Financial and management results
Business performance
In 2024, the recovery of the casing market of the Traditional Business was confirmed. With an estimated growth of 3% in volumes, the inventory adjustment process that began in 2023 came to a close. The main casing technologies ended the year with growth in volumes, particularly collagen casings, whose growth has been in the high range of its historical average, reflecting the good timing of the replacement of animal casings being led by Viscofan.
For its part, the New Business division has been influenced by lower revenues in plastics technology against a backdrop of increased competition where the decrease in raw material costs has been quickly passed on to market prices. Nevertheless, is worth highlighting the good performance of spice transfer products and the recovery in the second half of the year of collagen hydrolysates and vegetable casings, where we are still far from the potential productive capacity.
The recovery in the Traditional Business and in the New Business contrasts with the weakness of revenues from the sales of co-generation energy in a context of lower prices and electricity production.
The pressure on prices in the main production inputs that occurred in 2023, together with lower sales volumes, led to operational activity focusing on improving production efficiencies, on costs control and on reducing inventories. In this way, Viscofan has been prepared to improve operating profitability in the context of the moderation in the price of raw materials and energy in Spain that occurred in 2024.
One of the catalysts for this improvement has been the greater production efficiencies achieved in North America with the new cellulose casing technology at the Danville plant and in collagen casings at the New Jersey plant, thereby reversing the trend of diminishing competitiveness that these plants were showing in recent years.
In operations, also worth highlighting are the activities aimed meeting the objective of inventory reduction implemented throughout the year, with a focus on the optimisation of production capacity, strategic allocation of inventories from the EMEA region to other geographical areas and specific projects in spare parts. Thus, the ratio of inventories at the end of December 2024 to revenue for the year decreased by 3.0 p.p. compared to the previous year. Together with the higher operating profit, this allowed for considerable increase in cash generation.
In the field of investment, Viscofan made satisfactory progress in the Beyond25 plans set for the 2024 financial year. The most significant was the construction and commissioning of a new converting plant for cellulose and collagen casings in Rayong, Thailand. This new plant allows us to gain greater proximity to and improve the service to Southeast Asia, one of the markets with the best growth prospects, encompassing a population of more than 650 million people.
As part of the organic growth plans of the New Business division, work is progressing at the San Luis de Potosi plant in Mexico on the installation of production capacity of bags for meat products to serve the North American market, the largest of this type of application.
This division also improved its capabilities in collagen-related products thanks to the acquisition in September 2024 of Brasfibra and Master Couros in Brazil, thereby reinforcing our hydrolysate proposition, the use of collagen as a food ingredient and the development of collagen products in pet food. These Companies were incorporated into the consolidation perimeter by global integration in the fourth quarter of 2024 and contributed €2.4 million to revenue and €0.9 million to EBITDA in this period.
Viscofan also made progress in the sustainability action plan, where the initiatives implemented have allowed the Group to meet by 2024 the targets set for 2030 of a 30% reduction in the intensity of scope 1 and 2 GHG emissions on extruded metres, a 10% reduction in the intensity of water withdrawal on extruded metres, and a 50% reduction in the severity index, while the other targets are on track to being fulfilled.
Thus, Viscofan has raised its ambition in the fight against Thus, Viscofan has raised its ambition in the fight against climate change, and in December 2024 the Board of Directors approved a Net Zero Plan for scope 1 and 2 GHG emissions by 2050. This plan has an intermediate target in 2030 of absolute emission reductions in a range of 45% to 50%.
Despite the lower consolidated revenue in 2024 (-1.8%) due to the decline in co-generation electricity sales in Spain, the Group's operational strength has allowed it to reach new all-time highs in the year in EBITDA and Net Profit with growth of 6.3% and 11.4%, respectively.
With the completion of the main organic transformation projects foreseen in the Beyond25 plan, the results have exceeded the achievement of the initially planned operating cash flows. Thus, and taking into account the financial strength and the expected expansion of future cash flows, the Board of Directors has approved submitting to the General Shareholders' Meeting a total remuneration of €3.10 per share for the 2024 financial year, an increase of 3.1% in shareholder remuneration compared to the previous year, consisting of an extraordinary remuneration of €1.00 per share, and an ordinary remuneration of €2.10 per share, equivalent to a distribution of 62% of the net profit attributable to controlling entity.
