Verallia SAS

F:1VRA

Hello, and welcome to Verallia Q1 2025 Financial Results Analyst Call. My name is Tristan, I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Mr. Patrice Lucas to begin today's conference. Thank you.

Good morning, everyone, and welcome to our call for our Q1 financial results. As usual, Nathalie and I will go through our presentation, and we'll have the Q&A session. I will share with you some key highlights, and Nathalie will present in detail our numbers, and then I will be back for our guidance.

So to start, just to remind you 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. And as you already know, 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. And please note also that we are running 19 cullet recycling centers allowing us to control about 50% of our needs for external cullet.

So let's move to some key highlights of our Q1. The first highlight I want to share with you is about a new innovative initiative. A few weeks ago, we started to use hydrogen as a commission energy source for two furnaces in Essen in Germany. This hydrogen is coming from nearby [indiscernible] plant and made from a byproduct of production. We have signed with [indiscernible], a 5 years contract of partnerships. And after many tests and now weeks of production, it is a success, and we are operating the largest hydrogen powered the melting capacity in the glass industry with 6 megawatts. This will allow a CO2 emission auction by 8% to 10%, and on top of this reduction, it is cost effective compared to natural gas.

This solution is an alternative to our electric and hybrid furnace technologies that we are deploying, meaning each time locally, we would have access to an alternative bioenergy source, we will look at it to support our decarbonization road map. The second key highlight is to share with you the confirmation of our additional capacity launch in Brazil at Campo Bom. The heat of the furnace will be done in a few weeks for first production by the end of H1. This additional capacity will allow us to pursue our growth in the dynamic Brazilian market. And this new furnace, a new advanced oxy-combustion technology will operate with 18% CO2 emission reduction compared to a traditional fairness.

So this additional capacity will feed our growth in Brazil in H2. the third highlight is about product innovation. Glass is the perfect material to enhance and magnify the product offer of our customers. Developing customer intimacy and proposing premium and tailored solution is the level we want to push. Here, you have four good illustration of what we lately accomplish. One new rosé bottle, which was one of your output of our French designer awards. In U.K. this new gin bottle. In Italy, a nice single-serve proposal for nonalcholic beverage, [indiscernible]. And last in Brazil, a 600-millimeter returnable beer bottle for [indiscernible].

By doing so, we are leveraging the full capability of glass as a packaging solution and demonstrating our ability to support our customers. Let's move now on the -- some Q1 business insights. So about 2025 market situation. We can say that destocking impact in most markets is not ending, and we can say that the growth is not directly linked with the end consumption growth. In Europe, market is slightly up. And in LatAm, we are still facing a supportive market. Obviously, geopolitical and trade tensions are creating a very volatile and uncertain environment, which is leading to cautious and kind of wait and see position of many customers.

In Q1, as Verallia, we experienced volume growth impacted with negative year-on-year inflation spread due to carryover from 2024 selling price and some inflationary pressure, mainly on energy in Q1. And finally, about capacity, we continue to see permanent capacity shutdown across Europe and especially with the latest official public information with some significant adaptation in France in the past weeks. Facing this overall environment, we keep our focus on self-help measures and cash flow generation. One, we want to focus on customer innovation and product innovation to support our customers, and I believe that we can do much more with this level. Two, except in U.K. and Germany, in Q2, we are planning a gradual back to normal use of our capacity in Europe, but ready to adapt again with agility if necessary, especially the vigilant of the real output conclusions of the tariff between U.S. and Europe.

In Germany, we have decided to launch an additional project to adapt our workforce for restoring costs of about EUR 10 million. And as usual, number four, productivity and cost control are at play as part of our DNA with PAP delivering again in Q1, 2.3% of cash cost reduction. Finally, as we commented during our beginning of this year, our priority is cash generation with tight control over CapEx and working capital. Before giving the floor to Nathalie, a quick overview of our Q1 results. So the positive news is our volume recovery in a difficult market environment. Our Q1 revenue is down by 2.2% year-over-year to EUR 818 million with organic growth at minus 3.6% year-over-year.

