Verallia Société Anonyme (VRLA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Verallia 2025 Third Quarter Financial Results Analyst Call. The call will be structured in 2 parts: first, a presentation by the Verallia Group management team represented by Patrice Lucas, CEO; and Nathalie Delbreuve, CFO. Afterwards, there will be a Q&A session. [Operator Instructions] I will now hand over to the management team. Please go ahead.

Good morning, everyone. Thanks for joining us, and welcome to our Q3 financial results call. As usual, Nathalie and I will go through our presentation, and then we'll have our Q&A session. I will share with you some key highlights of our quarter, and Nathalie will present in detail our numbers. And then I will come back on the outlook for 2025. As an introduction, just to remind that Verallia is a global leader in glass packaging. We are #1 in Europe, #2 in Latin America and #3 worldwide. On this chart, you have our ID card. You have, on the left, the 2024 split of our sales by segment. One of our strong assets is our customer base, more than 10,000 customers, and the diversified and balanced end markets in which we operate. We do operate in 12 countries with 35 plants with 64 furnaces. Please note also that we are running 19 cullet recycling centers, allowing us to control about 50% of our needs for external cullet. Let's now move to some key highlights of our Q3. First one, the first part of the year was marked by BWGI's voluntary tender offer. This process ended mid-August and was successful. You have on this chart the new shareholding structure at the end of September. BWGI went up and has now 77% of Verallia share. Bpi went down and has now 3.8%. Employees still have 4.1% of the share capital, and the floating part is now 12.6%. This step being completed, we will continue rolling out our strategic road map, focusing on creating value for our customers, employees and shareholders. Second key highlight is about our decarbonation road map. A few weeks ago, we got the certification by SBTi on our net zero 2040 target. We are the first glass packaging manufacturer to commit to such a target by 2040. We have a robust plan to do so. By 2030, we plan to reduce our Scope 1 and Scope 2 by 46.2% compared to 2019 and by 90% in 2040. For Scope 3, the plan is to reduce by 27.5% in 2030 compared to 2019 and by 90% by 2050. Some of our customers have committed to achieving net zero by 2040, and they need our contribution. This commitment is paramount and demonstrates our glass packaging is well positioned as a sustainable solution for the future. This strategic lever is paramount and key for future value creation. Last highlight is about the confirmation of the commissioning of our first hybrid furnace in Spain, Zaragoza as a substitution of an old traditional furnace technology. The commissioning was successful. As of today, we do operate with 30% of electricity and will ramp up in the weeks to come with the objective to reach 70%. This furnace will bring 55% reduction of CO2 emissions compared to a traditional furnace. After our full electric furnace launch in Cognac last year, this is clearly an additional step forward in our decarbonation road map. We will take some time for lessons learned and if needed, for optimization, and then we will enter in a step-by-step pragmatic deployment phase aligned with our decarbonation road map towards 2040. Before giving the floor to Nathalie, a quick overview of our results, Q3 results and the 9-month results. As seen in Q1 and Q2, the positive news is that we are recovering volumes compared to last year but in a much difficult market than what we plan. Q3 revenues is down by 2.8% year-over-year to EUR 846 million, with organic growth at minus 0.6% year-over-year, giving a 9-month results -- 9-month revenue result down by 2.5% year-over-year to EUR 2.565 billion (sic) [ EUR 2.569 billion ], with organic growth at minus 2.4% year-over-year. About EBITDA, Q3 is at EUR 181 million, minus 14% versus last year with a margin at 21.3%, minus 279 bps versus Q3 last year, giving a 9-month adjusted EBITDA of EUR 531 million, minus 17.1% versus last year with a margin at 20.7%, minus 365 bps compared to last year '24. About net debt, our leverage is maintained at 2.6 at the end of September compared to last June. Let's see now the details of our numbers with Nathalie.