Summary of financial results Viscofan Group. ('000 €)
| Jan-Dec' 24 | Jan-Dec' 23 | Change | ||
|---|---|---|---|---|
| Revenue | 1,203,994 | 1,225,787 | -1.8% | |
| EBITDA | 285,334 | 268,400 | 6.3% | |
| EBITDA margin | 23.7% | 21.9% | 1,8 p.p. | |
| Operating profit | 201,540 | 184,686 | 9.1% | |
| Net Profit | 157,019 | 140,962 | 11.4% |
Breakdown of net turnover (€000's)
| Jan-Dec' 24 | Jan-Dec' 23 | Change | ||
|---|---|---|---|---|
| Traditional Business | 996,610 | 985,305 | 1.1% | |
| New Business | 147,326 | 151,521 | -2.8% | |
| Other energy income | 60,058 | 88,961 | -32.5% | |
| Revenue | 1,203,994 | 1,225,787 | -1.8% |
By greographic area
| Jan-Dec' 24 | Jan-Dec' 23 | Change | ||
|---|---|---|---|---|
| Europe, Middle East and Africa (EMEA) | 508,482 | 531,317 | -4.3% | |
| Asia Pacific (APAC) | 163,005 | 158,467 | 2.9% | |
| North America | 373,742 | 369,323 | 1.2% | |
| South America | 158,765 | 166,680 | -4.7% | |
| Revenue | 1,203,994 | 1,225,787 | -1.8% |
Revenue:
In the cumulative figure up to December 2024, revenue came to €1,204.0 million, 1.8% lower than in the same period of the previous year due to the sharp 32.5% decline in energy sales, which with €60.1 million are impacted by lower electricity sales prices (an impact of €-16 million) and lower production (an impact of €-13 million).
In the Traditional Business, revenue grew by 1.1% vs. 2023 to €996.6 million, driven by the increase in volumes, and in New Business, revenue decreased by -2.8% vs. 2023, to €147.3 million.
In the year 2024, the fluctuation in exchange rates eroded the growth in the consolidated revenue by -0.3 p.p. and the changes in the scope of consolidation contributed +0.2 p.p.
The geographical breakdown of revenue in 2024 was as follows:
- EMEA (42.3% of the total): Reported revenue of €508.5 million, -4.3% lower than 2023, strongly influenced by sales of co-generation electricity in Spain, which fell by -35.6%. In like-for-like terms, revenue in the region decreased by -4.3% while, excluding revenues from co-generation electricity, revenue grew by 1.3%.
- APAC: (13.5% of the total): Reported revenue was €163.0 million, +2.9% higher than in 2023 and +3.7% on a like-for-like basis.
- North America (31.0% of the total): Revenue amounted to €373.7 million, showing an increase of 1.2% and of 1.6% in like-for-like terms.
- South America (13.2% of the total): Revenue came to €158.8 million, a decrease of -4.7% compared to 2023 and of -6.2% in like-for-like terms.
Operating expenses
Consumption costs(2) fell by -7.3% compared to 2023 to €390.4 million thanks to savings from production enhancements in new technologies, operational efficiencies, the decrease in the cost of natural gas in Spain and the lower price of raw materials. All this allowed for a widening of the gross margin[4] by +1.9 p.p. vs. 2023 to 67.6%.
Personnel expenses for the whole of 2024 grew by 1.6% to €274.3 million. The higher costs due to wage inflation were offset by the -3.4% decrease in the average workforce to 5,163 people. The lower staffing requirements compared to the same period of the previous year related to the new technology installed in the United States, the adjustment of production levels, particularly in Europe, and the measures implemented throughout the Group have enabled this workforce reduction.
Aggregate Other operating expenses in 2024 were €267.4 million, a decrease of -4.8% compared to 2023. Of this, energy supply costs fell by -11.8% and transport costs by 5.2% compared to 2023.
