Vidrala SA

MAD:VID

Earnings Call Analysis

Vidrala Reports Continued Growth Amid Mixed Market Conditions

Vidrala achieved over EUR 1.2 billion in revenue in the first nine months of 2024, with a notable 9% volume increase year-over-year, despite facing a negative pricing mix, resulting in a modest 0.9% revenue growth. EBITDA reached EUR 338 million, reflecting a 4.3% organic improvement and a substantial margin of 27.8%, a 140 basis point increase from last year. They reiterated a full-year EBITDA guidance of EUR 450 million and expect free cash flow to surpass EUR 200 million. While U.K. margins remain strong, challenges persist in Europe, with demand down 10-15%. There are no immediate plans for capacity expansion, focusing instead on strategic investments.

Strong Financial Results and Revenue Growth

In the third quarter of 2024, Vidrala showcased robust financial performance, generating over EUR 1.2 billion in revenue, with an EBITDA of approximately EUR 338 million. This translates to a net income represented by an earnings per share (EPS) of EUR 7.22. Notably, revenue achieved a 0.9% uptick at constant currency and comparable scope, largely driven by a remarkable 9% increase in sales volumes, effectively offsetting a negative price mix effect. The business has benefited from incorporating results from Vidroporto while excluding contributions from Vidrala Italy following its divestment earlier in the year, contributing an additional 1% to revenue growth.

Operational Efficiency and Margin Improvement

The EBITDA margin has shown significant improvement, reaching 27.8%, marking an increase of 140 basis points year-on-year. This comes despite facing challenges from price adjustments and a softer demand in some markets. The performance in the U.K. was especially notable, where margins have improved sustainably, thanks to effective capacity utilization and strategic acquisitions that have strengthened Vidrala's market position.

Free Cash Flow and Debt Management

Vidrala reported a strong free cash flow generation of EUR 155 million over the nine months of 2024, indicating a Q3 generation of EUR 65 million alone, primarily due to effective inventory management and reduced stock levels. The company anticipates exceeding EUR 180 million in free cash flow generation for the full year, with expectations of approaching or exceeding EUR 200 million. Current net debt stands at EUR 299 million, reflecting a conservative leverage ratio of 0.7 times last 12 months pro forma EBITDA.

Transformational Year Ahead and Strategic Focus

The management emphasized 2024 as a pivotal year of transformation for Vidrala, aiming to solidify its position as a leading packaging supplier. Their strategy focuses on three core priorities: enhancing customer relationships, controlling costs through efficient operations, and maintaining disciplined capital expenditure, with a planned CapEx of around EUR 160 million allocated to improvements in production and sustainability initiatives.

Market Dynamics and Capacity Utilization

While Vidrala experiences strong growth in Brazil, where sales volumes surged by nearly 60%, particularly in the beer segment, challenges persist in Europe, where demand has contracted by approximately 10-15% over the past two years. The company currently operates at full capacity in key regions like Brazil and the U.K., but maintains reduced capacity utilization in Continental Europe, reflecting ongoing adjustments to control inventory levels amidst variable demand.

Pricing Strategy and Competitiveness

Looking ahead, Vidrala expects to implement modest price adjustments based on contractual agreements and market conditions, navigating a landscape of slight pricing declines projected at around 5-10% for the year. The strong competitive position in the U.K. enables sustainable margins, supported by a significant portion of sales linked to indexed pricing formulas which provide pricing security despite external inflationary pressures.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and welcome to the conference call organized by Vidrala to present its 2024 Third Quarter Results. Vidrala will be represented in this meeting by Raul Gómez, CEO; and Iñigo Mendieta, Corporate Financial Director.

The presentation will be held in English. In the Q&A session, questions will be also answered in Spanish. Nevertheless, it is strongly recommended to post 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 now have the floor.

[Iñigo de la Rica, executive]

Good morning, everyone, and thank you for the time to join this call. As previously announced, Vidrala has released its 2024 third quarter results earlier today, and we have also published a results presentation that will serve as the supporting material for this conference call.

In line with the presentation, we will begin by briefly reviewing the key figures disclosed today, and then we will dedicate ample time to discussing business performance in the Q&A session. So starting with the main magnitudes in the first 9 months of 2024, we achieved as most relevant business figures, revenues above EUR 1.2 billion, an EBITDA of almost EUR 338 million and a net income equivalent to an EPS of EUR 7.22. Net debt at the end of the period stood at EUR 299 million, which is equivalent to a leverage ratio of 0.7x net pro forma EBITDA, which considers the contribution of the last 12 months from Vidroporto.

