Safeguarding the health and safety of employees and ensuring business continuity our top priorities
Strong performance in the first two months of the year, with sales and EBITDA up double-digit
Social-distancing measures and government lockdowns in several of our markets resulted in a
significant reduction of customers’ orders for the upcoming months
Q2 is expected to be severely impacted by the sharp decline in demand; April’s sales were down by
approximately 54% y-o-y
Actions taken to adjust cost base to the reduced business activity and reprioritise capital expenditure
Sufficient cash balance of €66 million at April-end to meet future financial commitments; Debt
maturities recently extended to 2025
Liquidity assisted by increasing the existing credit lines
First quarter 2020 highlights
Group sales increased by 8% y-o-y, driven by demand growth in Commercial Refrigeration
Commercial Refrigeration sales up 15% y-o-y following strong demand in Russia, India and Africa in
January and February
Glass business primarily impacted by soft demand for plastic crates
EBITDA increased by 9% y-o-y, with EBITDA margin improvement in both segments
Adjusted Net Debt to LTM EBITDA at 3.3x, improved from 4.0x in 1Q19
Nikos Mamoulis, Chief Executive Officer of Frigoglass, commented:
"The COVID-19 pandemic has created unprecedented challenges for our business. Throughout the pandemic,
our top priority is to safeguard the health and safety of our employees and continue serving our customers. I
am particularly delighted and thankful with the efforts of our employees on the ground to ensure business
continuity during this challenging period.
The good momentum of the first quarter, together with our proactively developed precautionary measures,
will support our efforts to manage the rest of 2020 and enable our business to ramp-up when the recovery
phase begins."
Financial Overview
We reported a good set of Q1 results with growth momentum continuing in January and February 2020.
Following the rapid evolution of COVID-19 and the subsequent governments’ interventions in several of our
markets, demand for our commercial refrigeration products slowed down in March. Demand for our glass
container and complementary products in Nigeria was also impacted by mounting macroeconomic concerns
in the country. Overall, Group sales increased by 8.2% to €135.9 million, demonstrating a resilient
performance in the first two months of the year across all our Commercial Refrigeration geographies.
Gross profit (excluding depreciation) increased by 5.0% to €30.9 million in the quarter. The gross margin
declined by 70 basis points year-on-year to 22.8% due to a less favourable sales mix, higher transportation
costs and increased idle costs in some of our Commercial Refrigeration plants, more than offsetting volume
growth and productivity gains.
Operating expenses (excluding depreciation) declined by 1.2% at €11.0 million. Consequently, operating
expenses as a percentage of sales improved by 80 basis points to 8.1%.
As a result, EBITDA increased by 8.7% to €20.5 million in the quarter. EBITDA margin improved by 10 basis
points, at 15.1%. Net finance cost was €0.6 million, compared to €5.9 million in Q1 2019, supported by
foreign exchange gains primarily caused by the impact from Naira’s devaluation on hard currency
denominated monetary assets. Frigoglass reported a net profit of €4.4 million, compared to €2.0 million last
year.
We generated adjusted free cash flow of €2.1 million in Q1 2020, compared to an outflow of €13.2 million in
Q1 2019. This improvement was achieved through higher year-on-year EBITDA and better working capital
management. Adjusted net debt was €247.4 million, compared to €250.6 million last year. Importantly, we
successfully issued €260 million senior secured notes in February 2020, extending the maturity of the bulk of
our gross debt to 2025.
Europe
Sales in East Europe grew by 19.8%, following sustained strong orders from key customers in Russia, Ukraine
and Poland. This good performance was supported by market share gains with a customer in the brewery
segment. Growth was tempered in March as lockdown measures affected our customers’ cooler
investments. In West Europe, although we saw growth in most of our markets, the significant lower year-onyear orders in Germany resulted in a mid-single digit decline in sales.
Africa and Middle East
In Africa and Middle East, sales were up 29.7% year-on-year in the quarter. This performance primarily
reflects increased demand in East and South Africa, more than offsetting lower orders from breweries in
Nigeria due to the challenging macro environment.
Asia
Growth momentum in Asia remained strong, with sales growing by 30.3%. This performance was driven by
increased orders in the first two months of the year from soft drink customers in India, coupled with market
share gains. Sales significantly slowed down in March, mainly following the lockdown measures in India that
affected our customers’ cooler capital spending.
EBITDA in the quarter increased by 18.6% to €13.7 million, with the respective margin improving by 40 basis
points to 12.3%. Volume growth, productivity improvement initiatives and lower operating expenses, more
than offset the less favourable sales mix. Operating Profit (EBIT) was €10.4 million, up 34.3% year-on-year,
supported by lower depreciation charges. We reported a net loss of €1.4 million, compared to a net loss of
€0.2 million last year, impacted by foreign exchange losses.
Sales declined by 13.4% in the quarter, primarily driven by lower demand for plastic crates. Lower year-onyear volume in the glass container business driven by key brewery customers was mostly offset by price
initiatives. Metal crowns’ sales were also lower year-on-year, impacted by production disruptions due to raw
material shortages. Demand for plastic crates remained soft, resulting in a double-digit top-line decline.
Measuresrelated to COVID-19 pandemic were taken in Nigeria late in March and early April and were varying
from state to state. Demand in April materially impacted by the mandated lockdowns.
EBITDA declined by 6.9% to €6.8 million, with EBITDA margin improving by 190 basis points to 27.6% due to
pricing. Operating Profit (EBIT) was €4.5 million, down 14.1% year-on-year, also impacted by higher
depreciation charges. Net profit was €5.8 million, compared to €2.2 million last year, assisted by foreign
exchange gains.
Business Outlook and COVID-19 Pandemic Update
Although we saw last year’s growth momentum continuing in January and February 2020 and were optimistic
for the year, customers’ orders have been significantly reduced in March following the material impact in the
Immediate Consumption channel caused by governments’ social-distancing measures and lockdowns in
several of our markets. The impact was varying across all our markets, with Western Europe suffering the
most.
The full impact of the COVID-19 pandemic on our 2020 results remains uncertain and will highly depend on
the magnitude of the global economic impact after the lift of the governments’ restrictions. What is evident
from April’s 2020 sales and the continuous trend in May is that the impact will be significant on our Q2 2020
results.
To limit the profitability and cash flow impact caused from the slow-down in demand, we are taking several
actions to protect our business and adjust our cost base and capital spending. Currently, our focus is on
improving our cost absorption ability by reducing our fixed production and operating expenses base and
eliminating discretionary costs, such as travelling, third-party fees and marketing. We have also reprioritised
capital expenditure, reducing spending at around €15 million in 2020. We remain firm on completing the
furnace rebuild later in the year to protect the long-term future of our Glass business. In these market
conditions, we have also currently put on hold the implementation of SAP platform. The aforementioned
cash preservation initiatives do not affect our capacity to swiftly respond when demand returns to normal
level.
We are entering the crisis from a position of strength, having extended the bulk of our debt maturities to
2025 and reaching a cash balance of €66 million in April, which is sufficient to meet our financing costs
obligations. Over and above, we have increased our credit lines with banks in certain local jurisdictions by
€10 million. We also continue our efforts to further increase our liquidity position over the upcoming months.
