Board of
Directors’ Report

Dear Shareholders,

With no change to the high level of demand for glass packaging, the dominant features of the 2022 fiscal year were persistent delivery bottlenecks and rising prices. The loss of production capacity in Ukraine during the first quarter of 2022 made it even more difficult to cover the demand situation. In this challenging environment, the Vetropack Group succeeded in increasing its net sales from goods and services by 10.2 percent (16.9 percent after adjusting for currency effects) to reach CHF 899.4 million in the 2022 reporting year (prior year: CHF 816.5 million). Consolidated EBIT rose to CHF 89.1 million (prior year: CHF 81.6 million). Contrary to initial estimates in the Semi-Annual Report, the anticipated value adjustment at the Ukraine plant proved to be less than we assumed, at CHF 31.4 million. This results in reported profit for the Group of CHF 40.7 million (prior year: CHF 63.8 million).

Johann Reiter, CEO of the Vetropack Group, sums up the challenging year under review in these words: "This year, we were able to achieve so many things that previously seemed unthinkable and unrealistic. Our sites undertook wide-ranging efforts to find solutions. This shows the Group's strength, and it has brought us closer together."

Throughout the fiscal year, our priorities were determined by the war in the Ukraine, rising energy and production costs, and the unabated high level of demand for packaging glass. The capacity reductions ensuing from the shutdown of the Ukrainian glass industry – together with capacity bottlenecks in the logistics sector – led in some cases to shortfalls in meeting customer demand throughout Europe.

Back in February, rapidly escalating events in Ukraine had already led to the shutdown of our production at the Gostomel plant near Kyiv. Since then, on-site investigations have indicated that resumption of production by two furnaces appears possible. Our employees on site are currently carrying out the necessary maintenance and clearance work. We have been able to examine the damage to the plant in more detail, with the result that the required value adjustment turns out to be lower than originally assumed. We shall not relinquish the site. Our goal is to resume production as soon as the damage has been repaired and the political situation justifies this step.

The Vetropack Group reacted to the death of Tihomir Premužak with profound sorrow and grief. The popular and deeply committed General Manager of Vetropack's Croatian site passed away unexpectedly at the start of August. Premužak worked for Vetropack in various functions for over 23 years, and he made a lasting contribution to shaping the development of Vetropack Straža d.d. The Vetropack Group has appointed Darko Šlogar as the new General Manager of our site in Croatia: he took on this position with effect from 1 January 2023.

In the 2022 reporting year, the Vetropack Group employed a workforce totalling 3,561 people (prior year: 3,896 people). The decreased headcount is a consequence of the stoppage of production in Ukraine.

Claude R. Cornaz, Chairman of the Board of Directors (left) and Johann Reiter, CEO (right)

Development of key figures

The Vetropack Group sold 5.26 billion units of packaging glass in the 2022 reporting year. Due to the absence of capacity at our plant in Ukraine, therefore, sales volume was 10.6 percent below the prior year's figure of 5.88 billion units. Consolidated net sales from goods and services rose by 10.2 percent to reach CHF 899.4 million (prior year: CHF 816.5 million). After adjustments for currency effects, the increase was as much as 16.9 percent: given that the sales volume decreased, this reflects the high level of energy surcharges.

Despite the shutdown of our Ukraine plant, production losses amounted to merely 7.7 percent, corresponding to 1,503,000 metric tons (prior year: 1,629,000 metric tons). Due to this reduction and the high level of demand for glass packaging, the Vetropack Group's inventory levels remain at a lower level and are virtually constant as compared to the first half of the year.

Increase in added value

Despite reduced capacity and increased production costs, Vetropack was able to post consolidated EBIT of CHF 89.1 million for the 2022 reporting year (prior year: CHF 81.6 million). The EBIT margin was 9.9 percent (prior year: 10.0 percent).

Cash flow in the year under review reached CHF 142.2 million (prior year: CHF 154.1 million). The cash flow margin was 15.8 percent of net sales (prior year: 18.9 percent). Due to war damage at the Ukrainian plant, a value adjustment of CHF 31.4 million had to be charged to the reporting period. The Vetropack Group's consolidated profit is CHF 40.7 million, which is below the previous year's figure (prior year: CHF 63.8 million).

