I think the raw material is obviously the one to follow closely. I think if you break down the raw material picture, the polymer prices, they have stabilized. We do not expect significant impacts on the Q4 results due to polymer. If they change in Q4, they will only affect the P&L next year because of the inventory effect. We see continued increases in aluminum, as we speak. Also, we have seen increases in utilities in the beginning of Q4. I would say aluminum and utilities are those two, say, call it, say, uncertainties for the Q4. Polymer not so much.
As far as revenues are concerned, I just will stick to the outlook statement that we believe that the full year revenues will be above last year and in line with the mid-term guidance. The mid-term guidance is, as you remember, between 2%-3% revenue growth.
Very well. A question to our CEO, Thomas, on pricing, and it's from Robin Santavirta in Carnegie, asking: What kind of sales price increases in Europe for 2022 do you need to offset the higher raw material costs? And do you expect sufficient sales prices to offset the higher input cost?
I think, you know, in general, we are seeing, as we all know, in most industries, a very unique situation, both on the raw materials that Bent alluded to on the polyethylenes, but also on other areas that we have seen, including utilities, pallets, transports. We talk about container traffic, et cetera. It's clear that we as an industry and as a company, we will increase our pricing. It's also clear that it's going to be very difficult necessarily to do that exactly when the price increases occur and to get a one-to-one effect on this. That simply from a practical point of view in a European context is going to be very difficult. So, we do increase. We are in very close contact with our customers on how to handle this in the best way.
It is quite a unique situation, the way we've seen the development on the input costs throughout this year. I'm frankly not specifying the amount that we are increasing at this stage, but the dialogue and the communication is ongoing right now.
Very well. Thanks, Thomas. I think that also ticked off a couple of other questions in the chat as well, so thanks for that. Another question from Robin Santavirta from Carnegie, when it comes to input costs. How much is energy and logistics of your costs, and have you hedged your energy costs? How will energy and logistics impact your costs in the fourth quarter and in 2022? Bent, maybe that's for you.
That's great.
Over to you.
Thank you, Thomas. We are not very specific on the logistics. Let's take the logistics part first. We have different contracts with customers. Sometimes we deliver, sometimes we sell ex works. Sometimes we have pass-through effects of rates. It's a mixed bag on how logistics play out. It has not been a huge factor for Elopak so far. When it comes to utilities, I think more or less broadly speaking, utilities and the energy for the utilities part is mainly spot, but we do have suppliers doing some forward contracts for us. It's a mix between the spots and some forward contracts.
Very well. Okay, over to another topic. It's a question from Mr. Thomas Angermann, and it's about Americas and a pass-through mechanism in our Americas contracts. What is the time lag in months for the pass-through contracts in Americas?
Thanks for the question. I think it depends on the customer contract, but broadly speaking, it could take a quarter.
Very well. That's good. A question from Mr. Frederik Windrup. What was the percentage share of aseptic sales in the quarter? And can you please give an updated number of aseptic machines in the field now? What share of the filler placements are in the quarter? That's a question and a number of questions there on the aseptic sales.
Yeah. Of the machines we've installed, how many of these are aseptic? That's what I understand.
Correct.
Right. We don't actually give that figure specifically on number of machines. But even if we did, frankly, you know, it's not only about number of machines. The point being here, you have high capacity machines and very low capacity machines. As you've seen throughout our sales in this quarter, we're reporting good filling machine sales driven primarily by higher capacity machines, which is a very good lead indicator that the business is moving in this direction. Let me say, the bigger business and not only the small areas. We've seen on the aseptic sales that we have both signed contracts, we've made installations, but moreover also we have a very interesting backlog and an interesting outlook on the filling machine sales on the aseptic side as well.
I will only leave it at that right now, but the development as you've seen on our UHT, again this quarter after many, many quarters now, is very, very solid. The installations we make, the machines we put in place are working well with customers, are highly preferred by consumers, and are overall performing in the retail environment where they are. That for us is the encouraging fact that when we put out more machines, they will deliver the business that they're there for.
Very well. A follow-up question to that, Thomas, again from Frederik Windrup, is related to the Pure-Fill, as we now call it or the aseptic.
Yeah.
E-MP machine. So, the question goes, can we give an update on how that one, that machine, is developing? When can we expect to see that being delivered to customer? Is there anything that we can say about the traction that this machine is getting with customers? You largely.
Yeah.
Addressed that, but.
I am very happy to address that. This is, I have to say, something that interests me personally very, very much because I strongly believe that with this platform, we're going to open up our portfolio on the aseptic side. We are in, as I think we have, or actually I know we have, informed about before during the IPO as well, we're going to install this machine with a customer in Europe. None of that has changed. It's all in motion. We may be seeing some level of a small delay, simply because of delivery on some of these components for the machines are also delayed from around the world, essentially. We may be seeing some level of delay.
It's not entirely, we're not entirely sure about what that may be, but we will be delivering it during the first half of next year. With that, actually a number of machines that we are currently signing up for the subsequent period.
Very well. Thank you. A question from Mr. Louis Larer. It's also a market question, goes to you, Thomas. Is it fair to assume competing materials like glass, plastics or aluminum packaging need to increase prices more than carton players and therefore making substitution to carton even more attractive? It's a leading question there, but.
Yeah. I think you're right, frankly. Look, when we look at the packaging market in Europe and we do see that other materials have had good developments. Specifically, you've seen glass develop actually. That has on the other hand developed from a very small base, and it's developing in some markets because there's belief that it is from a sustainability point of view a strong contender. We believe and what we think we see the evidence of is that the carton business will be growing. The carton competitiveness will remain strong and will likely increase versus the cans and glass, and very much so against plastics.
Now, cans, as you know, is nothing we typically see in milk, but it's more juice product and soft drinks and other drinks, but certainly glass has its following in milk as well.
Very well. Thank you. That concludes the Q&A session for now. We'd like to thank you all for joining in on the webcast and the presentation and wish you all a lovely day.
Thank you. Thank you all.