Citigroup on Monday adjusted the financial outlook for European glass packaging manufacturer Vidrala (LON:) SA (VID:SM) shares, lowering the company’s price target to 99.00 euros from the previous 104.00 euros, while maintaining its view on European glass packaging manufacturer Vidrala (LON:) SA (VID:SM) Neutral rating for Vidrala (LON:) SA (VID:SM) .
This adjustment came after Vidrala announced that its second-quarter results were in line with expectations, and its stock price experienced fluctuations that first rose and then fell. The company reiterated its guidance for EBITDA in excess of 450 million euros, indicating a flat second-half result compared with 225 million euros in the first half.
Despite stable guidance, Citi expects challenges ahead, forecasting EBITDA of €433 million, below the consensus of €454 million. The company noted that it may encounter difficulties due to a slow recovery in sales and weak prices. While cargo volume comparisons in Europe are likely to ease in the second half of the year, conditions in Brazil are expected to become more challenging, especially given increased capacity at the Port of Ferreira.
Citi analysts don’t expect major changes in pricing, but expect a double-digit percentage decline in 2024, which could offset any improvement in sales. They also expect higher downside risks to pricing compared to sales volumes. However, the company predicts that low energy costs will still support margins, while higher margins in Brazil could lift the group’s average.
In the current weak market, Citi reiterated its neutral stance on Vidrala, noting that the company has significant exposure to the beer industry, which may lead to an early recovery in the beer industry, but also brings a temporary shift from glass to cans, etc. Risks of Alternative Packaging Materials. Given Vidrala’s high valuation multiples and unclear growth strategy, the company suggested investors may prefer to seek recovery elsewhere.
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