Thank you, Patrice. So let's look at revenue and EBITDA as usual. So you can see here the third quarter consolidated revenue variance analysis. So we moved from EUR 871 million as reported revenue 1 year ago in Q3, 2024, and we are today at EUR 846 million. As said by Patrice, the organic growth for the quarter is almost neutral at minus 0.6%, minus 0.7% excluding Argentina. You can see the volume pillar is up by EUR 37.3 million year-on-year despite still a challenging market environment and more challenging than anticipated. We could see, in fact, in the quarter that the activity softened in August in September after a very good start with the good month of July. And looking at segments -- sorry, most segments grew year-on-year and especially led by nonalcholic beverages and spirits coming back to growth. The price/mix impact on the top line is unfavorable at -- with minus EUR 43.4 million, driven by lower prices than 1 year ago and still a negative mix. And then we have FX impact that is -- continues to be negative. The perimeter impact is almost 0. Just as a reminder, I will come to the 9 months. You will see perimeter impact with Corsico, so our additional entity and plant in Italy. It was acquired on the first of July, so in the Q3 doesn't show as a perimeter anymore. So continued volume growth in Q3 despite difficult market conditions. Looking at the 9 months consolidated revenue variance analysis now, we moved from EUR 2.635 billion to EUR 2.569 billion. The organic growth for the full 9 months is lower than in the quarter or pretty different. The quarter is better than the full 9 months. Organic growth is minus 2.4%, minus 2.9% excluding Argentina. We have seen continuous organic volume growth on the 9 months supported by commercial initiatives and all of that despite the softer market environment, especially in the end of the Q3, as I just commented. Volumes are up in Europe and especially in South and West Europe. And LatAm is positive despite a slower growth in the third quarter. The price/mix is negative in the 9 months, minus EUR 154.4 million, so it's significant, but sequentially, we see a decline in this negative impact. And we -- step by step, we have the carryover '24 price reduction softening. We continue to see a negative mix over the 9 months. And you have here negative FX impact but also a positive perimeter impact, so from the 6 first months for EUR 50.5 million. So how does this translate into adjusted EBITDA? For the third quarter, you have here the adjusted EBITDA variance analysis. So we moved from EUR 210 million in the third quarter 2024 down to EUR 181 million in this third quarter 2025. So we can see from the pillars that the spread impact is the main driver, the main negative driver with minus EUR 40.6 million. We have lower prices and negative mix as we explained this beginning of the year. But as I was saying, it's gradually easing. It was minus EUR 85 million in Q1, minus EUR 60 million in Q2 and as we just saw, minus EUR 41 million in Q3. Then we -- despite that, we benefit from the volume growth and the solid Q3 performance in activity. We have EUR 7.9 million positive impact of the activity. Despite, here, start-up costs and ramp-up costs from our 2 new plants, 1 in -- furnaces, sorry, 1 in Campo Bom in Brazil and mainly for wine; and 1 in Italy, mainly on food; and also, as Patrice explained, the hybrid furnace in Zaragoza in Spain. The net productivity continues to deliver 2% cash cost -- cash production cost reduction and some negative other mainly due to some one-offs. Exchange rate is negative and Argentina as well. So the adjusted EBITDA margin that you see on the top right is 21.3% for the quarter. So for the 9 months, this leads us to EUR 531 million adjusted EBITDA. It was EUR 641 million in 2024. And you can see all the pillars to the activity, pillar being positive. We have growth across all regions with volume growth continuing despite a challenging summer, so bringing plus EUR 42.1 million. The main negative pillar continues to be the spread for the 9 months even if softening in Q3 again. The net productivity continues to deliver positive number at EUR 35.5 million, and it's 2.2% of cash production cost reduction. The other here is positive and includes the 6 first months of Corsico, also the perimeter impact. And then you have FX negative. FX negative is mainly coming from the Brazilian real. And Argentina is presented aside size. So we have a continued positive activity on the 9 months but offset by mainly negative spread. So here, you can see the group net debt evolution and the leverage. So the leverage is stable versus end of June at the end of September with 2.6x, and the net debt is EUR 1,920.4 million. Here, you can see our financial structure and liquidity at the end of September. So several comments here. You can see the first 2 lines are the sustainability-linked bond that we issued in 2021. As a reminder, following the change of control, there was a possibility for bondholders to ask for reimbursement of these bonds. But you can see that we still hold a nice amount on both of them, EUR 100.7 million for the first 1 and EUR 70.3 million for the second 1. And as you can see, they have a very nice nominal rate, a low one. So this is very good news for the group and for the confidence that our bondholders have in the group. The rest was refinanced by a bridge loan that you can see at the end of this table. And you can see EUR 838.4 million grown on this bridge. And then, of course, we will prepare a refinancing of this bridge. At the end of September, we have available liquidity of EUR 835 million.