Strong balance sheet

Despite the challenging fiscal year of 2022, the Vetropack Group continues to present a strong balance sheet. Total assets were CHF 1,234.5 million as at 31 December 2022 (figure as at 31 December 2021: CHF 1,047.8 million). The reporting year saw short-term assets rising to CHF 552.3 million (31 December 2021: CHF 432.3 million). This growth resulted mainly from increases in liquid funds and accounts receivable in the first half year. As the result of high investments in the second half of the year, long-term assets rose to CHF 682.2 million (31 December 2021: CHF 615.5 million). Liabilities increased to CHF 485.2 million (31 December 2021: CHF 273.3 million). This was due to financing of EUR 150 million taken up for ongoing investments in Italy. As at the reporting date, shareholders' equity had reached CHF 749.3 million (31 December 2021: CHF 774.5 million), corresponding to a gearing ratio of 60.7 percent (31 December 2021: 73.9 percent).


Construction of the new glass factory in Boffalora dominated our investments in the 2022 reporting year. Commissioning is scheduled in the second quarter of 2023. Work to maintain and expand various melting furnaces and lines at different sites is laying the foundations for us to increase our capacities. Photovoltaic systems are currently being installed on the roofs of the Vetropack plant at Kremsmünster. The electricity is to be used directly in the Kremsmünster plant to make glass production more sustainable. By joining the Science Based Targets initiative (SBTi), Vetropack is underscoring the high priority it accords to this issue and committing to make every possible effort to achieve the emission reduction goals.

Outlook for the 2023 fiscal year

The European packaging glass industry and its customers continue to anticipate high demand for packaging glass. Capacities for 2023 are utilised and inventory levels are low at the start of the year. Bottlenecks in the logistics chain continue to be likely. Costs of energy, operating materials and personnel can be expected to rise in 2023. It follows that a price increase in the low double-digit percentage range can be anticipated.

Vetropack will celebrate the start-up of its new plant in Boffalora in 2023, marking a milestone in the company's history. The new plant will produce approximately 100,000 metric tons more packaging glass per year than the previous plant in Trezzano, thus increasing the Group's capacity by about 7 percent. As planned, one of the two furnaces at our Kyjov plant in the Czech Republic will also be renovated in the third quarter of 2023. As part of this renovation, moreover, the Group will be installing its first servo-controlled glass production machine: this will represent another step towards digitalisation. On account of the high start-up costs to be incurred in 2023 coupled with low productivity during commissioning of the new plant in Italy, the EBIT margin is set to decrease. However, the Group's profit is expected to be significantly higher because no further value adjustments on the Ukraine plant are anticipated.

General Assembly of Vetropack Holding Ltd

The General Assembly of Vetropack Holding Ltd will take place on Wednesday, 19 April 2023 at 15:30 at the Stadthalle Bülach, Allemndstrasse8, 8180 Bülach.

The Board of Directors will propose to the Annual General Assembly the payment of a reduced gross dividend of CHF 1.00 (2021: CHF 1.30) per class A registered share and CHF 0.20 (2021: CHF 0.26) per class B registered share.

The Board of Directors of Vetropack Holding Ltd has decided to nominate Raffaella Marzi for election to the Board of Directors. She is running to succeed Rudolf W. Fischer, who is retiring from the position. Raffaella Marzi, like Rudolf W. Fischer, draws on many years of professional experience in the field of human resources and is now a member of the Group Management and Head Human Resources and Compliance at Sika AG in Baar. The Board of Directors is committed bringing a new member with this expertise on board as seamlessly as possible. Topics such as employer branding, talent management and management development have a high priority.

Rudolf W. Fischer, first became a member of the Board of Directors in 2000. Claude R. Cornaz expresses the Boards gratefulness: "We are deeply indebted to Rudolf W. Fischer for his many years of tireless dedication and appreciate the contribution he has made to the successful development of our company".

Thank you very much!

The Board of Directors would like to thank all our employees for their outstanding commitment and hard work during the 2022 fiscal year. We would also like to thank our customers, suppliers, business partners and shareholders for their support and the confidence they have shown in us.

We are still unable to grasp the magnitude of what is currently happening in Ukraine. The Board of Directors and employees of the Vetropack Group are deeply saddened by these events. Our thoughts go out to our colleagues in Vetropack Gostomel, their families, friends and acquaintances, and we are doing our utmost to support them.

Bülach, 8 March 2023

Claude R. Cornaz

Chairman of the Board of Directors

Johann Reiter