Good afternoon, I'm Anthony Pettinari, Packaging Analyst here at Citi, and we're very pleased to welcome Oliver Graham, CEO, and David Bourne, CFO of Ardagh Group. I think we wanna keep it interactive, so please feel free to jump in with any questions. But Oliver, David, thank you for joining us. Pleasure. Thank you for having us. I guess maybe we could start off with demand trends in North America. Specifically, you know, kind of early views on 2024. You posted quite strong growth in 3Q. I'm just wondering if you could maybe start with North America and talk about some of the demand dynamics you're seeing there. Sure, yeah. So I think we saw that, as you say, we were on the right side of the market this year. We were with some very strong innovation customers, particularly in the functional energy space. We had some of our core customers in areas like sparkling water in good growth, and we also had a good year in soft drinks. Generally, broader energy drink space was strong for us. You know, which seemed to be about a mix of our bottlers and locations. So yeah, we've definitely been on the right side of the market trends this year. I think going into next year, we do expect more focus on volume by big brands relative to price, just because there's been a lot of focus on price for the last 18 months, which I think worked for them. You know, they got price, they didn't see significant volume reduction. It was just more flat to slightly negative. But I think in recent scanner data, those volume declines are a bit more pronounced, and we probably have reached the limits of pricing, plus input costs are moderating. So, yeah, look, our expectation is that we'll see brands lean in a bit more on volume in 2024, which would underpin our belief that the market will go from being a sort of broadly flat market this year into some kind of growth next year. Can you just remind us, in terms of North America, your split between hard seltzer, energy? Yeah, I mean, we have, we have next to no mass beer position. We'll probably have about 5% in the portfolio next year. Then we're sort of 40-50 carbonated soft drinks and other soft drinks, 10-15 energy, 10-15 hard seltzers. You know, and then the rest is a mix of other categories. In terms of promotional activity, you would see that in the spring or you're seeing it now? You know- It's—y eah, it looks patchy at the moment. If we look at the scanner data, we see some brands are starting to move back into, you know, price, holding price, and getting a bit more volume growth, and some brands are not doing that. Some are still pushing price a bit. So, so I think, yeah, it'll be more as we move into the, into the new year and into the summer period, you'd expect to see a, a prioritization to some degree of volume. You know, the industry saw strong growth before COVID. It was accelerated by COVID, and then, you know, there was a certain over capacity over supply situation. As you exit 2023, and you think about North American industry supply and then your own footprint, I'm wondering, you know, are we balanced, or how, how do you think about those dynamics for North America? Yeah, I don't think we're quite balanced yet. So I think we're moving into balance, and it'll take a year or two to get fully balanced. The way I'd describe it for ourselves is we had to curtail temporarily this year, around 3 billion of capacity that got us into the 90s utilization rates. With the action we've taken, which has now been confirmed to close our Whitehouse plant in Ohio, which obviously nothing we want to do, but we do need to balance our demand and our capacity. The way we see next year is with some growth, we'll be in the 90s without temporary curtailments. We'll be actually in the 90s on a permanent basis. And then we may have some spot curtailments to get us, you know, into the mid-90s. So, you know, that's on our part. I think as we look at the industry, we think with some growth, we'd expect the industry to be pretty balanced in 2025. In terms of competitive intensity or new market entrants, are you seeing any impact? And should we think about pricing as just sort of broadly stable or— I, I think that North America had a price hike in 2017, 2018. We're five years on beyond that, so. Yeah, look, we don't, we don't know yet, right? We, there are no real repricing events going on in North America at the moment, and there won't be till 2025, 2026, so we don't really know. You know, again, with the capacity situation as forecast, we don't expect anything dramatic. So, you know, it's a reasonably balanced market and, yeah, we're not seeing anything significant on that front. In terms of the closure of Whitehouse and the capacity that you have brought online, in terms of capabilities, whether it's, you know, geographic or specialty can mix, is there anything that you'd call out in terms of, you know, being able to do? No, I mean, I think we've introduced. We're spending a bit of money this year to introduce a bit more flexibility into the network next year, to be able to