Operating profit
The 2024 financial year was characterised by an improvement in operating profitability. The strategy of commercial discipline, the increase in production efficiencies, the decrease in energy and raw material costs and the favourable trends in currencies combined with the recovery of casing volumes in the second half of the year were reflected in the margin. Thus, the EBITDA margin for 2024 amounted to 23.7%, an improvement of 1.8 p.p. compared to the previous year.
Thus, EBITDA for 2024 grew by +6.3% to €285.3 million.
In like-for-like terms, i.e. excluding the impact of exchange rate fluctuations and changes in the scope of consolidation, EBITDA for 2024 grew by +3.6%.
Depreciation and amortization expense in 2024 remained virtually unchanged at €83.8 million (+0.1% vs. 2023). As a result, the cumulative Operating Profit up to December came to €201.5 million, 9.1% above 2023.
Financial position
In cumulative terms, the net financial result was positive at +€4.9 million with positive exchange differences of +€13.0 million and financial expenses of €10.4 million. This compares with a negative net financial result in 2023 of -€15.8 million, a period in which exchange differences were negative at -€9.7 million and financial expenses amounted to €6.9 million.
Net profit
Profit before tax in 2024 was €206.4 million and the corporate income tax expense was €49.1 million, bringing the effective tax rate to 23.8%, higher than the 16.5% of 2023, a period with special tax deductions associated with the impact of COVID19 in China and the tax change in Brazil, which provided tax benefits for exporting companies.
All in all, the Net Profit attributable to the controlling entity for 2024 amounted to €157.0 million, growth of +11.4% compared to 2023.
Investment
Investment in 2024 amounted to €71.0 million (€77.5 million in 2023), where the construction of the new cellulose and collagen casing converting plant in Thailand stands out. This plant was opened and commissioned on time and at budgeted cost in the fourth quarter of 2024. The figure for investments for the year also includes the installation of production capacity of plastic bags for meat products at the San Luis Potosí plant in Mexico, energy equipment as part of the decarbonization strategy and consumption efficiency, and recurring plant projects.
The breakdown by type of investment in 2024 is as follows:
- 34% of the investment was earmarked for investments in capacity and machinery.
- 35% of the investment was earmarked for improvements in sustainability, including energy equipment and the optimisation of the installations in terms of security, hygiene, and protecting the environment.
- 14% of the investment was earmarked for process improvements and new technology.
- The remaining 17% was spent on ordinary investments.
At year-end 2024, the investment commitments are €13.5 million compared to €28.9 million at year-end 2023.
Dividends and Shareholder remuneration
The Board of Directors of the Viscofan Group has resolved to propose to the General Shareholders' Meeting a profit distribution equivalent to a remuneration of €3.10 per share. Of which, €2.10 per share - equivalent to the distribution of 62% of net profit attributed to the controlling entity- is of an ordinary nature, and €1.00 per share is of an extraordinary nature arising from the generation of operating cash flows that were higher than envisaged in the Beyond25 strategic plan.
In this way, shareholder remuneration consists of:
- An interim dividend of €1,437 per share (paid on 19 December, 2024).
- The proposed ordinary final dividend of €0,653 per share and extraordinary final dividend of €1.00 per share under the optional dividend system in cash or shares "Viscofan Flexible Remuneration" in a lump sum payment expected in June 2025.
- A bonus of €0.01 per share for attending the General Shareholders’ Meeting.
The proposed total and ordinary distribution is 3.1% higher than the previous year's total remuneration of €3.01 per share, and 4.7% higher than the proposed ordinary distribution of the previous year.
In turn, the Board of Directors has approved submitting to the General Shareholders' Meeting the possibility of flexible remuneration with which shareholders can decide whether they prefer to obtain new shares in a paid-up capital increase or cash remuneration. Furthermore, in order to avoid dilution of shareholders who do not participate in the capital increase, the Board plans to redeem the treasury shares necessary to keep the number of outstanding shares stable.
Equity
The Group's equity at 2024 year-end amounted to €938.9 million, down 2.0% on the end of the previous year, due to the increased negative translation differences originating from the consolidation of the subsidiaries whose currencies depreciated significantly against the euro in 2024 (mainly Brazil) and the distribution of an extraordinary dividend in the year.
