By Matteo Allievi
Spanish glass bottle maker Vidrala said on Friday it does not expect substantial growth in European markets amid a weakening economy, even as it sees demand stabilising in the short term.
European glass makers have been facing a slower-than-expected demand recovery after consumers tightened their belts for more than a year because of a more fragile economic environment.
Customers have switched to cheaper canned products or bought smaller quantities amid a post-pandemic environment of high inflation, Inigo Mendieta, Vidrala’s head of investor relations, said in an interview.
“In our European regions, we are not very optimistic about the future, but we see a certain floor in demand,” he said.
However, Mendieta said Vidrala’s destocking process was now behind it and he expected volumes return to positive in Europe, which accounted for almost half of the group’s sales from January to September.
“2023 was a bad year and comparisons are getting easier, but we do not expect volumes to recover significantly,” he added.
France-based Verallia said on Tuesday it also returned to moderate volume growth in the third quarter in a still-challenging market environment amid soft consumption in Europe.
BUSINESS DIVERSIFICATION
Brazil showed the biggest increase in sales in the January-September period, with a jump of almost 50% in a market where Vidrala plans to focus its next investments as it bets on diversification.
The group said this year that the region should account for 15% to 20% of its total sales at the end of 2024, up from 12%.
The company sold its Italian business in July and acquired Brazil’s Vidroporto at the end of 2023.
In the first nine months of the year, the bottle maker posted an increase of 25% in net profit from a year ago, to 232 million euros ($251 million), sending its shares up 5%.
Vidrala also reiterated its full-year core profit guidance of more than 450 million euros.
($1=0.9238 euros)
(Reporting by Matteo Allievi; Editing by Charlie Devereux and Clarence Fernandez)