Q1 adjusted EBITDA is EUR 147 million, minus 27.9% versus last year, with a margin of 18%, minus 641 bps versus Q1 '24. And about net debt leverage is at 2.3% at the end of March compared to 2.1% at the end of last year. So let's see now with Nathalie detail of our numbers.

Thank you, Patrice, and good morning to you all. So let me leave you into these Q1 results. So you see here our revenue variance analysis for the first quarter. So we move -- we delivered sales of EUR 818 million to be compared to EUR 836 million in Q1 2024. So the organic growth in the quarter is negative, minus 3.6%. If we exclude Argentina, it's minus 4.3%. You can see here in the pillars -- the usual pillars of our bridge that volumes contribute positively, as Patrice just commented, plus EUR 24.1 million.

So you have -- we have an improving demand context, especially in Latin America. And we've seen organic volume growth in Q1, again, with most segments improving. We have -- and again, this growth is more dynamic in LatAm. But even in Europe, we've seen volume growth in this quarter. In the price mix, we have a negative impact, as expected, so minus EUR 59 million. We have a decrease in average selling prices year-over-year and some mix impact in these figures. And if you remember, we had anticipated this negative impact in the beginning of the year. We have a negative exchange rate with minus EUR 6.5 million. Here it's mainly coming from Brazil.

The perimeter in fact, EUR 24.5 million is mainly linked to the new plant in Italy acquired in July 2024. And you have separated the Argentina variation of minus EUR 1.4 million. So all in all, good momentum in volumes, but not sufficient to offset the negative price mix. So how does this translate into adjusted EBITDA? We have -- so an adjusted EBITDA for the quarter of EUR 147 million to be compared to EUR 204 million. And that leads, that you can see on the top right, to a margin -- EBITDA margin of 18% to be compared to 24.4% 1 year ago.

So here, again, the usual pillars to explain this variation. So we have a positive activity pillar, plus EUR 18.5 million. So we have here a positive impact from the sales volume, the organic sales volumes that we were commenting before.

Now we'll come back to that. But in finished goods inventory, usually in Q1, we do prepare and build up inventories to enter the higher quarters that are Q2 and end of Q3, which is not what happened in this first quarter where our inventories remained stable. The spread is strongly negative with minus EUR 86.2 million. So we have seen we have lower selling prices and mix -- negative mix impact. But we also have cost inflation and especially in this first quarter, we had some stronger-than-expected cost inflation, mainly on energy from the spot element.

On the net productivity, we delivered as usual, more than 2% cash production cost reduction at 2.3%. That leads to plus EUR 12.5 million additional EBITDA. The other pillar is a combination of perimeter effect, some SG&A reduction, but partly offset by some positive one-offs that we did have last year and that we don't have this year, but quite limited in amount at EUR 2.3 million. The effects you have, again, mainly Brazil and Argentina as a separate pillar for minus EUR 1.3 million. So as a conclusion, the decrease in our EBITDA compared to Q1 2024 is mainly driven by spread.

At the end of the quarter, so our debt is pretty stable versus end of December 2024. We have a decrease in the last 12 months adjusted EBITDA. So our leverage is a bit higher than end of December at 2.3x. But we have, in the quarter, almost natural free cash flow when 1 year ago, we had a very negative one, if you remember. And here, as usual, our financial structure, no specific change compared to end of December, we have a comfortable available liquidity at EUR 927.9 million at the end of March.

Okay. So thanks, Nathalie. So about our guidance. So 2025 has started with uncertainty and volatility and marked with subdued European consumption and rising global tensions. As we speak, we still see a demand slightly up in Europe and the remaining stronger in Latin America. However, market conditions are much tougher due to the global environment. And in this context, so we do update our adjusted EBITDA target.

For now, we expect to be around EUR 800 million from a level close to that of '24, which was EUR 842 million initially. And we are confident to generate free cash flow of more than EUR 200 million compared to around EUR 200 million initially. Free cash flow, again being our key focus for 2025 So thanks a lot for your attention, and let's now move to our Q&A session.

[Operator Instructions] We'll start off with Mr. Louise Wiseur from UBS.

