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SIG Group AG / Key word(s): Quarter Results
SIG Group AG: Stable volumes, initial signs of growth recovery, progress on production footprint
30-Apr-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
Media Release
April 30, 2024
Q1 2024 trading update
Stable volumes, initial signs of growth recovery, progress on production footprint
. Q1 2024 revenue, at constant currency, in line with strong prior year (constant currency and constant
resin[1] also in line with prior year)
. Q1 2024 reported revenue declined by 1.0% compared with Q1 2023
. Volume growth resuming in key regions, pricing stable
. Q1 2024 adjusted EBITDA margin 21.5%; set to expand through the year as revenue growth resumes
. Full year guidance confirmed
Samuel Sigrist, CEO, said: "In the first quarter of the year, good volume performance in aseptic and chilled cartons
offset the impact of a tough base of comparison for bag-in-box and spouted pouch revenues. For the business as a
whole, we expect volume growth to accelerate through the year as consumer confidence improves.
Profitability in the second half will benefit from top line growth and we expect an increase in the full year adjusted
EBITDA margin to be within the lower half of the 25-26% range. We aim to achieve this while continuing to invest in
growth and innovation. Our expansion into new regions is proceeding well with strong growth in India and in other
emerging markets such as Latin America.
In Q2 2024 we will commence production at our new state-of-the-art chilled carton production facility in China. Located
alongside our aseptic carton facilities in Suzhou Industrial Park, the facilities completion, ahead of schedule,
positions SIG to capitalise on the strong revenue growth and market share gains in chilled. We believe that the
business will benefit from the modern and efficient facilities that we have in Suzhou as well as from our shared
infrastructure, existing R&D resources, and our customer testing facility."
Key performance indicators: Q1 2024
Three months Three months

ended        ended 
March 31,    March 31, 
(In EUR million or %)             2024         2023 
Total revenue                  721.5        729.0 
Adjusted EBITDA                155.2        175.0 
Adjusted EBITDA margin         21.5%        24.0% 
EBITDA                         134.2        166.2 
Adjusted EBIT                   88.5        113.3 
EBIT                            29.7         66.9 
Adjusted net income             39.7         64.7 
Net income                     (7.1)         23.0 
Free cash flow               (100.7)       (95.2) 

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Revenue by region

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Three months Three months

ended        ended      Change 
March 31     March 31 Reported Constant 
(In EUR million or %)          2024         2023 currency currency 
Europe                      250.9        237.9     5.5%     5.8% 
IMEA                         90.6      96.2[2]   (5.8%)   (4.7%) 
APAC                        185.5      179.4^2     3.4%     7.9% 
Americas                    194.5        215.3   (9.7%)  (10.5%) 
Group Functions               0.0          0.2 
Total revenue               721.5        729.0   (1.0%)     0.0% 

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Europe

In Q1 2024, revenue growth for Europe on a constant currency basis was 5.8% or 6.2% on a constant currency and constant resin[3] basis.

Performance was driven by strong volume growth in aseptic carton partly due to a low base effect in Q1 2023. The segment continues to win new filler contracts in liquid dairy and food.

Revenue from bag-in-box and spouted pouch declined against a strong prior year comparison which included equipment sales that were not repeated in Q1 of this year.

India, Middle East and Africa

In Q1 2024, revenue for India, Middle East and Africa on a constant currency basis declined by 4.7% or, a decrease of 4.5% when adjusted for both constant currency and constant resin[4].

While India witnessed strong aseptic carton growth, the Middle East and African region was impacted by shipping disruptions in the Red Sea, leading to delays in deliveries to customers in North Africa. It is expected that these shipments will take place in Q2 2024, subject to no further escalation of shipping disruptions in the region.

The region was pleased to win its first bag-in-box contract, for a full aseptic system solution, in Saudi Arabia for food service.

