SIG Group (SIGN) H1 2024 earnings summary

Executive summary

• Carton segment delivered strong growth, offsetting underperformance in bag-in-box and spouted pouch, which faced soft North American demand and operational challenges from a plant relocation; remedial actions are underway and sequential improvement is expected.

• Revenue grew 3.0% at constant currency to €1,573.2 million for H1 2024, with carton revenue up 5.9% and bag-in-box/spouted pouch revenue down 12.5% year-over-year.

• Adjusted EBITDA margin declined to 23.5% from 24.9% due to higher production and SG&A costs, FX headwinds, and operational issues in bag-in-box.

• Net income rose to €84.9 million from €52.6 million, aided by a positive fair value change in contingent consideration and unrealized hedging gains, despite impairment and restructuring costs related to the China plant move.

• Major refinancing completed: €450 million Schuldschein, new credit facilities, and term loan, extending debt maturity profile beyond 2027.

Financial highlights

• H1 2024 revenue: €1,573.2 million (+2.2% reported, +3.0% constant currency); adjusted EBITDA: €369.5 million (23.5% margin), down from €383.7 million (24.9%).

• Net income: €84.9 million, up from €52.6 million; adjusted net income: €120.2 million, down from €144.4 million.

• Free cash flow improved to negative €76.6 million from negative €213.2 million, driven by lower capex and improved working capital.

• Q2 2024 revenue was €852 million (+5.0% reported, +5.7% constant currency), with adjusted EBITDA of €214 million (25.1% margin).

• Net capital expenditure at €103 million for H1 2024, mainly for aseptic carton plant in India and chilled plant in China.

Outlook and guidance

• 2024 revenue growth expected at around 4% (±50 bps), revised to the low end of previous guidance.

• Adjusted EBITDA margin guidance lowered to the lower end of 24–25% (from 25–26%).

• Net capex expected in the lower half of 7–9% of revenue; dividend payout ratio maintained at 50–60% of adjusted net income.

• Mid-term guidance confirmed: revenue growth in the upper half of 4–6% and adjusted EBITDA margin above 27%, with net leverage target around 2.5x by year-end.