Vidrala: the Spanish glass oligopoly buying plants and handing out free shares

Vidrala: the glass business that hands out shares like a Christmas hamper

Vidrala is not a fashionable stock. No AI, no microchips, no SPAC. It is a glass bottle company, controlled by one or two families, that over five years has handed out 27 free shares to anyone who started with 109, and which now trades well above the 60 euros it once fell to. The business works: first-half 2023 results showed sales of 794.8 million versus 650.8 the previous year, and an EBITA of 215.2 million versus 112.2. Almost double. And yet the stock has taken an 11% hit in two sessions. The market does not reward good numbers, or not always.

The glass oligopoly and sustainability as a pretext

The underlying argument is simple: plastic is in retreat, glass is gaining ground as a premium packaging material, and in Spain the sector operates as a de facto oligopoly. Some sum it up like this: if the company does well, it is a fairly safe bet. The purchase of The Park in the UK and of 30% of Brazil's Vidroporto underpin that expansion, although they pushed debt-to-EBITA up to 0.9 times in the first quarter, before falling back to 0.5 in the third.

The problem is energy. Vidrala is gas-intensive, and that is no small detail: some recall that Germany slipped into recession precisely because of energy costs. The company's answer is to pass the gas price on to the final customer. It works as long as the customer can bear it.

The share issue nobody understands

Every December, one new share for every twenty. Without paying the 19% tax. Anyone who started with 109 shares now has 27 more, valued at 88 euros: 2,376 euros over five years, according to the calculation doing the rounds. The problem is that hardly anyone knows about it. The communication from these companies is so discreet that investors who come in without knowing the details spend two or three years missing out, as peine to more than one with MCM.

Selling Italy, buying Chile

They sold the Italian plant for 230 million and bought the Chilean one for 75. The official explanation: in Italy there was no network, just an isolated plant with no market share to grow. Some are not buying it: in 2023 Italy was generating 130 million in revenue with an EBITA of 33.3. The swap makes sense if the goal is to replicate in Latam the leadership they already have in Iberia and the UK. The CEO has already said there are more acquisitions on the list.

The special dividend and the plunge

The Italian sale unlocked a special dividend of 4 euros per share, approved at the general meeting and conditional on antitrust approval. Once confirmed, the stock went from 107.20 to 95.90 in two sessions. Pure market logic: anyone who bought at 98.90 to collect the 4 euros sold as soon as they could. It is not magic, it is the *himberziones*.

The closing, with caveats: as long as gas does not spike and the oligopoly holds, Vidrala will remain that old-school company handing out bottles of red wine and shares at Christmas. If energy costs spiral, things change.