Moving to Slide 4. We look at the top line performance by analyzing the annual revenue variation categorized by concept, leading to the reported figure of EUR 1,216.4 million. As shown in the graph, this figure reflects 0.9% growth at constant currency and comparable scope. Volumes increased by almost 9%, which was nearly offset by a negative price mix effect. FX and scope, which aggregates the combined effect of the incorporation of Vidroporto's 2023 year-to-date results and the exclusion of Vidrala Italy since March 1, 2024, these 2 effects contributed an additional 1% to revenue growth.

Continuing with the key business figures mentioned earlier, we analyzed the variation in operating income using the same breakdown. So for the first 9 months of 2024, EBITDA amounted to EUR 337.7 million, representing an organic improvement of 4.3%. Considering the rest of effects, EBITDA increased by 7% year-on-year. These operating figures led to a robust operating margins, EBITDA over sales of 27.8% in the period which means an expansion of 140 basis points compared to the previous year.

Now in this slide, we present the distribution of sales and EBITDA by business unit under the new perimeter that is including Vidroporto in 2023 figures and fully excluding the results of Vidrala Italy in 2024. Although as you know, Vidrala Italy contributed to reported sales and EBITDA in the first 2 months of 2024, and then it was reported that discontinued operations contributed to net profit from March to year.

The graph show very similar trends to that reported back in July, EBITDA is still experiencing weaker performance due to price adjustments and soft demand context, but the results should improve in Q4, mainly due to easier comps. The U.K. continues to perform well, driven by the filling business integration and better glass volume performance and Brazil is still enjoying the benefits of the capacity expansion executed in 2023.

Finally, we take a close look at free cash flow generation. Using this chart that outlines the year-to-date cash conversion. Starting with an EBITDA margin of 27.8%, we have allocated 10.4% of sales to investments and an additional 4.6% to the aggregate of working capital, financials and taxes. Consequently, free cash flow generation is close to 13% of sales. As a result of this, net debt at the end of September 2024 closed at EUR 299.1 million, which is equivalent to the leverage ratio of 0.7x last 12 months pro forma EBITDA. These figures include, of course, disbursements for recent M&A and the acquired debt as well as the proceeds from the sale of Italy and the amount allocated to dividends and share buybacks.

And now before turning to the Q&A, I pass the word to Raul, so that he can start main conclusions or highlights and make additional comments.

[Rául Merino, executive]

Good morning. Thank you, Iñigo, and thank you all for attending this meeting today. It's Friday morning, quite a busy day for most of you. We are aware of this, and that's why we do appreciate that much your time. Thank you.

Well, our results published today put on evidence that we are creating a strong EBITDA. Vidrala grounded on a more solid business profile, better diversified, strategically refocused on core regions, resilient under weak demand environments, less seasonal, thanks to a great combination of 3 different markets of activity with the proper dynamics. And above all, a business profile that is finally showing its capacity to generate a superior structural level of cash that will help us elevate the company to a new level as a packaging supplier of choice.

Indeed, we see 2024 as a transformational year for us, a change that we are executing with the expected results. As a good proof of this, despite the prolonged period of demand weakness, we are still suffering in some of our more mature markets. We are today to reiterate our guidance for the full year. That means that we still see our full year EBITDA of EUR 450 million, and that also means that we do expect to exceed EUR 180 million of cash generation in the year. A point that will mark a record level for us to help us better invest in great future.

And we will do it strictly fixed to our 3 core priorities; customer, cost and capital. Customer first, we will invest with the aim to consolidate and reinforce our commercial relationships and supply our products and services under the most efficient, competitive and sustainable way. Cost, second, we will use our internal glass manufacturing expertise to remain efficient, and we will use our superior level of cash to invest more, more than in the past to further improve our competitiveness and better serve our markets and capital.

Third, we will strictly control our inventory levels to remain adapted to the existing conditions when needed and much more relevant, we will execute our ambitious CapEx plans and our ambitious corporate strategic actions, maintaining always, our financial leverage ratios under particularly solvent levels. At the end, we are becoming a multinational company, a particularly competitive manufacturer. We invest with ambition.