I've got a few questions, please. So firstly, on the guidance 2025. What drove the to the adjusted EBITDA guidance? Is it linked to the strong negative price/cost spread in Q1 or the outlook on tariffs or something else? And what is your new guidance assume in terms of scenarios for the year -- for the current year? Is there any indirect impact from tariffs from the volumes included in there?

Then secondly, on volume and price for full year '25. You said in the past on volumes probably low to mid-single-digit growth in 2025 and on price, low single-digit decline from the carryover and again, low single-digit decline from the additional price cuts. How do you see volume in price for full year '25 now in light of your new guidance?

And the last one is around the price cost spread in 2025, strong negative impact on EBITDA in Q1 from the price cost price. Can you give more color on what happened? I think you mentioned more inflation in costs. how much negative could this be for the full year, please?

Okay. Thanks a lot for your question. So about our guidance and the slight adjustment we did on the EBITDA level. It's mainly due to the market conditions, but we see much tougher than expected. Again, we have the good news on the volume side. But on the price mix and especially on the mix, we see some negative impact that we had in Q1, especially, I would say, in January and February, but even again a bit in March.

The good news is that we see March -- we had a March which was quite supportive in terms of volume. We see that again in April. So on the volume side, we are quite, let's say, confident with the different initiatives we have taken, but with some impact on price and mix, let say. And you're right, we were expecting to make it simple, a mid-single-digit increase in terms of volume with a mid-single-digit impact in terms of price and mix. And now we see much more volume to be for Verallia, high single digit and a few additional points negative in terms of price and mix compared to our initial expectation.

And your question about the tariffs and the trade tension between U.S. and the rest of the world, I mean, frankly, nothing has been really taken just what we observed as we speak today because the first difficulty we have is to understand what is the assumptions significance. And as you know, you can go to bed with one information and wake up in the morning with the different information or even having something which seems to be clear on Monday and you have the opposite on Friday.

So -- and with our customers, it's about the same. I mean, they are -- so the main key word is really agility and adaptation. This is why, by the way, we are cautious in production in Q1,and we are paying that with some less production contribution to our results in Q1 compared to what we do usually, as Nathalie explained in Q1, normally, we built some inventory for the high season to come in Q2 and Q3. Being cautious, we did not do that. And we see some production upside to come in Q2 as we are going to restart. Except U.K. and Germany, as I mentioned, we are back to normal everywhere to face what we see as the peak season in Q2 and Q3. For the cost, Nathalie?

Yes, for the price -- for the cost element in the spread, you're right, in Q1, we had a negative -- what we have inflation in our cost. And we had some, I would say, one-off effects with especially energy, if you recall, the spot and at prices have been pretty high in Q1 and are now down. So we are back to normal level even reduced ones. But in Q1, we had a negative impact from the energy mainly. And also in all our -- in the cost inflation that we see for the full year, that should be close to neutral or slight inflation.

But again, not the same as in Q1. We will benefit from cullet into the deflation, and we don't fully see that yet in the third quarter. But again, back to the more surprise, I would say, the spot energy prices were higher than expected in the first quarter. But that's not what we see going forward. As we speak today, energy is again lower. So that's good news for the rest of the year.

We now go to the line of Lars Kjellberg from Stifel.

I just want to get back again to Q1. Again, the -- we appreciate the energy costs went up, of course, right? But again, with your hedge portfolio, et cetera, it's still very puzzling to see that extreme margin contraction of 650 basis points sequentially. You've got to be able to provide some more color on that. And if so, of that 650 basis points drop, but it did speak to most of the prices, of course, have price declines happen in the first half of '24 and some incremental, but you didn't have top line problem here. So this is really a cost issue, it appears.

So if you can provide some color, how do you expect that to reverse in Q2? And considering then, of course, the guidance around EUR 800 million, you need to have a real step up in margins for the balance of the year on the current revenue base to get there. And in the context and of uncertainty around the tariffs, are we comfortable with that? And then the final, could you just put us some color on that inventory variance would it normally would have been as a positive contribution and also CapEx guidance in absolute number for the year, if you could.