Okay. So let's move to the outlook here. As we have just commented, so in Q3, we did enjoy, again, after Q1 and Q2, a volume growth in July, August and September. But we are expecting more based on the trend on Q2 consumption. And in Q3, consumption has suffered, impacting, as a consequence, the glass demand. And I want to share with you some fact-based data. Here on this chart, you have the data from Nielsen about the off-trade consumption in Europe of beer, spirits and carbonated soft drinks, these data over the last 4 weeks period evolution year-over-year. To make it clear, if I take on the graph the date September 7, the off-trade consumption of beer for the last 4 weeks of September 7 was down by 5% and minus 2.9% for spirit and minus 2.1% for carbonated soft drinks. What is this graph showing is, one, that off-trade consumption of beer was quite positive on mid-May to mid-July and very positive on carbonated soft drink for the same period, with potential positive outcome for the summer to come. Two realities totally different since mid-July. All categories turned negative with a sharp negative turn on evolution, especially in beer and carbonated soft drinks. No need to say but uncertain environment remains the norm with a slow global economy, geopolitical and trade tensions are weighting as well on the consumption and creating very volatile environment. As for our outlook assumptions -- sorry, as a summary for the market and activity trends. Despite a good month of July, we had a poor summer compared to our expectations. In Brazil, after a strong H1, we see the market softening and especially the beer market. Mix and spread continued to be negative even if the spread is softening as it has been clearly explained by Nathalie. And we are still facing a difficult situation in Germany due to the market condition and the overall environment. And finally, about capacity, we continue to see permanent capacity shutdown across Europe, with latest announcement in Q3 in Europe, in Germany and Netherlands. It means that since late 2023, up to 18 furnaces are contributing to capacity adjustment. Facing this overall situation, we keep our focus on self-help measures and cash flow generation. For Q4, uncertain and volatile environment will remain the norm, and we see a delay recovery in market conditions compared to our previous expectations. However, as recorded since the beginning of the year, we expect a continued pickup in activity compared to last year, again, despite soft demand but supported by our furnace openings or additional capacity well positioned in Italy on the wine business -- on Brazil, sorry, in the wine business and in Italy on the strategic food segment and as well a positive effect, which will come with the reopening of our second furnace in Ukraine. Priority will be to keep on our focus on strict control -- cost control and CapEx management to support cash generation. And last, we are -- keep on preparing the future with our Zaragoza hybrid furnace, which will keep on ramping up, being clearly a new milestone for us. As a conclusion, based on, one, the material deterioration in market condition in August and September; the expected pickup in profitability in Q3, which did not materialize; three, the fact that we see a delay in market conditions recovery; and despite the continued organic volume growth for us in Q4, we have decided to adjust our outlook for 2025. We plan now to close the 2025 with an adjusted EBITDA of around EUR 700 million and a free cash flow around EUR 150 million. On short term, again, we will keep our focus on profitability improvement action plans and cash generation. But we will be back to you to present our midterm strategy next January during our Capital Market Day. Thanks a lot for your attention, and let's now move to our Q&A session.

[Operator Instructions] The next question comes from Francisco Ruiz from BNP Paribas.

Well, the first one is if you could help me to understand your warning. So on the one hand, we have -- can you hear me?

Yes, we do. A bit low.

Yes, yes, yes. A bit low, but that's okay.

I have some noise on the phone. So yes, I mean, in this quarter, you have volume acceleration, I mean, to almost 3.9% despite what is happening in the industry. And you have a price evolution in the top line in line with what was your estimated. So I mean, in my opinion, this is more a matter of operating leverage cost structure. So 2 questions here. Why operating leverage was so low compared to, for example, Q2? And can you give us an idea of the impact of margin by geographies? I know that you are not reporting margin by geographies, but with the low activity in Latin America, we could have much negative mix than initially expected. The second question here is, theoretically, Q3 should be a quarter in which you will see some deflation in cost. I mean, at the end of the day, you have no impact of the [ expensive ] hedges in 2022 and then [ local led ], probably better energy and also better soda ash prices. Why we haven't seen this in the net pricing of the company? And last but not least, I mean, I have another 2 or 3, but just 1 more is why is demand is so weak. You have decided to start 3 furnaces, while the rest of your competitors are closing capacity.