swing between Sleek and Standard. Because obviously, you know, the hard seltzer volumes didn't come through to the extent we had expected and the industry expected. So some Sleek volumes came off, and we're making sure we're flexible between standard and Sleek for the future, which is where the market seems to be sitting. Even though we've had good Sleek volumes this year with some of the innovative products, and we'll replicate the capabilities we had in Whitehouse and other plants. So there'll be no loss of capability through that. I guess finally, just in North America, from a destocking standpoint or inventory standpoint, your customers and where are we in that, in that? So I think, as I say, on our side of the market, so not in mass beer, we think that's through. But obviously, with the situation that occurred this year in mass beer, there must be some, I guess, some stock sitting in the system somewhere. But from our point of view, the customers we're dealing with are not hearing it and thinking about that. In terms of that kind of large brand and beer, you know, having difficulties this year, did that have any sort of secondary impacts on you or—y ou're not in beer, but I'm, I'm just wondering, as footprints or? No, not really. You know, we didn't see it. Obviously, some of that went with, you know, with the captive can- maker. Some was, you know, as announced with one of our peers. So we didn't really see any direct or indirect impacts, I guess. I guess this is a seasonally slow period in North America and in Brazil, we're getting into the summer, been a very volatile year. Can you talk about Brazilian demand as we go into 2024 and Yeah, it seems to be strengthening. So we've had a good, a good run of months that is earlier than normal for the summer season. So September, October, November, all strong. I think we need to see that persist through December, January to be absolutely sure where we're at. But, if that does persist, then, you know, we've got a good recovery going on in Brazil, and the market might even get back to flat for the year, which after a pretty poor first half, would be a, you know, a strong second half. You know, I think the debate that was going on in the industry is, would the recovery come this summer or next summer? You know, we'd always been thinking this summer, and then with the poor first half, we began to wonder, will it be delayed into 2024? So yeah, we're hopeful now that, you know, we're seeing a good recovery this year, and that will obviously help the situation in Brazil, you know, generally for the can makers. Yeah. And there were some kind of substrate shift dynamics during the pandemic from cans to glass and maybe back. Can you remind us sort of where we are in that? Yeah. I think there was a very strong shift into cans from, you know—t here was a long-term shift into cans. Yeah. And then there was a very strong additional shift into cans between sort of 2018, 2019 and 2022, driven by the lead brewer in the market. And then they made a tactical, which we always felt was temporary, switch back into returnable for reasons of inflation on the cans. And I think the evidence suggests that that was a short-term tactical move, and that now cans are, you know, backing growth. We obviously don't know exactly how they'll play that into 2024, but normally, they, they want to hold share, and so we'd expect them to compete also in the off-trade. You talked about sort of utilization in North America. I guess, Brazil, it's maybe a more volatile market. I don't know how you'd characterize supply-demand in Brazil, and then maybe related question, there's a, you know, number three brewer there that had financial distress, like the impact on the market. Yeah, they're out of that now. Yeah. So just to take that one first, you know, their judicial restructuring process is finished. It's all cleaned up. I think, you know, ourselves and one of our peers has talked about that being over, and we're very comfortable with the outcome, and they're trading well. So, you know, I'm glad to say that was, you know, it was an unexpected turbulence in the air that looks like it is over. I think Brazil did run into quite a significant overcapacity situation at the back end of last year and going into this year, and people took action, and we slowed some ramp, and we stopped the building of a new plant there. So we and that's still fully stopped. And we will again curtail some capacity in 2024 to be balanced in the 90s utilization. So we'll basically take a line out, and that line will be, you know, properly down for the year. And then if this growth continues, I think we'll see Brazil do what it always did, which is, you know, put everybody under pressure again very quickly. Yeah. We're already seeing some, you know, shortages on particular sizes in particular regions. So, I think it could correct very quickly if this level of growth continues. I had a question, and it's not specific to Brazil, but maybe just Americas or Europe as well. I think historically, can volumes