Yes. So you're right, we are -- so energy costs, first question. Again, we are hedged, as you very well know, for a large part, but we always have 15% to 20% open to spot, Lars. So this is this element that was impacting our spread in the third quarter. So we always have an open position. And in fact, we have a bit more open position. But again, normal in our policy than 1 year ago because 1 year ago, we had lower production than anticipated here. We are really well adjusted. So we have this open element, again, between 15% and a bit more here in the third quarter, and that was impacted by the spot. And again, as we speak today, energy prices are down.

So this portion that is open to [indiscernible], we are not penalized anymore in this third quarter. On the margin contraction, it's not only the spread impact, I would say. Again, we did not produce as fully -- we did not produce with a full production. We were -- we had a slow start in Jan and Feb. And in March, we had good sales -- dynamic sales, but production was still pretty low. So again, we did not build the inventories that we usually would build in the first quarter. And so this has an impact on our margin because basically, you absorb less fixed cost than what you would normally do by running and building up a bit of inventory in the first quarter.

One year ago, in Q1 2024, we were building some inventories. So again, this fixed cost absorption is also weighing on your EBITDA margin. So again, moving to Q2, Q3 and later in the year, as Patrice said, we are back with higher production. And so this will lead, you're absolutely right, to an improvement also in the adjusted EBITDA margin. So this is also answering, I think, a question on inventory valuation.

If you could just quantify that, help us to understand what that means because you did have a quite a meaningful positive on the activity pillar, right, which was EUR 16 million positive. So how would that been? How did you had a normal production?

I'm not going to give you a precise number here, Lars. Just again, it's specific impact in this first quarter. And again, we will improve in the second quarter and moving forward. Your question on the CapEx...

About CapEx, Lars,what we see and what you could consider the forecast for this year is that we're going to be below EUR 300 million. So tightening, obviously, we see some depletion as well compared to the overall plan we have of the CapEx side, so below EUR 300 million, which will put us in the range of 8% plus of our revenue.

We will now move on to the line of Francisco Ruiz from BNP Paribas.

I have two questions. The first one, I'm sorry to insist on this, on the cost side. I mean, Nathalie, you mentioned that you are almost 85% hedged in energy, but you are also working at a lower utilization capacity. So as it happened last year, this spot acquisition of energy is much lower right now than it was -- that it should be. So how it's possible to have a 5% cost inflation with such an exposure. And I don't know if you could detail on this cost, if there is also a negative effect on mix and you could quantify this.

The second question is on capacity utilization. If you could remind what's the level right now? And how much of your capacity is curtailed? And give a little more detail on Germany self-help measures if this will come with a lower capacity for the future. And given that one of your main competitors has made a big restructuring in France, as you commented, I don't know if you are planning further movement on that side.

Okay. So thanks a lot for this question. So just to clarify on the cost inflation, so the energy has quite significant impact to what we have in Q1. And compared to last year, you know that we are hedged. In our hedging facing some uncertainty on volumes for '25, we have slightly reduced the hedge part instead of moving to 85%, we did 80%. And so the non-hedge part of Q1 was much more 20% rather than 15%. And if you compare the gas price spot level in Q1 and especially it was very high in Jan and Feb compared to compared to last year, we had significant impact.

And what we see as a good news to come, it seems that at the end of March, it has started to be real. If you look at the number, Jan and Feb, the megawatt was around EUR 50. And as we speak, we are much more around EUR 35. And based on what is happening on the geopolitical and market environment. Our capacity, as I commented, we are back to normal as we speak, in every country, in Europe, except U.K. and Germany. So U.K., we are still suffering from spirit market, which is quite low and with all the uncertainties and with U.S. tariffs.

So in U.K., we are still one furnace, which is not running on [ four ]. And in Germany, we have one furnace in [indiscernible], which is not running, we are making here a temporary adaptation. That means we have not made any decision for a definitive closure as the opposite of what we did last year in Essen. So Germany and U.K. are really the two countries where we are still suffering from nonused capacity. For the rest of the countries, we are back to normal. In Germany, again, so we have decided not to do definitive capacity turn down, but we have decided to adapt some cost base, especially on the workforce side.

And as I mentioned, we plan for about 100 people for EUR 10 million recurring cost. And this will take place at Essen in Germany, at [indiscernible] manufacturing side and some SG&A adaptation as the headquarter in Germany. For France, as we speak, we don't plan any capacity adjustments. We see, again, in France, we are back to back to normal. We have relaunched the furnaces. We have some maintenance, which is business as usual plan, but we are not planning, as we speak for an additional account.