Okay. You take the first one?

Okay. So yes, I'll start, Paco, and don't hesitate to complete your questions. So first, on what happened in the Q3 and the reduction of our -- and the gap versus our expectation. In fact, the gap versus our expectation is truly on volumes and on price/mix, I would say. Even if I will comment on the operating leverage, you're right, it is low in Q3. But don't forget that in Q3, as I commented, we start -- we are ramping up, and this is also one of your questions, we are ramping up new furnaces, and we have been working on the hybrid furnace for Zaragoza. That is not a new capacity. But when we are in -- so you have 3 furnaces, where you have start-up costs. We are ramping up. They are not fully delivering. They are not producing full capacity at all. So it is quite a strong impact in the third quarter, especially. And this was anticipated because it's just the start of -- in its work in the plants. But also, yes, even if we have additional volumes versus last year -- and you're right, we are very pleased and happy about that -- we anticipate did a better summer and this is what Patrice illustrated with the consumption, was low. Our customers did not ask for the volumes that they were supposed to ask. In several geographies, the beer segment especially was disappointing, so we expected, frankly, a better summer in that. And the mix also was poor -- poorer, sorry, than expected, lower than expected. So this is mainly that. On the cost side, in the third quarter, there is no specific element that would be to be noticed really -- to be noted on the cost element. I'm not sure I understood well your question here. So we are in the same -- we have a very flattish inflation as in the rest of the year, so there is not -- there is no change here.

About profitability by geography, Francisco, as you mentioned, we do not communicate by quarter the profitability. What -- I can give you some color about it. In LatAm and especially in Brazil, but as well in Argentina and Chile, we do enjoy very good profitability. So there is no material change compared to what you know, I would say, still difficult in Northeast Europe, as we mentioned, especially in Germany. So there is no big move or change compared to what we saw roughly in H1. About the capacity, the initial capacity, which is the third question, I mean, clearly -- and I'm going to take some time here. Clearly, one, in Campo Bom in Brazil, this furnace is positioned on segments we do believe have real potential. And this is what we see really today when we look at the market and the demand. This furnace will be much more focused on -- will be focused on wine and spirit. And these are the segments, which are facing good momentum right now. What is much more difficult in Brazil as we speak, especially since July, is beer, the beer market. And it's known that the winter period there was very cold the last -- the coldest for the past 40 years according to what we know, and obviously, it has an impact on the demand. So there is a clear willingness to keep on developing in Brazil with our fifth furnace. And with that, we are preparing the future. The second furnace in Italy is about the same story. It's a furnace on which we are focusing sales development in jar, food jar, which is a segment where we do see potential. We see significant growth this year, and we see, according to the forecast we have, a significant as well increase at least above the average of the overall industry, so obviously why we decided to focus and add this additional furnace. So obviously, it's a balance between the short term and the medium and long term, but as you know, we are focused on long term. And for us, it's taking the appropriate measure of short term to protect profitability but at the same time, doing the job to position well the company for the future. So this is the rationale of it. And the hybrid furnace in Zaragoza, it's a different story because, here, it's not additional capacity. It's to replace a furnace, which was at the end of life, and we've decided to make here our first hybrid furnace, our first pilot, again, here to prepare the future, to get the lessons learned of such a furnace, to align with what we want to do as a strategic lever for 2040 decarbonation. So this is rationale of our additional capacity. So maybe we have some -- obviously, some penalty short term, especially that in Q3, we're ramping up all of that. But it is an upside for tomorrow, and it is aligned with our long-term strategy here. I hope it's clear, Francisco.

Yes, yes, it's clear. Could you give us a data of what's your level of capacity utilization and the level of full payments?

Capacity utilization, it's about the same story as what we mentioned in Q2 in July, the end of July. We are running close to normal, except some slight adjustments but marginal adjustment everywhere but U.K. and Germany. And in U.K., we have one furnace, which is stopped. In Germany, we have 2 furnaces, which are stopped, cold stop. And obviously, we are working to see how we are going to optimize that. And this is part of the industrial strategy we're working on to make it clear.

