Packaging, turnover down but profits hold

EBITDA - gross operating profitability, on the other hand, calculated on the income statement before depreciation/amortization, interest expenses and taxes, continued to increase significantly: in absolute value, the increase is a good +32%, while the percentage of value produced increased from 11.11% to 15.81%. Of course, absolute value and relative weight increases should not be compared with each other. The first figure offers insight into whether EBITDA has increased more or less dynamically than the volume of business. The second issue tests the change in income efficiency with equal business volumes.

How was this good income result achieved? If we look at the income statement, the increase recorded by ‘Added Value’ is immediately clear, while the cost of personnel and other operating expenses remained basically stable, increasing only a little. In addition to possible greater production efficiencies, the increase in Added Value is likely linked largely to a decrease in raw material prices for the period: according to research data, in 2023 prices fell for most packaging raw materials (paper, cardboard, plastics, metals), with a significant exception for glass. We know that the Added Value/Personnel Cost ratio is the basis of the operating result of any company; it is the search for optimisation that distinguishes the quality of economic management and thus the quality of management. In this sector, labour absorbs 40.6% of the added value generated, down from the previous 46.7%. Indeed, it can be seen that while in contrast to the previous year, turnover per employee decreased from €513,000 to €471,000, added value per employee increased from €131,000 to €147,000.

The improvement in profitability was subsequently maintained, even arriving at the underlying EBIT (operating income after depreciation and amortization) while it suffered some erosion due to higher financial expenses and taxes. So final profit did in fact increase its percentage weight, but to a lesser extent than EBITDA, rising from 5.89% to 8.95% compared to Value of Production. 
All of this is summed up in the pie chart on the “How it works economically” page of the full analysis report (attached to this page). In this graph, the red slice of the pie highlighting the extent of possible economic improvements is very thin, with a width of about 8% (also considering the pink part of rentals and leases) compared to 92% of the green part, which instead considers factors already optimised by the economic management of this sector.
 
FORECAST ECONOMIC ANALYSIS: Is the statistic analysing the possible “return to average” EBITDA% favourable or unfavourable to the management?
The statistical forecasts regarding EBITDA% in the previous analysis were exceeded by reality: the probability that EBITDA would exceed 13% of value produced was only 16%; instead, this limit was exceeded by an extraordinary factor: the decrease in raw material prices. For the following year’s statements (2024), in this analysis we show probabilities of (43%) that EBITDA will remain in a range between 12.6% and 19% of the value produced, while there are even higher (55%) probabilities that EBITDA% may fall below 12.6%. So the statistics favour a declining trend in EBITDA% for the 2024 statements.
 
FINANCIAL ANALYSIS: the ability to sustain business
The financial situation of this industry (highlighted by the bottom row of pie charts on the right-hand side of the sector financial analysis sheet) shows the lack of net financial debt, i.e., calculated by offsetting it against cash and other short-term securities, which are, however, replaced by loans between companies belonging to the same group, usually managed by holding companies, highlighted by the red horizontal bar chart, which record a year-on-year decrease. Very small % weight on turnover, which remains within 9%, for net financial position calculated including net inter-company debts.  Thus, a fairly quiet situation with potential for use of other credit. 
If we now look at the Financial Structure chart in the Full Report, there is a slight financial imbalance at maturity level due to negative Net Working Capital (NWC). However, this is not an imbalance of concern because the NWC does not consider inter-company calculations, which are substantial here, and consequently maturities are managed “in house”. Of course, there may also be some external holding companies, not included in this aggregate, with more pressing maturities and debts to the banking system. The Financial Cycle of receipts and payments is positive for 19 days, that is, it contributes to the lower debt. 
The financial situation is summarized figuratively in the pie chart on the “How It Pays” page, dedicated to those with a lower understanding of business mechanisms through figures. The red slice in this chart, showing a larger extent of financial factors that can be improved, is more substantial compared to the economic pie chart seen above, reaching up to 26%, in any case down 10 points on the previous year. 
Investments also decreased in this financial year, from 6.59% to 5.64% of turnover (with declining sales, we should remember).  
 
RATING ANALYSIS: quality and reliability summarised in a single indicator
In the rating tables in the full report we can observe a top-notch rating expressed by the two rating methods contained at the top of the page devoted to this topic, namely the Mediocredito Centrale rating method and the method based on Basel III regulations. While the discrete rating (2.8, up on the previous 2.5) resulting from Altman Z score (AZS) falls in the middle rating range of that methodology, which does not indicate problems, but simply that the risk is not exactly close to zero. 
Confirming this sector’s good reputation for reliability, the rating assessed using S&P methods and measures and adapted to these analyses according to our simplified calculations still offers a very good AAA+ rating (scan the QR code in the bottom right-hand corner on the single sector financial analysis page).
 
EQUITY VALUE ANALYSIS: shareholder value 
We conclude this analysis by calculating the sector’s Equity Value, i.e. the average value for shareholders in this sector, observing the consequent stock exchange multiples. This is determined as if the aggregated sector were a single company and considers a blend of two components: the equity value (which represents the amount that would need to be invested to start a new company from scratch) and the operating value (which is the amount that would need to be paid as goodwill wanting to start from scratch with a new company and wanting to achieve similar results). 
The following stock exchange multiples correspond to the resulting absolute equity value: 
-  Company Value over EBITDA (EV/EBITDA) = 5.6 times
-  Price/Earnings (P/E) = 8.3 
-  Price/Book Value (P/B) = 1.6 
Furthermore, purchasing at the price expressed by the equity value would require a Financial Leverage of 1.2 times. This means the buyer would buy 1.2 times more than the price paid, financing the excess amount with the company’s debts. 
 
These assessments are based on the book values in the financial statements and incorporate a “goodwill” value obtained by capitalizing the current future values of EBITDA, appropriately adjusted, to account for what is already included in the net assets of the assets. It is clear that the higher the profitability achieved the better the company’s ability to generate income, due to the quality of products, the quality of marketing ... and the greater the value of its goodwill, understood as the operational skills of the people within the company. The EV/EBITDA multiple may remain low if there are unexpressed capital gains in the book amounts or if there is fast cash generation that is not immediately reinvested (cash is not included in the value of the company) or if an adequate profit growth rate is not considered.

(Article by Alfredo Ballarini - alfredo@ballarini.info for CER Giornale NEWS, October 2025)