Okay. So correct me if I wrong, so two furnaces out of the 50 something that you got is only 4%, 5% production [indiscernible] right now?

Yes. This is globally for the group i about that, obviously, with much more impact in U.K. and Germany.

And just, Paco, to come back on the -- on your question on the cost side. So we talked about energy, but there's not only energy. We have also inflation on labor costs, for example. So here, nothing that is not anticipated. But as I commented, we have -- this is partially mitigated by some expected deflation on cullet. And again, in Q1, we don't yet have the full impact of that. So just to give you some further light on [indiscernible].

We will now take from Mr. James Perry from Citi.

I'd just like to ask about the global consumption trends and trade flows. And I know you talked about the improving European volumes and obviously, a direct exposure is Europe and LatAm. But would you be able to comment a bit more on any changes in customer behavior in light of the U.S. tariff uncertainty? What are you hearing from customers regarding the export trends? And to what extent could a weak U.S. consumer hold back your volume growth in 2025, do you think?

This is good question. The assumptions we have, as we speak, is consumption being slightly up globally speaking in Europe. What we see through the different strategy initiatives we have taken in the different countries and in some segments, we see for [indiscernible] a good momentum in terms of volume. We see volumes picking up in beer and nonalcoholic leverage. The only segment which is suffering is much more sparkling. For discussing with the customers, frankly speaking, most of them are very cautious.

They are a little bit of blind. What we may see is some tactical and strategic behavior with 90 days pause, I would say, but it's really difficult to have -- to be definitive and to have a standard to be honest. We don't know. So again, here, what is key is agility and adaptation. Being cautious in everything we plan, ready to adapt if necessary. Again, the good news is that we see we had a good March. We see a strong April, so which is -- let us -- which is giving us a good momentum for Q2 and we'll see. And then you know as well that the weather conditions in Europe will be quite significative on Q3 and Q4 sales.

So we'll see. But we are not pushing for or making an assumption of high consumption or even push consumption here, we are quite cautious on that. And the result of our volume growth is much more related to the initiatives as we explained during the full year results to be in year-over-year.

We will now take the question from Philippe Lorrain from Bernstein.

Yes. I just wanted to come back a little bit on your comments on volume. So maybe it's just me. But you mentioned that volumes seem to play out the way you wanted, but you indicate as well that you would now expect a high single-digit growth versus mid-single digit before. But at the same time, you mentioned that you had the negative effect from finished goods inventory in Q1 and that you will restart more capacity in Q2, except in Germany and the U.K. So that strikes me as maybe the visibility has moved a lot or fluctuated a lot during the first quarter.

Maybe you can shed some more light here? And also, when you speak about the volume trends, can you confirm whether this high single-digit growth that you now expect for Verallia as a whole includes Corsico or not, is it in organic terms or not?

Yes. So quite easy answer. Yes, it's -- Corsico is embedded in that. And you know that about Corsico compared to last year, it's 4% growth coming from this scope perimeter effect with a good momentum, especially on beer.

About -- I believe about your question, this is what we just said. We have good volume progression compared to last year. So obviously, in H1 with a perimeter effect from Corsico. Keep in mind that in H2, we'll get the positive impact in Brazil as well with our additional capacity in [indiscernible]. And keep in mind as well that we have in our plan to start our pressure furnace in Italy for -- with Q4 impact with some good opportunity we see on the food segment. So this is a plan we have as we speak. But globally, volumes are quite at a good level in terms of growth for us, but with a tougher market condition to get this work make it simple.

Okay. And that led you basically to still not pile up that much finished goods inventories at the end of Q1 because you expect to be able to catch up on that production in future quarters?

Yes. Yes.

And it's also linked to the fact that it's really March, that was very dynamic in terms of...

[Operator Instructions] We'll now move on to Jean-Pierre from ODDO BHF.

Jean-Francois Granjon speaking from ODDO BHF. Just one question. Just one question regarding the pricing. You mentioned on the press release. That -- there is some -- during -- for the negotiation at this year, some decrease for the pricing with your discussion with clients, customers. So could you give us some more color? And does that mean that we should integrate some lower pricing on average for the full year, but for sure, for the coming quarters?