Finally, in my conclusion, you probably may note in my words that we are living intense times in Vidrala, quite dynamic internally. We have the confidence that we are creating future that will be reflected in value for our shareholders, in competitive service proposals for our customers, in future for our people, and in business sustainability for all of our stakeholders. Hope you today appreciate in our numbers, in our message, a good proof of our confidence in our purpose. Thank you.

[Iñigo de la Rica, executive]

This finalizes our position. So we now give way to the Q&A session.

[Operator]

[Foreign Language] [Operator Instructions] The first question comes from Alberto Espelosín from JB Capital.

[Alberto Espelosín González-Simarro, analyst]

I have 2, if I might. The first one is relating to volumes. It seems that after 2 years of constant volume declines in Europe, mainly in Iberia, we have now reached a trough and a somewhat more positive volume cycle is beginning. My question is, what is your view on this? And how and at what speed do you expect volume increases in Europe to take place? And my second question is relating to pricing. You should already be negotiating prices with customers for next year. Should we expect any relevant price adjustments for next year? And should we expect a positive price cost spread in 2025? Thank you.

[Rául Merino, executive]

Well, thank you, Alberto. With regarding volumes regarding our demand conditions, please let me start helping you consider that we now have 3 different markets of activity with 3 quite different macro demand dynamics. And this is an improve of the solid business combinations we are creating. I mean, we are seeing some growth in Brazil, while we are seeing some weakness in Europe and the U.K. And this is, I mean, quite consistent with what our margins -- sorry, our customers are reporting. And this will obviously dictate our strategy.

With regards to your specific questions, I assume that you refer to the demand conditions that we are seeing in Europe and the U.K., our more mature markets where demand is weaker. Here, demand has dropped over the last 2 years, approximately minus 10% to minus 15% organically, globally, not in our specific case. And despite we don't see yet the signs of recovery that some were expecting, it is true and it is probably evident in our numbers that you say that the demand has at least stopped dropping.

We shouldn't be particularly optimistic about the potential quick immediate recovery of demand. We have little, let's say, macro external reasons for that. But we do think that additional demand drops having reached to these levels is under our view, particularly for our case and our specific commercial positioning unlikely for 2025.

[Iñigo de la Rica, executive]

Thank you, Raul. Just to add some points, Raul was speaking Alberto, which I understand was your question on general demand trends, external organic demand trends. Just to clarify our volume performance by region, we are roughly flattish in the 9 months in Iberia and others in terms of volumes. We are up plus 9% in the U.K. and Ireland in the first 9 months. And in Brazil, due to our specific characteristic of the new capacity executed back in 2023, volumes are up almost 60% in the first 9 months.

Based on your first question. Taking the second question on prices 2025, well, it's still too soon. We are right now in the moment of elaborating our budget for next year and negotiating with customers. But just remind you that more than 50% of the group sales are now subject to commercial agreements linked to price adjustment formula with the capacity to transfer cost variation to sales prices. This -- the result of the formulas today are pointing to a small price moderation, let's say, down low single digit for next year. As they show with some delay cost trends, okay, because probably we are not seeing significant, let's say, deflationary trends looking into 2025.

[Rául Merino, executive]

Thank you Iñigo. Just to add on this, Alberto, as you may note, we have significantly reduced our prices this year. after the needed increases implemented in the previous 2 years to recover past that normal inflation. And we are doing this, we are adapting down our prices significantly, maintaining our margins under I will say, a reasonable level of control, proving that our pricing initiatives are consistent and our internal cost actions are providing some results.

Looking ahead to 2025, as Iñigo said, you should remember that a significant and growing portion of our sales volumes are priced under specific indexes of formula. The results calculated today give us all this negative variation, as Iñigo say. For the remainder of our sales, customers with direct price negotiations, we will make our best to remain competitive, remain as the most attractive supplier of choice, but we have little reason so far to reduce our prices as we still see inflation in many of our cost factors, for example, the energy factor. It is true external cost inflation is much more moderate. That's good news for us, for our customer and for the consumer, but inflation is still positive.

[Operator]

The next question comes from Francisco Ruiz from BNP Paribas Exane.

[Francisco Ruiz, analyst]

I have 3 questions. The first one is on the sharp increase on U.K. margins. You pointed out 9% volume growth, which is an acceleration versus what we saw in Q2. But if we compare with last year, there is more than 600 basis points of improvement in margin. So I don't know if there is a reason for that, if it's sustainable or it's something a one-off that we see this quarter, we will not see in the coming months.

