Board of
Directors’ Report

Dear shareholders,

The Swiss Vetropack Group boosted its net sales by 3.5% to CHF 714.9 million in the 2019 fiscal year (2018: 690.7 million). Consolidated profit increased by 25.6% to CHF 73.0 million (2018: CHF 58.1 million).


Net sales increase once more

In 2019, Vetropack Group achieved net sales of CHF 714.9 million, 3.5% more than in the previous year (2018: CHF 690.7 million). This equates to growth of 5.7% in local currencies.

Unit sales

As was the case in the previous year, the Vetropack Group sold
5.16 billion units glass packaging in the 2019 fiscal year (2018: 5.16 billion units). The high sales volume in 2018 was only made possible by selling off existing stock. As additional production capacities were available in 2019, however, unit sales could be fully covered by ongoing production.

Performance of the Vetropack companies

The market environment remained very positive in the 2019 fiscal year. The good economic framework conditions as well as the trend towards sustainable and natural packaging materials led to increased demand across the entire sector.

Throughout Europe, around 2% more glass packaging was sold than in the previous year.

In the course of this development, the Swiss Vetropack subsidiary was able to increase net sales to CHF 88.6 million (2018: CHF 87.4 million) and thus significantly improve its performance.

The two glassworks of Vetropack Austria in Pöchlarn and Kremsmünster increased net sales by 6.4% to EUR 202.6 million (2018: EUR 190.4 million). As no furnace overhauls had to be performed, the entire capacity was available, which in turn had a positive impact on performance.

Due to a changed sales mix, which was coordinated across the Group, the Czech company Vetropack Moravia Glass achieved net sales of CZK 2,398.7 million (2018: CZK 2,454.5 million). Thanks to efficient utilisation, this company was also able to improve its performance.

The Slovakian company Vetropack Nemšová increased its net sales by 13.4% to EUR 65.2 million (2018: EUR 57.5 million). This rise in net revenue was achieved thanks to the expanded production capacity of a white-glass furnace in the previous year. Following the completion of the newly created coloured-glass furnace in 2019, the company will have additional capacities at its disposal from 2020.

The net sales of the Croatian company Vetropack Straža stood at HRK 862.5 million (2018: HRK 857.2 million), with its performance remaining at the high level of the previous year.

Despite the reduction in capacity owing to a scheduled furnace overhaul in the current fiscal year, the Ukrainian subsidiary Vetropack Gostomel increased its net sales by 7.5% to UAH 2,416.7 million (2018: UAH 2,248.1 million). Vetropack Gostomel continues to focus primarily on domestic demand at the expense of exports. Thanks to optimised production costs and the stable local currency, it was possible to further improve performance.

During the fiscal year, the Italian subsidiary Vetropack Italia revamped both furnaces and the associated systems. Due to this overhaul, the company had lower production capacities at its disposal in 2019 than was the case in the previous year. At EUR 78.8 million (2018: EUR 79.1 million), net sales were at the prior-year level.

Production capacities slightly expanded

The year under review was characterised by several overhauls and modernisations, with the associated capacity increases only taking full effect in 2020. Nevertheless, the Vetropack Group was able to produce 1.46 million tonnes (2018: 1.45 million tonnes), 1.0% more than in the previous year.

Profitability significantly improved

Vetropack Group generated consolidated EBIT of CHF 90.2 million, up by 15.1% on the previous year (2018: CHF 78.4 million). At 12.6% of net sales, the EBIT margin was well above the previous year’s figure of 11.3%. This pleasing result was achieved thanks to the further improvement in production efficiency, stable production costs and increased demand for high-quality glass packaging.


Consolidated profit increased

The consolidated annual profit rose by 25.6% to CHF 73.0 million (2018: CHF 58.1 million) and the profit margin stood at 10.2% (2018: 8.4%).

Further improvement in liquidity

Due to the improved performance, the cash flow in the year under review reached CHF 153.1 million (2018: CHF 135.7 million), which equated to 21.4% (2018: 19.6%) of net revenue. As was the case in the previous year, the Vetropack Group invested in the expansion of its capacities. Overall, CHF 123.7 million (2018: CHF: 115.6 million) was invested in tangible and intangible assets. All investments were fully financed by the Group’s own funds.

At CHF 28.1 million (2018: CHF 28.6 million), the free cash flow only changed marginally. The Group’s net liquidity increased to CHF 81.4 million (2018: CHF 72.3 million).

Stable balance sheet structure

Consolidated total assets amounted to CHF 949.2 million (2018: CHF 947.4 million). Short-term assets fell to CHF 365.0

(2018: CHF 399.6 million). The decline in liquid assets and accounts receivable led to this reduction. Brisk investing activities led to an increase in long-term assets to CHF 584.2 million (2018: CHF 547.8 million). At CHF 197.0 million (2018: CHF 235.8 million), liabilities declined during the year under review due to the repayment of short-term loans.

Shareholders’ equity increased to CHF 752.2 million (2018: CHF 711.6 million). The equity ratio improved to 79.2% (2018: 75.1%).

At the end of the reporting year, Vetropack Group employed a workforce of 3366 people (31 December 2018: 3291 people).

Investments stepped up

The operating cash flow from investing activities amounted to CHF 128.6 million (2018: CHF 107.0 million). A focus was placed on the comprehensive modernisation as well as the capacity expansions of the two coloured-glass furnaces and their production facilities in Slovakia and Ukraine. To ensure that customers can be guaranteed the required capacities and a high level of quality prior to the opening of the new glassworks in the Italian commune of Boffalora sopra Ticino in 2022, the two existing furnaces and their production facilities at the glassworks in Trezzano sul Naviglio have been optimised. Vetropack also increased its holding in the Ukrainian subsidiary to 100%, meaning that all Vetropack companies are now fully owned.

Vetropack share

The stock market price of the Vetropack bearer share was CHF 3,040.00 at the end of 2019 (31/12/2018: CHF 2,010.00). Compared to the previous year, the share increased in value by 51.2%.

Improved dividend

The Board of Directors will propose to the Annual General Assembly on 22 April 2020 that the dividend for the previous year be set at 130,0% of the nominal value. This equates to a gross payout of CHF 65.00 per bearer share (2018: CHF 50.00) and a gross payout of CHF 13.00 per registered share (2018: CHF 10.00).

Outlook for the 2020 fiscal year

We expect that the sustained increase in demand for glass packaging will also continue in the 2020 fiscal year. The “pro glass” trend is unbroken, with health-conscious consumers increasingly opting for sustainable and fully recyclable glass packaging.

As Vetropack Group is planning a furnace repair in the 2020 fiscal year, specifically the complete reconstruction of a furnace and its systems at the Croatian glassworks, it will then have greater capacity at its disposal than in previous years. We are also intending to utilise all capacities to the full. In addition, we are planning to further improve our operating result. The investment activities remain at an above-average level, which will lead to an increase in depreciation. A one-off book profit from the sale of land will have a positive effect on the annual profit.

The current worldwide spread of the coronavirus is likely to have a negative impact on global economic development in 2020. At this point it is impossible to determine what implications this will have for Vetropack Group.

Thank you

The Board of Directors would like to thank all of our employees for their outstanding commitment and hard work during the 2019 fiscal year. We would also like to thank our customers, suppliers, business partners and shareholders for their support and the confidence that they have shown in us.

Bülach, 10 March 2020

Claude R. Cornaz

Chairman of the Board of Directors

Johann Reiter


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