Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SIG Group AG (SCBGF, Financial) reported a 6% growth in carton revenue for 2024, outperforming the market and gaining share across all geographies.
- The company successfully placed 75 aseptic carton filling machines in 2024, maintaining strong performance in this segment.
- SIG Group AG expanded its global manufacturing capabilities with new plants in China and India, enhancing local production and supply chain efficiency.
- The company launched four key innovations in 2024, including aseptic spouted pouch filling machines and alu-free barrier aseptic packaging, strengthening its competitive edge.
- SIG Group AG's sustainability efforts were recognized with inclusion in the Dow Jones Sustainability Index and an improved MSCI ESG rating of AAA.
Negative Points
- Bag-in-box and spouted pouch revenue declined by 5% for the year, impacted by weak market conditions in North America and operational challenges in US facilities.
- Adjusted EBITDA margin slightly decreased to 24.6%, affected by higher production costs and SG&A expenses.
- The company is facing legal action from Clean Holding regarding contingent consideration related to the acquisition of Scholle IPN.
- China's market conditions remained challenging, with weak consumer sentiment affecting growth in the region.
- Net leverage remains relatively high at 2.6 times, with a focus on reducing gross debt to improve financial stability.
Q & A Highlights
Q: Can you provide details on the arbitration process with Clean Holding regarding the contingent consideration?
A: Samuel Sigrist, CEO, explained that the arbitration follows the usual procedure, but it's difficult to predict the duration. The company disclosed the issue in financial statements and is addressing it step by step.
Q: Why not focus more on reducing gross debt given its high level and variable nature?
A: Ann-Kristin Erkens, CFO, stated that reducing gross debt is part of their strategy. They reduced debt by over EUR70 million last year, but leases offset this. The main driver for leverage reduction remains EBITDA expansion.
Q: Do you expect Scholle IPN's 2025 revenue growth to outpace the group guidance of 3% to 5%?
A: Ann-Kristin Erkens, CFO, indicated that they don't expect growth above the 6% range needed for the earn-out to kick in for 2025. There is no provision for contingent consideration in the books.
Q: How did China perform in Q4, and what are the expectations for early 2025?
A: Samuel Sigrist, CEO, noted that China remains a challenging market. Q4 benefited from early Chinese New Year preparations, but they await potential stimulus programs from the National Party Congress in March.
Q: What is the revenue potential for aseptic pouches in 2025, and how did the 75 fillers installed this year break down by geography?
A: Samuel Sigrist, CEO, stated that aseptic pouches have long-term growth potential. The 75 fillers were placed across geographies, with muted demand in China due to sufficient capacity.
Q: What gives you confidence in better growth in the second half of the year compared to the first half?
A: Samuel Sigrist, CEO, cited structural shifts, such as the ramp-up of fillers and normalized bases for bag-in-box and spouted pouch, as reasons for expected stronger H2 growth.
Q: Can you provide a breakdown of the expected price mix and volume for 2025?
A: Ann-Kristin Erkens, CFO, mentioned that growth will mainly come from volume, with a smaller positive contribution from pricing. Raw materials are expected to be a moderate headwind in 2025.
Q: What needs to happen to achieve the midterm guidance of 4% to 6% revenue growth?
A: Samuel Sigrist, CEO, explained that disposable incomes need to adjust to price levels for consumers to spend more, which would drive growth. They aim to compensate for market weakness with market share gains.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
