European Packaging and Paper: Glass Preview: Stable 2Q with slight drop in margins; Long term margin remains intact

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European Packaging and Paper: Glass Preview: Stable 2Q with slight drop in margins; Long term margin remains intact

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20 Jul 2026 12:00:42 ET │ 19 pages

European Packaging and Paper

Glass Preview: Stable 2Q with slight drop in margins; Long term margin

remains intact

Ephrem Ravi AC

CITI'S TAKE +44-20-7986-2462

We expect LSD volume growth in FY26 for both Verallia and Vidrala. Pricing ephrem.ravi@citi.com

is still tracking at -LSD%/-MSD% YoY, but we think the steepest declines are AC Ashish Khetan

behind us. Energy costs have risen substantially but we believe that strong

hedging should support profitability. We expect steady top-line and EBITDA +91-22-4277-5121

on YoY basis for both Verallia and Vidrala. We largely maintain our estimates ashish.khetan@citi.com

for VRLA and expect margin expansion going forward. Maintain Buy with TP Simon Hales

of €23/share. We increase our medium and long term estimates for Vidrala simon.hales@citi.com

as we expect margin to remain strong. We still think VID’s upside is limited

due the recent stock price rally and maintain Neutral with TP of €95/share

(revised upwards from €85). With this note we transfer the coverage of

Vidrala to Ashish Khetan.

Volumes are slow but improving YoY — Glass demand remains subdued. European

Beer volumes are showing sigs of recovery but this is offset by weak volumes in

spirits (-LSD%). US spirit volumes are stronger are +LSD% YoY.

Pricing remains weak — We expect pricing to remain subdued in near term given

intense competition. We expect LSD decline in pricing in FY26. Low volumes and

weak pricing are expected to keep top-line in check.

Expect margins to improve — Soft volumes and pricing are likely to impact EBITDA

margin in near term. But we model peak margins in Latin America and weak margins