The second question is on the free cash flow generation. So there has been also an acceleration here with more than according to my calculation, EUR 65 million of free cash flow generation this quarter. If you could give us what's your estimate for the full year because you guided to above EUR 800 million -- sorry, about EUR 180 million, but this is going to be well above EUR 200 million. So if there is something with inventories that has made the big change. And last but not least, also you highlighted that the manufacture, you have or you see a nice market coming next year. What's your capacity utilization right now? You sold Italy, you closed some furnace. What is the ability that you have to grow next year with existing capacity?

[Rául Merino, executive]

Okay. Thank you, Paco. Well, first, regarding our margins in the U.K., what we are seeing today is what we were expecting. It's not a surprise for us. We are capturing demand, particularly a year after the relevant acquisition for us for our U.K. business of the bottling facility, the large bottling facilities in Bristol, U.K., something that is helping us capture demand in a context where organic demand is not growing, obviously. And that means that we are using better, our unique capabilities in the U.K. in -- and circa as we name this subsidiary, and that has an effect of operating leverage and the margins that we are seeing is the margins that we have -- that we should have seen probably in the past. So yes, answering your question, we do consider this level of margins sustainable for 2024 and beyond.

[Iñigo de la Rica, executive]

Then second, Paco, on free cash flow in the quarter, you're right. We are reporting free cash flow for the 9 months in the range of EUR 155 million. This implies a free cash flow generation in the quarter of EUR 65 million. This is mainly due to the positive contribution of working capital in Q3, which is basically explained by reduction on our stocks as a consequence of taking the right decisions back in 2023 to stop capacity to maintain a reasonable level of inventories. And yes, we agree with you. I mean the guidance for the full year is to exceed EUR 180 million of free cash flow generation, not sure if well above, but we agree that free cash flow generation should be above EUR 200 million for the full year.

[Rául Merino, executive]

Okay. And last question regarding the demand conditions and our capacity control actions. Again, let me say that we have 3 different -- very different markets of activity. In Brazil, is a platform for growth for us. We are running at full capacity, and we are successfully capturing the new sales we needed to put on sale the new capacity with, let me say, I hope you agree evident results.

In the U.K., demand is weak as it is in Continental Europe. But as I said before, in the U.K., our unique particular commercial approach is helping us to capture some sales volumes. We are running there again at close to full capacity, and that's the reason of our confidence in our margins in the U.K. You remember the first question. And third, probably more relevant for your question is our business in Continental Europe. Here, demand has dropped over the last 2 years accumulated by minus 10%, minus 15%. We are dropping slightly less maybe because we are becoming progressively more competitive, but due to this relevant drop, minus 10%, minus 15% drop in 2 years is quite relevant for the characteristics of our industry.

We are forced and we will remain forced as much as needed to adapt our capacity to control inventories. That means that we are running at 85% capacity utilization rate in this region. I insist in the rest of our regions, U.K. and Brazil, we are running at full capacity. And the good point is that even after this less than optimal utilization of our capacity, our margins remain more or less safe, okay, something that give us confidence for the future.

[Francisco Ruiz, analyst]

Could you give me the level of inventories that you are running at this moment?

[Iñigo de la Rica, executive]

Yes. Level of inventories, Paco, differs by region. But at the group level, we are approximately at 65, 70 days.

[Rául Merino, executive]

That means Paco that our inventory levels today are not at probably they were a year ago in this period, okay? Our inventory levels today are more or less normal with our historical levels. So we will remain dynamic, and we will control capacity progressively only when needed. And we are ready, very prepared to restart capacity in Continental Europe as long as we need to. Please do not consider that we have a problem of excess of inventories because this is not how we see the business today.

[Francisco Ruiz, analyst]

75 days is not a high level. Thank you.

[Operator]

Next question comes from [ Louis Weise ] from UBS.

[Unknown Analyst]

I guess the first one is, could you give some color on the market conditions or the current trading by category, I mean, like spirits, beer, wine and maybe there's differences in geographies based on that? And what is your visibility on that, too? The second question is just with regards to pricing. I heard your comments around 2025. Just on 2023, where do you think you will land based on the kind of like minus 5% to minus 10% range that you were mentioning before?

And the last one is on Brazil. Do you have any update maybe on you thinking about expanding capacity? I mean you obviously mentioned that you were running at full capacity at the moment. So wondering if there's any update on that, please?