The next question comes from Louise Wiseur from UBS.

Three questions for me, please. What are your exemptions now based on your new guidance of around EUR 700 million of adjusted EBITDA for the top line in terms of volume and in terms of price and then on the adjusted EBITDA bridge for the price-cost spread for the full year? The second question is around the new furnaces you opened, Pescia 2 and Campo Bom, in Q3. How much did they actually contribute to the volume growth in Q3? And how much would be kind of like underlying volume growth for the rest of the business? And the last question is around the flow-through of the volume from the top line to the EBITDA. It was only 22% in Q3. What explains this? I guess, given your comments right now, there's probably some things around like the new furnaces, but it was much better in Q1 and Q3. When do you expect to see that actually -- that flow-through to actually improve again?

Okay. Thanks a lot for this question. So about the top line assumptions, as we've said, we do expect a continued growth in Q4 compared to last year in the order of magnitude of what we have been delivering so far, let's say, despite the market, which is softening. So the gap between -- compared to what we are expecting is that we are expecting a higher demand. So obviously, it doesn't -- and consumption, they're not going down. It has impact on [indiscernible], but we do expect us to be in the same order operating on top line. On pricing moving forward in Q4, we do not expect any -- change, I would say, any change. What is waiting is mix due to the market -- conditional market environment. So mix will be more negative than what we are expecting initially. So this is some color about the top line moving forward in Q4. But Campo Bom, the impact in Q3 is quite limited as we are ramping up, so it's really partial. And we are not providing data in details furnace by furnace or plant by plant in any geography, but obviously, it will contribute. Next year, we will have some repair in Brazil, especially in one furnace in Porto Ferreira and this additional capacity will be able to -- for us to keep on selling at a good level and obviously, focusing again on the wince segment -- wine and spirit segments here.

On the flow-through, so yes, you did understand that the Q3 was a bit specific with these ramp-up costs and not full saturation of this capacity. So it will improve going forward with -- based on this because step by step, as we were just saying, Campo Bom will contribute. Pescia will contribute more and they won't have these startup costs anymore. And then it's more the country mix that could impact also because the Q3 is not purely mathematical. It's a bit different from countries, but it should improve in Q4 and moving forward.

The next question comes from Francisco Ruiz from BNP Paribas.

Sorry, it's again me. I mean [indiscernible] more question in the queue. But I have 2 questions, 1 clarification. As you mentioned, in your press release that -- let me see how you say it. Latin America demand momentum weakened in Q3. But also in the presentation, you mentioned that the Q3 performance has been solid, driven by Europe and LatAm. Could you give us an idea what is the general performance? You mentioned already Argentina and Chile good, Brazil bad, but the overall or the net effect, if it's plus or minus. And the second question is on the covenants. I mean if we are assuming EUR 700 million EBITDA with EUR 115 million free cash flow for the year and with the dividend you have paid, I mean, the net debt should go above or slightly above 3x. Is this a risk for you? Is this a risk for the dividend?

So I will answer the second one, and we have to come back to the first one because I'm not sure we have understood your question on -- your first question, Francisco. So I mean, about the net debt ratio, as you projected and all of that, I mean, obviously, as we have said, this will be a priority for us to protect that. And to speak about dividend as of today, too early, and this will be part of the broader decision beginning of next year. So...

We did generate good free cash flow in the third quarter, strong free cash flow. And this is also what we expect for Q4. So the leverage will not worsen by the end of the year. And then dividend next year, it's too early as we say, but we are not talking the 3x at all.

So the first question is I have an idea on what happened in Latin America because in the press release, you see -- you say that demand weakened in Q3. But on the presentation, you talk about EBITDA contribution of Latin America, which is positive together with Europe in activity.

Yes, yes. So Latin America, I mean, it's still making good contribution in Q3, obviously. What we are just saying is that in terms of activity and especially due to the beer market environment and demand, it was much below what we are expecting and below what we saw in H1. So this is what we wanted to explain here. And we were much more in our plans and expectation in the kind of growth similar to what we had in H1, which did not materialize. But even with this environment, we have positive contribution coming from Latin America and certainly due to the fact that we are not just beer focused or beer dependent, I would say.