And the other question is for the spread impact for the full year, how do you expect the level compared to the minus EUR 200 million last year for the negative impact on the EBITDA? Should we consider that we could have the same magnitude or lower than that?

So Jean-Francois, we won't comment on pricing. We don't give color on pricing evolution. In our spread, you have price and mix. So the comments won't go further in our comments on what Patrice patrice already said in terms of both. So again, in the volumes and price mix, overall, we are a bit better than anticipated on volume and a bit less -- a bit worse on the price mix road but no more detailed comment on this element. And overall, on the spread, we see not the same magnitude of spread impact as last year -- yes, go ahead.

Okay. But on the negotiation, you confirmed some decrease for the pricing. Sorry?

I just mentioned during your negotiation with the customers at the beginning of this year, you confirmed some decrease for the pricing when we negotiated the new tariff for 2025, there is some decrease for the pricing, that's right?

Yes. Yes, sure. I mean what we said about pricing is that obviously, and especially when you are looking at the spread, we have the carryover effect of what we did along the year in '24, plus the additional price reduction given in '25. So this is about it. And obviously, the spread is significantly negative in Q1 as expected, I mean a little bit more than what we expected due to the tougher market condition I mentioned. And obviously, it will reduce down the year.

And this is in Q1 where you have the largest gap between prices from '24 and '25 because if you remember, we had some price mix going down year in 2024 throughout the year. So this is in the first quarter that we see the highest negative gap.

We will now move on to the line of Mengxian Sun from Deutsche Bank.

So two questions from my side. The first one is on the 2025 guidance so you basically reduced the adjusted EBITDA guidance for 2025. But on the other side, you increased the free cash flow generation. So how shall we understand the bridge between these two elements? Or what are the drivers for the better cash generation for this year? And the second one is on the BWGI offer. Can you remind us what are the following procedures from here and the time line of the tender offer from here, please?

Thank you, Mengxian. On the cash, let me take this one. Well, in fact, indeed, we are -- we moved from around EUR 200 million of free cash flow generation to go. We see, again, in the in the first quarter, we were much, much -- were almost neutral in terms of free cash flow when 1 year ago, we were significantly negative. And we know in the seasonality of our cash generation that Q1 is the lowest and then Q2 and H2, especially are much stronger, so we have a better visibility. And again, we commented on the CapEx and the investments. We know that the additional capacity -- the CapEx in to additional capacity is basically behind us. And we have a lower CapEx spend and a better visibility today.

So we are, again, confident on delivering more than EUR 200 million. And we are also working and seeing some good effects on work to optimize our working capital, especially on inventories other than finished products because you have finished products, but you have also other inventories. So all these action plans plus the context of the cash spend leads us to this above EUR 200 million free cash flow guidance.

About the voluntary tender offer from BWGI. So you may have seen that BWGI have just filed this morning, the French Financial Markets Authority, the IMF. By the way, the information -- all of the information will be available on our website today. So the next step is that we'll have a Board of Director this Sunday to examine the offer. And as expected, the Board we have to issue a reason opinion of the offer, having considered the report of the independent expert, [indiscernible], I do remind you and the recommendation of the other committee. So this with an opinion and the independent expert report will be made public. And then we'll have to wait on the validating the offer and then we'll enter in the standard process later on.

We'll now open the line for Fraser Donlon from Berenberg.

I have four questions. So the first is quite an open one. I'd just be interested to understand your kind of view on, let's say, a more direct impact of tariffs on glass and aluminum and how those two substrates interact. For example, I think there was quite a lot of glass going from China to the U.S. So where could that land going forward?

The second question was just on the U.K. So I'm kind of interested in how your customers are responding to EPR and kind of the increased cost of glass effectively in the U.K. and whether there's any structural risk there for Allied?

The third question, could you just clarify what are the kind of cost savings relative to nonrecurring costs with this Germany kind of plan, which you mentioned?

And then the fourth and final question was just on M&A. I think it's obviously quite a dynamic environment in glass for various reasons. And I just wondered kind of what's your willingness or interest to participate in potentially quite rich M&A environment?