Treasury shares
At 31 December 2024, the company had 690,795 treasury shares representing 1.49% of the voting rights valued at €35.0 million.
During this period, the Company acquired, in use of the powers vested in it by the General Shareholders' Meeting, a total of 1,560,966 treasury shares.
Subsequently, within the framework of the first edition of the flexible remuneration programme approved by the General Shareholders' Meeting, the Company received 37,138 own shares. Under this programme, all shares were delivered by means of a share capital increase involving 675,954 shares, and a capital reduction was carried out through the redemption of 675,954 treasury shares in order to avoid share dilution among those shareholders who did not take part in the capital increase.
Subsequently, within the framework of the second edition of the flexible remuneration programme approved by the General Shareholders' Meeting, the Company received a total of 24,659 own shares. Under this programme, all shares were delivered by means of a share capital increase involving 662,369 shares, and a capital reduction was carried out through the redemption of 662,369 treasury shares in order to avoid share dilution among those shareholders who did not take part in the capital increase.
Moreover, in 2024, a total of 12,740 treasury shares were delivered to Viscofan personnel within the framework of the company's variable remuneration plans.
At 31 December 2023, Viscofan, S.A. held a total of 419,095 treasury shares representing 0.90% of its voting rights, for a value of €21.7 million.
Financial liabilities
Net bank debt (3) at the end of the 2024 financial year was €146.9 million, higher than the €138.0 million at the end of the previous year 2023 due to the increase in shareholder remuneration that includes the payment of €60.1 million in June and December to shareholders who have chosen to receive the cash dividend, and the share buyback of €90.7 million carried out within the framework of the flexible shareholder remuneration programme.
In addition, Viscofan also made the payment of €7.2 million within the framework of the agreement to acquire 60% of the share capital of the companies Brasfibra and Master Couros.
In addition, based on IFRS 16, which requires most non-cancellable operating leases to be recorded on the balance sheet as an asset for the right of use and a liability for the future amounts payable, the breakdown of net financial debt is as follows:
| Dec 2024 | Dec 2023 | Change | ||
|---|---|---|---|---|
| Net Bank Debt * | 146,854 | 137,963 | 6.4% | |
| Liabilities for right-of-use assets | 11,849 | 11,541 | 2.7% | |
| Other net financial liabilities** | 35,063 | 31,157 | 12.5% | |
| Net Financial Debt | 193,766 | 180,661 | 7.3% |
The net financial debt is the equivalent of 20.6% of the equity, with a leverage level that is sufficient to be able to attend to all Viscofan's liquidity needs.
Changes in the scope of consolidation
Details on the changes in the scope of consolidation carried out during the year are available in Note 2 of the Consolidated Financial Statements of the Viscofan Group.
Outlook for 2025
Viscofan expects to continue to achieve record results with growth in the main financial figures of revenues, EBITDA and net profit.
In this context, Viscofan expects to grow in revenue by between 5% and 8%, between 8% and 12% in EBITDA, and between 6% and 10% in Net Profit in 2025, with investments totalling approximately €75 million and a €-USD exchange rate of 1.05.
Subsequent events
The Board of Directors, at its meeting held on 27 February 2025, agreed to propose to the Shareholders' Meeting a gross amount of the Supplementary Dividend of €1.653 per share. Consequently, considering the amount of the 2024 Interim Dividend of €1.437 per share and bonus for attendance at the General Shareholders' Meeting of €0.01 per share, the total remuneration for shareholders to be received will be €3.10 per share. Of the aforementioned estimated amount of €3.10 per share, €2.10 corresponds to the increasing ordinary remuneration that the Board of Directors has been proposing to the General Shareholders' Meeting in recent years (€2.006 per share charged to the 2023 financial year), while the additional euro per share to reach the total estimated amount would be extraordinary in view of the current market and Company conditions.
The ordinary distribution proposal is 4.7% higher than the previous year's remuneration of €2.006 per share.
The payment of the Complementary Dividend is expected to be made in June 2025.
Likewise, on February 27, 2025, the Board of Directors of Viscofan, S.A. has agreed to launch a buy-back program for treasury shares (the "Buy-back Program") in use of the powers granted by the General Shareholders' Meeting held on April 27, 2023 under item eleventh on the agenda.
