Like many other businesses, the Swiss-based Vetropack Group was also affected by the global COVID-19 pandemic in the first half of the year under review.
Net sales came to 323.8 million CHF, down 10.4% on the same period last year (2019: 361.2 million CHF) or 5.6% after adjusting for currency effects. EBIT fell by 14.8% to 40.9 million CHF (2019: 48.0 million CHF). Consolidated operating profit remained virtually the same as last year, while reported profit rose to 46.3 million CHF (2019: 37.9 million CHF) thanks to the sale of a property not required for operations.
In the first half of the year, Vetropack Group sold 2.35 billion units of glass packaging, 9.3% fewer than last year (2.59 billion units). Consolidated net sales from goods and services were down by 10.4% at 323.8 million CHF (2019: 361.2 million CHF). After adjusting for currency effects, however, this only amounted to a 5.6% reduction. Since this drop in sales mainly affected lower-priced products such as glass bottles for beer, mineral water and soft drinks, the average price of the glass packaging sold actually increased.
With capacity being actively reduced, Vetropack Group produced 725,000 tonnes in the first half of the year (2019: 730,000 tonnes). The effects of COVID-19 pushed stock levels up to 16.1 million CHF during this period.
Vetropack Group responded swiftly and effectively to the COVID-19 pandemic: measures to protect staff were coordinated across the Group and implemented locally. Efforts were also made to guarantee the supply of raw materials and the delivery of glass containers. Thanks to the Vetropack network, with eight production facilities and a committed workforce, we were able to keep the production process going safely and without any interruptions.
Stringent cost control measures were also introduced. This, along with lower energy prices, meant that savings could be made across all areas. For example, accrued staff overtime and untaken leave were reduced and delivery costs were optimised. Thanks to these extensive measures, Vetropack Group achieved a consolidated EBIT of 40.9 million CHF (2019:Â 48.0 million CHF). The EBIT margin amounted to 12.6% (2019: 13.3%).
The consolidated semi-annual profit of 46.3 million CHF (2019: 37.9 million CHF) was up 22.2% on the previous year’s figure. The profit margin amounted to 14.3% (2019: 10.5%). A property in the Swiss canton of Zurich that was not required for operations was sold in the first half of 2020, generating one-off proceeds before tax of 11.7 million CHF.
Cash flow came to 75.5 million CHF (2019: 81.6 million CHF), while the cash flow margin amounted to 23.3% of net sales (2019: 22.6%). Vetropack Group employed a workforce of 3,414 people during the period under review (2019: 3,346).
Outlook for the second half of 2020
In view of the pandemic and the continued uncertainty surrounding its impact on the economy as a whole and on demand for glass packaging in particular, it is difficult to predict the outlook for the coming months.
As things stand, and taking the reopening of restaurants and catering outlets into account, it’s expected for Vetropack Group’s sales volumes to increase slightly in the second half of the year compared to the first six months.
Production capacity will be actively reduced further in the second half of 2020 to bring the high stock levels down, which will impair production efficiency. This will have an adverse impact on performance in the second half of the year. The company is therefore expecting the operating profit margin for 2020 as a whole to fall slightly short of last year.
Vetropack Group’s Semi-Annual Report 2020 is available online here.