were viewed as, maybe recession resistant or very defensive. You know, over the last 5 years, 5-plus years, producers have talked a lot about premiumization. So you have slim cans, you have new categories. Just wondering, like, in a period of consumer stress or if we think, you know, things worsen in 2024, do you think the bev can is— is there a kind of a discretionary component of bev cans that just did not exist in previous cycles, or is there anything from this year in the consumer stress that you've seen that would suggest that or? Yeah, I don't think so. You know, I think that it's still a relatively affordable— Yeah. T reat, right? So if you take, consumers coming under pressure, we'd typically see out-of-home holidays falling away— Yeah. A nd at home, you know, being more resilient, and that in the at-home occasion, the desire for something, you know, not just drink, eating, you know, very basic, but having some treats within there. So I don't think we've ever seen that, you know, some of the more specialty or premium products have suffered. And we haven't seen that, particularly this year— Yeah. I n Europe, where there is clearly some degree of pressure on the consumer with energy prices and mortgage rates. So in fact, the people that are suffering are mainly mass beer players who aren't pricing competitively in the market. They're the ones that are suffering the most, rather than people with a proposition, with a premiumization. So no, I think we are still resilient to, to lower economic activity. And the only possible exception, but it is a bit speculative, is that this year there was still some post-COVID reaction in terms of people wanting to go on holidays or wanting to do out-of-home activities, having been restricted in that over the previous years. So that, that is a possible hypothesis. We've not got any real data to suggest that. Yeah. But I think all of this washes out into 2024, and we'll be in normal trading and things. Maybe just rounding up on the regions. Europe seems like there's been a little bit more stress there recently. Can you talk about Europe going into 2024? Yes. I think, you know, clearly the brands expected a better summer, and built stock for that. So we had a good June, a good second half of May. July was still going quite strong when we did our Q2s, and then it really fell away in, you know, August and September. So I think then there was some destocking activity, and now we're seeing people running quite tight on inventories through to the year-end, probably running for cash a little bit and being a bit cautious about where the consumer is at. So, you know, we've seen all the numbers now from the major can makers in Europe. So clearly, the market was off 1% or, you know, 1%-2% in Q3, and we think Q4, it won't be so different. So, you know, the question is: How does it look into 2024? Again, I think we'd expect to see brands leaning more onto volume, having taken a lot of price and suffered volume losses. But obviously, we have to wait and see just to what extent, you know, we get back there. So, I think like all three regions, in a way, if you go back to 2019, Europe was 6% growth, U.S. was 3%-4%, Brazil was 10%. You know, in a way, the question is: Has anything fundamentally changed to mean that those growth rates shouldn't be achieved? In my view, nothing has fundamentally changed. I think the trends that were there in terms of innovation, sustainability, the switch from returnable in Brazil, I think those fundamental trends continue, but we've obviously been held back by significant retail price inflation and consumer weakness. So, so really, we're talking about what, what speed do you get back to that kind of growth rate? And I think we'd be thinking that Europe again should be in a low single-digit growth, you know, next year for beverage cans. But we need to wait and see exactly where the brands pitch it, and we'll know more about that, I think, in Q1. Right. In terms of trend, volume growth in Europe being higher than North America, can you talk about some of the drivers there, or at least we've seen that in recent years? Yeah. I mean, Germany obviously is a big driver. So Germany went through a period with very low can volumes as a market. It has very low, therefore, per capita consumption relative to other developed economies, and so it's on a long-term path back to a more normal rate. So even in this year, we've seen growth numbers, you know, in the high singles for Germany, while the rest of the market suffered. So that's a big factor. There's still some glass substitution on the beer side. There's still some plastic substitution in sort of Eastern Europe. And then I think the sustainability trend is big in Europe, so I think that affects brands thinking about the pack mix between cans and plastic. So that was definitely something we felt in 2018 and 2019 was driving growth because there wasn't a differential between PET margins and can margins for the big customers. So it was easier for them to switch into cans in Europe, you