Vidrala delivered robust sales growth for the first nine months of 2011, increased by 4.55% from the previous year to EUR 331.55 million.
Solid business development benefited from the group’s market positioning over the European geographical areas of influence. Demand for glass containers in those markets remain stable, reflecting current trends for domestic consumption and exports in beverages and food products.
Accordingly, higher volumes of sales contributed to the improvement of turnover in a bigger proportion than sales prices.
Manufacturing costs continue suffering from increasing inflationary pressures as a consequence of the rise in energy tariffs, raw material prices and other inputs of costs.
Production for the first nine months was up 2.3% over the same period in the previous year, reflecting an increase lower than the growth delivered in the volumes of sales.
Consequently, lower inventories and production costs disproportionate to sale prices, caused a dilution in operating margins.
Operating profit –EBIT- amounted to EUR 46.28 million, representing an EBIT margin of 14.0% over sales.
Net profit for the nine months reached EUR 32.97 million.
Net debt on the date of report was EUR 218.6 million, showing a decrease of 7.3% from September 2010.
Stable demand conditions proved during the period anticipate sustained progressions in the volumes of sales until the end of the year. Foreseeable development is founded in the solid demand fundamentals for glass containers in the European beverages and food industries, the diversified geographical positioning achieved by the Group and the strong customer relationships consolidated by Vidrala.
Notwithstanding the above, the inflationary pressures caused by the increases in manufacturing costs will negatively impact operating results.
This business context reasserts the need to adapt in 2012 sale prices that are currently limited at levels non coherent with the prevailing conditions of manufacturing costs.
Concurrently, management priorities will remain focused on cash optimisation. This way, higher levels of turnover, an adequate control of working capital and an annual capex budget largely executed, will enable the group to generate solid cash flow and close the year at lower levels of debt.
Last July 14, the Company distributed the complementary dividend against 2010 results approved by the AGM of a gross amount of EUR 0.1448 per share. As a result, total dividend payment against 2010 results has been increased by ten per cent in comparison with the previous year.
Additionally, during July, the Company finished the process to cancel 550,000 shares held in treasury stock. The redeemed shares accounted for 2.3% of the company’s share capital. Share buyback programs and cancellation of treasury stock are considered alternative and optimised methods of remuneration to further enhance shareholder value.
Lastly, during the upcoming days of November the Company will execute the bonus share issue agreed by the AGM. The purpose is to freely allocate those new shares to the shareholders in the proportion of one new share to every twenty existing shares. It should be mentioned that the new shares will confer on all its owners, the same voting and economic rights of the originally existing shares. In particular, they will be entitled to fully receive the dividends to be distributed after the completion of the bonus issue.
All the above is a further evidence of the solid shareholder remuneration policy implemented by the company focused on achieving a sustained long term improvement of the shareholder return.