Okay. Thanks, Fraser. So frankly speaking, on your first question again about the tariff, the question again is, what is the assumption we are taking to make some study and define what could be the impact. So I mean, again, agility and adaptation is going to be the keyword there. Let's wait to see what are going to be the definitive measure to understand our customer strategy and impact. And as a consequence, the impact we have. I do not believe when you're speaking about China impacted the North American market that it has a consequence of additional Chinese imports in Europe.

Frankly speaking, I do not see that as realistic. But really the market -- the glass market is a local market. Obviously, you have a slight part of some imported products coming from far away countries, the say. But this is a small part, and this is most of the time on some very standard products and for some one short operation, I would say. So let's try to get a better understanding on what is going to be the reality at the end of this trade situation and trade war to make a definitive understanding.

About U.K., so you're right, we have this EPR cost topic compared to other packaging. So this is a -- this could be a concern for glass in U.K. But here as well, we do not see any impact to limited just started. And I would say that for Allied specialty, which is a platform dedicated to [indiscernible], I do not see any switch or any impact to come. So obviously, it will put maybe some pressure on pricing on our customer to the B2C market. So it's much more how it is going to be like in terms of inflation. But I do not see for us any impact to come. Cost saving in Germany. So with what we are planning to do with this restructuration. It's a positive impact of few million euros to come on the cost structure.

And last, on M&A. So you're right, many some potential topics to come. Here what we are -- as we have already said, we are on a permanent screening trying to understand the opportunities, if there are. And again, Italy is going to make sense, we'll have a look on it. But as we speak right now, it's clearly for us to focus on cash generation and to see what will be the next step in terms of M&A if value creation is secure.

We now come to the last question for the audio participants from Louise Wiseur from UBS.

Just a follow-up, please, on the price. Can you quantify how much of the price dropped in Q1 at group level, so the minus 6.3% is due to the carryover of the 2024 price cuts? And how much is due to the additional time cuts made in 2025, please?

As Nathalie said, we do not want to comment more than what we already said on price and mix effect. I think we express ourselves on that. Market conditions are tougher than expected. This is a good sign on volumes, and we see the price and mix effect being slightly negative than what we are expecting.

And with that, we will move on for the web questions, which will be addressed by your host. Please proceed.

Okay. Hi all. David Placet speaking. I'm the Head of IR we'll have a short one this time around since we only had one contribution in terms of written question. Just a short set of questions from Inigo Castellanos with Kepler. I think most of them have been answered, starting with -- there was one question on pricing trends, which I think we've addressed. Another regarding the impact of U.S. tariffs, which we've tried to address the best for knowledge.

Maybe just two more specific questions. One is in relation to the U.S. tariffs. Can you please remind us of how much of group sales are or could be affected directly or indirectly by U.S. tariffs. That's the first question. And the second one relates to the BWGI offer. And the question is, can you please confirm that the opinion on the offer using the independent expert valuation will be given as soon as this Sunday or when will it be given? These are the 2 questions.

Okay. So about, I would say, our tax exposure to U.S. tarrifs. What we can say on that? You know that 60% of our sales are made with spirits and wine and sparkling wine. So this is mainly this part, which is potentially exports. We don't have direct exposure we have indirect exposure for our customer exporting to the U.S. And what we do estimate is that within this 60% of our sales between 10% to 15% max is exported to the U.S. So if you make the math, it means that total exposure of our sales is between 6% to 9%. So it means that after that is based on what is going to be the final output on the tariffs imposed on the European market. What is the variation compared to this current 6% to 9%.

So this is what we can say on that. On the BWGI offer, yes, as I commented, so we're going to have a Board of Director this Sunday to examine the offer and then beginning of the week, after this Sunday, information will be released and especially about the reason opinion coming from the conclusion of the Board. So it will be available on beginning of the week.

All right. Well, thanks, Patrice. I think that's it from my end. So I think we're good.

Okay. Again, thanks a lot for your attention and for this Q&A session. I wish you a good day. Take care. Bye-bye.

Thank you. Bye-bye.

This concludes today's conference. You may now disconnect.