The next question comes from Louise Wiseur from UBS.

Sorry, can you hear me now?

Yes, yes. Perfect.

Apologies, I was on mute, sorry. Might be very, very early for you to reply to this, but just trying to get your thoughts on that, around the pricing. How do you think about this for 2026 given the slow recovery in terms of volumes? Could there be therefore an impact on pricing next year and you will have a bit of pressure from clients to cut prices to get a bit more of the volume recovery?

No real comment about pricing, Louise. What -- first, it's too early to discuss about '26. Our focus is really to close 2025 with what we have just mentioned. So we are on the way to validate the work, our budget and business plan. So we'll be back to you. What we can say is that we expect market condition to continue to normalize with possibly a slight growth in activity. We'll see that in details. And what we expect is continued sequential spread improvement, but we'll see that in detail and net that to contribute. So we are working on that with -- and especially on our midterm plan, and we'll give you more color, obviously, during our CMD next January.

And just maybe then, I mean, just checking, but there was not to be -- I mean Q3 was to be negatively impacted by the price cuts made at the beginning of the year, but no more carryover. Has there been some price cuts in Q3 that would therefore impact 2026? Or have you not done any further price cuts in Q3?

No. Marginally, the main impact is coming from the mix, which, due to the market condition, is really [ low ] what we are expecting.

The next question comes from Fraser Donlon from Berenberg.

Can you hear me? It's Fraser here from Berenberg. I have 2 questions. So following on from the pricing question, like on the cost side, do you see any wins, let's say, in the next 6 to 9 months, whether that's like in the hedging book for energy or soda? And then the second question is just on inventories. Like I think you were around EUR 730 million last year. Like do you have an idea of where you can land inventory in 2025 -- at the end of 2025, I should say, given the demand context is, I would say, more difficult than expected?

Okay. So in the 9 months, as I said, our cost inflation is very neutral in fact. We have in place return on most of the lines, back to normal inflation, I would say, for example, on labor costs. We commented that we have a significant reduction in cullet. You know that cullet is more than 50% of our raw material, so it accounts for a large part. And cullet overall prices are -- have been declining in the year. So we have a softening here. So that's the main, I would say, deflating driver and at least, overall, our costs to a neutral evolution at the end of September versus previous year.

About inventory, Fraser, so inventory control is a key topic. And since this demand backdrop, let's say, which started at the end of '23, it is really a key topic for us, and we are on that on a monthly basis to adapt and to make sure that we keep all of that under control. So one, it's a key topic. Our expectation for the end of the year is to be up compared to last year, at the end of last year but in a controlled way and slightly up versus last year due to the additional activity we have compared to last year and what we anticipate for next year. So it's not slightly and marginally up, I would say, compared to last year. This is what we are planning to do.

Maybe one additional point, sorry, on costs that I should have mentioned is on the energy. Just to remind that we are not fully benefiting from the spot energy prices decrease because of our hedging policy. But this is the last year that we have a portion of hedging from the high years. So it will be an upside for -- it should be an upside for next year.

[indiscernible]

Yes.

The next question comes from Manuel Lorente from Santander.

Yes. My first question is on the volume side. I'm trying to address the potential impact on that or the low profitability of the group in Q3. So according to what you have said, Patrice, on the call, is it fair to say that the vast majority of this 4% volume growth is coming from the new furnaces? And in that sense, like-for-like growth will be flattish to slightly negative and then filling the gap to that 4% will imply all the new furnaces or not?

Thanks for the question. No, the contribution in Q3 of the new furnaces is still very low. So like-for-like, we do have an organic growth. We do have an organic, and it's coming from -- it's coming from Europe but as well from LatAm. it's quite well spread, I would say.

Okay. So since we have a limited contribution from the new furnaces, so to speak, then the narrative of low margins because ramp-up costs in those furnaces might not significantly explain, let's say, the margin deterioration, right? So then you also mentioned the mix effect on that impact on profitability. So when you are mentioning regarding mix, it's more a country mix, a segment mix or both?

