SIG Group AG: Resilient third quarter revenue growth and margin performance
The organic aseptic carton business in the region experienced growth driven by price increases to offset cost inflation, including higher raw material, energy, and freight costs. The region's share of the aseptic carton market expanded due to new filler installations, including expansions in Finland and Romania. The revenue contribution from bag-in-box and spouted pouch in Europe was €34.8 million for the three months ending September 30, 2023.
In the Middle East and Africa, there was a robust recovery in revenue, increasing by 6.7% in the third quarter on a constant currency basis. Price increases helped offset prior-year cost inflation, and volume improved compared to the second quarter. The region saw increased volume for new filling lines in South Africa and Saudi Arabia, along with heightened demand in Algeria.
Asia Pacific reported a revenue growth of 14.4% at constant currency in the third quarter, including bag-in-box, spouted pouch, and chilled carton. Aseptic carton organic revenue increased by 10.4%, continuing its recovery from a slow first quarter. Southeast Asia saw rising aseptic carton volume growth, particularly in India and Vietnam. The rest of Asia performed well, with strong volume recovery for aseptic carton in China. Notable launches included SIG DomeMini in China and the rollout of alu-free packaging with major customers in the country. The revenue contribution from chilled carton, spouted pouch, and bag-in-box in Asia Pacific was €52.0 million for the three months ending September 30, 2023.
In the Americas, revenue growth at constant currency was 1.9% for the third quarter, including contributions from bag-in-box and spouted pouch. Organic revenue growth of aseptic carton, on a constant currency basis, was 1.4%. Brazil experienced an increase in demand in September following retail price reductions. Mexico reported a strong performance in liquid dairy for aseptic carton, gaining a share of the wallet with its largest customer. The revenue contribution from bag-in-box and spouted pouch in the Americas was €104.8 million for the three months ending September 30, 2023.
Adjusted EBITDA for the nine months ended September 30, 2023, increased by 26.7% to €581.7 million, with an adjusted EBITDA margin of 24.9%. Adjusted net income for the same period increased to €223.4 million, driven by higher EBITDA, partially offset by higher interest, tax, and depreciation expenses. Reported net income increased to €136.9 million for the nine months ended September 30, 2023, primarily due to movements in EBITDA, offset by additional depreciation and amortization, tax, and interest expenses.
The outlook for 2023 remains consistent with previous guidance. The company anticipates revenue growth of 20-22% at constant currency, considering the consolidation of bag-in-box and spouted pouch for an additional five months and chilled carton for an additional seven months compared to 2022. Resin escalators for the bag-in-box and spouted pouch businesses are excluded from the guidance. Organic constant currency revenue growth for the aseptic carton business is projected to be in the range of 7-9%, with continued contributions to top-line growth from price increases. The adjusted EBITDA margin is expected to increase by 50-150 basis points, falling within the range of 24-25%. The projected improvement compared to 2022 is contingent on input cost and foreign currency volatility. Net capital expenditure is forecasted to be within a range of 7-9% of revenue, and the dividend pay-out ratio is expected to fall within a range of 50-60% of adjusted net income.