know, what we could see. So those are the two or three factors that drive Europe a bit ahead of the U.S. Maybe on the financial side, can you talk about the step-up in cash in 2024 and, you know, the cash generation that you've seen? Yeah, sure. So yeah, I mean, clearly, this year's been a strong working capital inflow for, as we've kind of destocked ourselves. And that progress has gone beyond where we would have originally set out at the start of the year. So we, we'll close this year out with approximately $700 million of liquidity, maybe a fraction ahead of that, of which circa $300's in cash. And then as we go into next year, what you'll find is that our Business Growth Investment program drops away because we've now got 2-3-year runway of, you know, broadly, of earnings growth that's broadly investment free, other than, you know, small, small flexibility projects that we will do. So, so our Business Growth Investment will drop from circa $300 million this year to circa $100 million next year, and then lower again for 2025, 2026. And then in terms of target leverage range and dividend, can you just touch on that? Yeah. So we're at 5.7 at the end of Q3. We will, you know, our capital allocation policy will be a sustainable dividend, first and foremost. I think that suits, you know, both the majority and minority investor base, and then deleveraging beyond that. But I think realistically, with the cash profile that we'll have over the next couple of years, a lot of that deleveraging will come through the earnings growth rather than substantial net debt reduction. Right. Questions. Oliver, you talked about promotional activity in North America. I'm just wondering if there's similar things you could say about Latin America or Europe, slightly different markets, but— Yeah, I think, I mean, if you look at the growth in Brazil in the last few months, it would suggest that the brands have gone a bit more aggressively back into retail. We talked about it, but you know, what, what went wrong for the can in Brazil was the growth in LME, priced in dollars— the growth in Midwest Premium price in dollars, the growth in conversion costs of aluminum price in dollars with the real weakening. So that inflation that we saw everywhere was particularly exacerbated in Brazil. And so the brands did push those price rises through into retail, and that obviously significantly affected volumes. And even with that, they complained they didn't make the margins they wanted to, which is why, you know, Ambev pushed back into returnable. So, I think it's clear that in the second half there has been a push with the input cost moderating. There has been a push back into more competitive retail pricing, and that has sort of met a consumer. I think they've had 3% GDP growth as opposed to forecast 0 at the beginning of the year. That's met a consumer who's obviously feeling a little bit stronger. So that's, you know, would underpin the growth that we're seeing. So, and then in Europe, I think it's still very mixed, you know, and I think, you know, the customers a little bit, our impression, sitting on their hands till the year end, and working through a business planning cycle to figure out, you know, exactly what their strategy is for 2024. We remain confident that there should be an increase in promotional activity because all the logic would point there, but, you know, we do need to see it actually happen. Yeah. In terms of the trend volume growth by region that you kind of gave, not that you necessarily see those next year, but substrate substitution, is it a point or a couple points in terms of those underlying growth rates? And is that mostly from glass and a little from plastic? Or I don't know if it's possible to sort of generalize. Yeah, no, it's definitely a decent portion of it because, you know, if you take beer and carbonated soft drinks in Europe, they don't have a lot of liquid growth. So, you know, we are benefiting definitely from packaging substitution, either out of some glass, particularly two-way glass, or as we say, out of plastic. And then in North America, again, I think that, you know, the CSD players were pushing hard into plastic in the period up to, say, 2016, 2017. And then we're more benefiting from them, just sort of pulling back on that journey and just rebalancing back into cans. And certainly even two years ago, we were getting quite strong volume projections from our major CSD customers in cans. So I think there is a desire to balance the portfolio that way. And so that is a mix of packaging substitution and the innovation that's sitting in that, in that portfolio. So yeah, I mean, the can definitely benefits from packaging substitution in its growth numbers. Is it possible to say in North America whether you've seen, you know, a little bit of shift there because the brand specifically, sustainability concerns around plastic? Because that's something that was talked a lot about before the pandemic, and there was questions as to whether it sort of maybe was on hold during the pandemic