So when we comment the ramp-up costs, I understand that the new plants are not -- they are not running fully. So it's just normal. We have usually 3 to even 6 months really run full speed when we start a new capacity. So this is just normal. And at the beginning, you have the cost, but you don't have the full sales against it. So this is impacting the flow-through when we look at the EBITDA bridge, so it's very specific on Q3. This is also impacting the percentage of EBITDA margin when we look at it because, again, you have a portion of cost, and you have no revenue in France. So it's one driver. It's not the only driver. You're right on -- to explain the level of our material EBITDA margin percentage in Q3 or in the 9 months. Absolutely, it's not the only one, but it is a negative impact still on that. And when we comment the mix impact, yes, it's both. Here, we were more commenting on the mix of the segments and the projects because of the lower level of consumption, people buying more entry products than, again, high-level products. So we have less margin on -- usually on some cases on these products. But we also have a country mix. When you have a Latin America a bit weaker than expected, again, in Q3, I guess you know that LatAm is above 30% adjusted EBITDA usually, so it has -- it had some impact. So it's a combination.

Okay. Great. And just the last one. The next key milestone, it will be the Capital Market Day. You mentioned that probably it was too early to talk about 2026. But what we should expect on the Capital Market Day? Is it going to be a quantitative type of Capital Market Day with medium- to long-term forecast? It will also address some qualitative issues regarding the strategy, a little bit of both?

You said everything, Manuel. Yes, it will be -- first of all, it will be midterm, so it will not just be '26, obviously. So it means we will give and provide some orientation being qualitative and quantitative, especially about the sector, how we do see the evolution, the different segments, what -- how we are positioning ourselves on that. It will be a bulk of all of that with some financial substantial data, I guess. We're still finalizing that, working on that. But this will be a key milestone after this quite, let's say, disturbing period of '22, '23, high inflation. '24, '25 is the opposite, all the volatility and the demand. So this will be the opportunity for us to pause and to explain how do we see the next years and as a consequence, what you could expect from the company. This will be our intent. So you said everything, Manuel.

All right. Well, so this is David Placet. I'm the Head of IR. I think we're done with the questions on the call, and thanks, guys, for asking all of them. We have, I think, just 2 questions in writing from [ Jeremy Perez ] with ODDO . The first one relates to the -- basically the flow-through between the volume and EBITDA in Q3. I think we've largely touched on that. The second one relates to the spread, the question being, so last year, spread effect was around minus EUR 200 million. Should we see the same trend happening in '25 full year? Also, do you see any improvements in full year '26? That is the last question.

So on this -- so for this full year, I think I commented quite largely. On the spread, we have a spread of minus EUR 183 million at the end of September, so we are indeed close to already to the minus EUR 200 million. But as we commented, we have a softening of this negative spread, so an improvement quarter after quarter, and we were minus 14% in Q3. One element where we are prudent and it's difficult -- it's very difficult to forecast, as you know, is the mix impact in this spread for the end of the year. And sequentially in 2026, again, we'll come back with more data, but yes, we should see an improvement, of course, in the spread. That continues to normalize but slower than expected impact.

Thanks, Nathalie. And actually, we have -- I think I'll take the last one. Last-minute question from Inigo Egusquiza with Kepler, asking actually what has changed in the company since BW took over. So any changes that you've seen or that may occur, etc?

Thanks for this question. I mean, as we said, so BWGI is not new in the company. They are already part of -- a significant shareholder, part of the Board. So they decided to go for more. So it is really a continuation of the strategic plan we have as we speak. And obviously, this will be updated with the CMD. But it is a much more holding and key focus on managing the short-term profitability and preparing the future as well. You know that BWGI has -- the DNA of the company is really long-term oriented. So it's going to be a step-by-step evolution if needed, but that's really on the key business factor on how would we see the industry here. So the key word is continuation, more of the same and creation value and testing the environment.

Great. Well, thanks, Patrice. Thanks, Nathalie. I think that's it on my end.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thanks a lot. So thanks a lot to all of you. Let's first focus on delivering and testing the situation and moving forward to Q4. And obviously, next milestone is CMD. It will be a pleasure for us to have this opportunity to share our view here and a much more midterm orientation. Thanks a lot, and have a good day.