Asia Pacific

In Q1 2024, revenue for Asia Pacific on a constant currency basis increased by 7.9% or by 8.1% when adjusted for both constant currency and constant resin^4.

Sales in China saw strong volume growth for both aseptic and chilled cartons following a decline in Q1 2023, which was impacted by an outbreak of COVID-19. Both categories are gaining market share in large and small packaging formats for milk.

Indonesia, Thailand, and Vietnam saw good volume recovery in March. The region saw strong demand for new filling lines during the period.

Americas

In Q1 2024, revenue for the Americas region on a constant currency basis declined by 10.5% or, a decrease of 11.1% when adjusted for both constant currency and constant resin^4.

This decrease was primarily driven by a decline in bag-in-box and spouted pouch volume compared to a strong performance in the previous year. An increase in menu prices also affected out-of-home dining during the quarter. The Group anticipates a recovery as quick service restaurants increase promotional activities.

In Brazil, aseptic carton volumes experienced good growth in March following a slower start to the year. Additionally, the Group continues to expand its presence in the rest of South America, particularly in non-carbonated soft drinks and flavoured milk segments.

Adjusted EBITDA

For the quarter, adjusted EBITDA amounted to EUR155.2 million (Q1 2023: EUR175.0 million). The adjusted EBITDA margin of 21.5% (Q1 2023: 24.0%) was impacted by unfavorable currency movements, which reduced the margin by 110 basis points. Lower raw material costs offset a negative mix impact. Higher SG&A expenses reflected investments in growth, research and development, and wage inflation.

The Company intends to transfer its chilled carton manufacturing plant in Shanghai to the same location as its aseptic facilities in the Suzhou Industrial Park China. It has built a state-of-the-art chilled carton production facility and plans to sell the Shanghai premises. This has resulted in an impairment and restructuring expense of EUR19.1 million pre-tax for the period. The impairment charge is related to the decline in real estate values in China. These costs have been adjusted out of EBITDA.

Net income and adjusted net income

For the period, adjusted net income amounted to EUR39.7 million (Q1 2023: EUR64.7 million). This decline was primarily attributed to lower adjusted EBITDA.

Net income for the period was EUR(7.1) million (Q1 2023: EUR23.0 million). The decrease was a result of an impairment and restructuring expense of EUR15.6 million post-tax related to the relocation of the Group's chilled carton plant, as mentioned above.

Further details on adjustments to EBITDA and net income can be seen in the tables below.

Reconciliation of profit for the period to EBITDA and adjusted EBITDA:

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Three months Three months

ended        ended 
March 31,    March 31, 

(In EUR million) 2024 2023

Profit / (loss) for the period                              (7.1)         23.0 
Net finance expense                                          36.7         33.0 
Income tax expense                                            0.1         10.9 
Depreciation and amortisation                               104.5         99.3 
EBITDA                                                      134.2        166.2 

Adjustments to EBITDA:

Unrealised loss/(gain) on operating derivatives           (1.9)          0.8 
Restructuring costs, net of reversals                       4.7          1.7 
Transaction- and acquisition-related costs                  0.2            - 
Integration costs                                           0.6          3.5 
Change in fair value of contingent consideration            1.2          2.6 
Impairment losses                                          15.9          0.2 
Other                                                       0.3            - 
Adjusted EBITDA                                             155.2        175.0 

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Reconciliation of profit for the period to adjusted net income:

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Three months Three months

ended        ended 
March 31,    March 31, 
(In EUR million)                                                            2024         2023 
Profit / (loss) for the period                                           (7.1)         23.0 

Non-cash foreign exchange impact of non-functional currency loans

and realised foreign exchange impact due to refinancing                 1.2          2.1 
Amortization of transaction costs                                          0.7          1.1 
Net change in fair value of financing-related derivatives                  0.2          1.2 
PPA depreciation and amortization - Onex acquisition                      25.9         25.8 
PPA amortization - Other acquisitions                                     11.9         11.8 

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