[Iñigo de la Rica, executive]

Okay. Thank you so much, Louis, for your question. So regarding different segments, what we see for the 9 months of the year is basically, the clients are focusing on wines and beers. The rest of segments in our specific case being flattish or even growing in the first 9 months, okay?

Of course, this is different by region. So if we include -- this is excluding Vidroporto, where we are seeing very significant growth, especially in beer because the additional capacity we executed in 2023 is basically linked to beer customers.

Second, regarding pricing for 2024 if I understood right, for the 9 months, as we said during the conference, we are seeing volumes up plus 9% almost in the 9 months. Prices are down minus 8%. So we are fully in line with the guidance that we give of seeing prices at the group level of minus 5% to minus 10%. I think that reference of the 9 months is a good one for the full year.

[Rául Merino, executive]

Thank you. Louis, it's my pleasure. Regarding your third question, it's true that we are running at full capacity in Brazil. It's true that we are capturing sales under a weak organic demand environment in the U.K., but it's also even more relevant, true that demand is significantly weaker than expected in the rest of our business that accounts for half of our business, Continental Europe. So actually, we are not thinking, unfortunately, in extending our capacity significantly, we are forced to thinking how to control our capacity to adapt our inventory levels to our existing levels of activity. And I hope the industry is maintaining a similar approach.

Today, we need more than ever disciplined. Maybe in some regions, we will need some rationalization of capacity, and we will try to support this basis as much as possible, okay? The only likeliness for us to extend capacity not today in a year from now is in obviously South America, Brazil, where we are trying to create a platform for future growth and where organic demand conditions are strong.

[Unknown Analyst]

Sorry. So at the moment, no plans to further increase the capacity in Brazil, is that right?

[Rául Merino, executive]

Not at the moment. Maybe in 1 year from now, I will invite you to repeat the same question next quarterly results.

[Operator]

The next question comes from Beltran Palazuelo from DLTV.

[Beltran Palazuelo Barroso, analyst]

Congratulations for the strong results. I have 2 questions. First of all, regarding M&A, how you see in the market, what you're analyzing with your strong, let's say, balance sheet? And also regarding -- you were talking about not increasing capacity, let's say, next year, what would be the budget for CapEx? And then the second question regarding the cost of debt. If you could give us more detail exactly what you're negotiating currently with your Brazilian banks for the debt you have in reals and euros and how you want to manage it in the future?

[Rául Merino, executive]

Well, thanks. Well, regarding M&A, I would say, a predictable question. Our approach and our story remains the same. It's been quite an intense year for us in terms of corporate activity. You will agree with me, having invested in Brazil, having acquired a large bottling facilities in the U.K. and not less relevant, having divested for Italy.

And you may agree that we are forced in a period of prioritizing the integration of our new enhanced business model. and this is our priority. Having said that, we will remain dynamic, as always, you know us. We will selectively analyze potential opportunities. And that means that we will also selectively refuse most of the options we are offered. We will remain ambitious but prudent with care. And please give us the time we need to make the next movement.

[Iñigo de la Rica, executive]

And then regarding your second point, Beltran, on CapEx and debt. CapEx for next year should be more or less aligned with CapEx we're expecting for this year. This is something around EUR 160 million and say, we are reporting a group debt of EUR 299.1 million. Out of this, around EUR 140 million is based on Brazilian reais, which is almost 50% of our debt.

And the cost of that debt after having refinanced this in 2024 is around 12.5%, okay? This is, as you know, our strategy to remain with Vidroporto with debt that is denominated in Brazilian reais because this creates for us natural hedge considering that the cash flows generated by Vidroporto will be used either to invest in Brazil or either to repay debt that is denominated in reais.

[Operator]

The last question comes from Enrique Yáguez from Bestinver Securities.

[Enrique Yáguez Avilés, analyst]

Most of my questions have been answered. So I have just 2 follow-ups. The first one is regarding the strong profitability recovery in the U.K. Just to confirm that is related with operating leverage and there are no deflationary tailwinds that might help in the quarter and in the future. And secondly, you mentioned that no capacity additions should be expected for next year. So just to confirm that guidance -- CapEx guidance should be broadly in line with this year in terms of sales?

[Iñigo de la Rica, executive]

Okay. Sorry, I think your line had some problems. We didn't hear the second question. If you could repeat?