In this regard, the Buy-Back Programme is approved and implemented in the context of the proposal that the Board of Directors intends to submit for approval at the next meeting of the Company's General Shareholders' Meeting in relation to the establishment of a flexible remuneration programme that allows shareholders to be offered the possibility of receiving their remuneration in cash (through the receipt of the corresponding dividend) or in shares released from a new issue by the Company (through the corresponding paid-up capital increases that will be submitted for approval by the aforementioned General Meeting) (the "Flexible Remuneration Program").
In order to avoid the dilution of shareholders who do not participate in the capital increase, the Board plans to redeem the treasury shares necessary to keep the number of shares outstanding stable.
In addition, in February 2025 Viscofan do Brasil Sociedade Comercial e Industrial Ltda. acquired 51% of Pet Mania Comércio Internacional Ltda, a Brazilian company dedicated to the production and marketing of pet treats for a cash value of R$34 million.
Alternative Performance Measures
The Viscofan Group has included in this report various Alternative Performance Measures (hereinafter APMs), as established in APM Guidelines published by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415es) and adopted by the National Securities Market Commission (the CNMV).
This involves a series of measures designed using the financial information of Viscofan S.A., and its subsidiary companies, and they are complementary to the financial information drawn up in agreement with International Financial Reporting Standards (IFRS). Under no circumstance should they be assessed separately or considered a substitute.
They are measures used internally in decision making processes and which the Board of Directors decides to report externally as it considers they provide additional information that is useful in the analysis and assessment of the Viscofan Group's results and its financial situation.
The APMs included in this report are as follows:
The EBITDA, or operating profit before depreciation and amortization, is calculated excluding depreciation and amortization costs from the operating profit. The EBITDA is a measure that is commonly reported and widespread among analysts, investors, and other stakeholders in the casing industry. The Viscofan Group uses this measure to monitor the business' development and to establish operational and strategic objectives in Group companies. However, it is not a defined indicator in IFRS and, therefore, it may not be compared with other similar indicators employed by other companies in their reports.
Cost of consumption: This is calculated as the net amount of supplies plus the change in finished and unfinished products. Management monitors cost of consumption as one of the main cost components for Viscofan. The weight of net revenue for this cost component on revenue or gross margin is also analyzed to study the operating margin's development. However, it is not a defined indicator in IFRS, and cost of consumption must not be considered a substitute for the different items in the profit and loss account that comprise them. Furthermore, it may not be compared with other similar indicators employed by other companies in their reports.
Net bank debt: This is calculated as non-current borrowings plus current borrowings netted from cash and cash equivalents. Management considers net bank debt to be relevant to shareholders and other stakeholders as it provides an analysis of the Group's solvency. However, net bank debt should not be considered a substitute for gross bank debt in the consolidated balance sheet, nor other liability or asset items that may affect the Group's solvency.
Like-for-like revenue and EBITDA: This measure excludes the impact of exchange rate variations on the comparable previous period and the non-recurring impacts of the business to present a homogeneous comparison of the Viscofan Group's development. However, like-for-like revenue and EBITDA are not defined indicators in IFRS and, therefore, they may not be compared with other similar indicators employed by other companies in their reports, nor may they be considered a substitute for the business development indicators defined in IFRS.
[1] Revenue by origin of sales: EMEA (Spain, Germany, Czech Republic, United Kingdom, Belgium, France, Serbia), North America (Canada, Costa Rica, Mexico and the United States), APAC (Australia, China, Japan, New Zealand, Thailand), Latin America (Brazil and Uruguay). [2] Like-for-like: Like-for-like growth excludes the impact of exchange rate fluctuations in 2024 and the non-recurring operating profit expense of €1.9m due to production stoppages in the US in 3Q23 as a result of power outages caused by the utility company. [3] Consumption costs = Consumables +/- Changes in inventory of finished goods and work in progress. [4] Gross margin = (Revenue - Consumption costs)/Revenue. [5] Net bank debt = Non-current bank borrowings + Current bank borrowings – Cash and equivalents.