[Enrique Yáguez Avilés, analyst]

Just regarding the CapEx guidance for next year, you mentioned that no capacity increases or it should be expected for next year. So just to confirm that CapEx for next year should be broadly in line with the current guidance for this year.

[Iñigo de la Rica, executive]

Yes. Just taking then the second question. First, you are totally right. As we said, CapEx should be at similar levels to that, that we are guiding for 2024, also in 2025.

[Rául Merino, executive]

And regarding your third question, margins in the U.K. well, as I said before, our business in the U.K. is where we were expecting to be. Our margins are reflecting the strengths, the capabilities of our unique proposal. Large glass making facilities added with additional bottling services that help us capture new sales, new demand in a context where demand is not growing. And because of this, we are running at close to full capacity in circa -- in our U.K. business, and that explains why we do consider our current level of margins as sustainable and even the starting point for the future. We are in the U.K. as we were expecting to be years ago.

[Operator]

We have a new question coming from Fraser Donlon from Berenberg.

[Fraser Donlon, analyst]

I just wanted to continue the line of question on the U.K. Could you maybe color a little bit like what your competitors have been doing in terms of capacity shutdowns or stoppages in the U.K.? And then I guess the add-on, so that is kind of where do you see your price level most versus competition in the U.K. given it seems to have been remarkably resilient this year, and it sounds like you don't expect a deterioration next year either.

[Rául Merino, executive]

Thank you very much. Well, you know that in the U.K., the competitive dynamics are quite particular. We are by far the strongest competitor with only 2 class sites in terms of economies of scale, serving approximately 40% of the market with additional bottling facilities that help us consolidate or reinforce even better our commercial relationships. So I would say that our competitive dynamics in the U.K. make us always stronger than our competitors. What we are seeing in the big names that compete with us in the U.K. is probably what you have seen because they are public companies. I won't mention nothing more than recommending you to compare our margins with their margins to try to understand what the competitive dynamics will dictate our future in 2025 and beyond, okay?

Regarding prices, the understanding of our U.K. business is easier than the rest of our business as long as a significant portion of our sales volumes of our customers in the U.K. are dictated or priced by formulas or indexes. That accounts for more than 70%, correct me if I'm wrong in euros, 70% of our sales volumes. So there is little to do for us in terms of commercial actions regarding pricing initiatives, but to obtain the result of this formula. And this formula, a typical formula is today and giving us a result of a modest negative variation, low single digit additional to the relaxation that we have executed in 2024.

I hope this is good news for our customers. I hope that help us remain competitive in the U.K. market as we need. And you can be sure that with this result in our prices, our margins are safe. We feel confident on that sense.

[Operator]

There are no further questions by telephone. I return the floor to Mr. Mendieta.

[Iñigo de la Rica, executive]

Thank you. There is just one additional question that we have received via webcast -- said that, okay, given that there is no intention to increase capacity, where are the EUR 160 million to be invested? Is the EUR 160 million the minimum level for maintenance?

First of all, on the second part of the question, this is not the minimum level of maintenance, but this is the amount that we will invest as an average in the next years. This includes pure replacement, which is clearly below this EUR 160 million, but we are investing technical improvement of our facilities, we are investing also and we will invest in vertical integration, Filling is an example. Logistics is another example. And we are investing in sustainability, which in the most immediate short-term means self-generation facility energy facilities.

Where will be the EUR 160 million invested? Our rationale behind that is, okay, first of all, we have to understand which is the replacement calendar of our furnaces. And the remainder probably will have a tilt towards growth and towards Brazil.

And finally, we are -- we have just received an additional question through the webcast, speaking about the energy hedging. So considering both energy hedging and those energy supplies that we have that have been directly contracted at a fixed price, we estimate that around 70% of our 2025 energy exposure is today protected against market movements.

And then finally, sales consolidation. It will be -- if this will be only focused on South America or could be also focused in Europe. As said before, our intention probably is today now more focused in South America because of the diversification and the growth profile of this region. But of course, if there are some potential opportunities in Europe, at least we will analyze that.

So we have now addressed all the questions received via the webcast also via telephone. Thank you once again for the time that you've dedicated to us. Please remember that we are always at your disposal for any further inquiries. And don't forget to keep choosing glass. It's good for your health and great for the planet.

[Rául Merino, executive]

Thank you all. Have a nice weekend.