or- Yeah, no, in fact, we're still gaining share. You know, if you look through the period, and including through the, you know, period where most of them were in volume decline this year, we've still, we've still gained share versus other substrates. Obviously, I mean, they're very heavily invested in plastic, right? And a big part of their portfolio is in plastic, so they're never gonna say anything too strong or publicly around this. But we, we clearly, and, and they don't say this is why we're coming with this volume projection, but we're clearly seeing volume projections that go ahead of just liquid growth in the market, and they're significantly ahead of where we were 5-10 years ago. So I think it's a reasonable proposition that there's some shift going on there to de-risk their portfolios. I guess in Europe, glass substitution, I mean, there's a view that maybe glass is viewed as a premium product more in Europe than it is in North America. I don't know if you'd agree with that, but. It certainly occupies that space in the beer shelf or in the bar. I think that is more prevalent in Europe than in North America. I think that's fair. So brands use it to premiumize, to get higher price per liter. But clearly, glass had a lot of input cost inflation in Europe with the energy crisis, so, you know, that's held them back this year a bit. But I think they'll have their place because I think brands will want to do that, that hierarchy, and that's fine by us, right? We're happy to grow with the volume in the mass and the mid-ranges. We do grow actually in some sort of craft type spaces as well. Yeah. Maybe just shifting to the cost side. I mean, you obviously have pass-throughs on aluminum, but as you look towards 2024, are there any kind of items on the cost side from, like, an escalator perspective that we should kind of keep in mind? And, you know, can you just talk about cost categories? Yeah. So most, most of our contracts work with, PPI type— Yeah. P ass-throughs. Actually, in the U.S., we have a mix of some labor index and PPI type pass-throughs that better reflected our cost structure here with some of the soft tolling by our customers, where they buy the aluminum. And as we look into 2024, I think we're gonna get good recovery in those contract structures in all three regions. So, and then the other piece we moved into in the energy crisis in Europe was direct pass-through of energy with big customers in Europe. So we'll see some energy costs falling, but no EBITDA impact from that in Europe. So I think the only area where we're sort of keeping a watching eye is that I think the repricing season in regional customers in Europe has been probably a little bit more competitive than we originally modeled, and there is some input cost inflation on the metal side. So that's probably the only risk, if you like, to price costs going into 2024. Is that a sort of a Europe-wide statement, or is it maybe just a couple individual markets or? Yeah, I mean, those regional customers are more based across the Northern European— Yeah. Markets. It's probably particularly focused there. Got it. Got it. Any, any questions from the room? Just on that [audio distortion] Y eah, a relatively small, sort of 10%, is on those kind of one to two-year type contracts on a regional basis. That growth, hard seltzers. Have you restarted another production program and more growth CapEx? Quite a lot in the short term. So I mean, you know, when we talk about being in the low 90s utilization next year in North America, that does mean we've got good runway to grow in 2025, 2026. So I think you'd need to see those categories growing, you know, significantly ahead of where they are today. So we'd- Do you think the growth in that is now permanently, or do you think it's a temporary pause in the growth? I mean, hard seltzers do continue to be a bit weak, to our surprise. You know, we thought, obviously, the whole industry thought they wouldn't stop growing, even if we thought they would grow less fast. And so we didn't see the reversal coming. And it's true that, that it's not that they're really fully stable yet. I mean, certain brands are really winning in that space, so we think it's stabilizing in that sense, but we're still not seeing the full. F or me, we've not seen the full stabilization of the whole category. So yeah, I don't think it's gonna turn into a big growth story next year from what we're looking at. You look at the valuation of the stock and the dividend yield, you think that there's something that investors are maybe most skeptical about, whether it's, you know, just long-term industry growth rates or something company specific or— I'm just kinda curious why. Yeah, honestly, not sure. You know, I think clearly it's been a difficult two years since launch in terms of expectations set and versus where we've had to reset them to. So that may be a drag. But look, we, we see it, you know, that the dividend is sustainable, and we can see, you know, our plans for the next couple of years. So, so yeah, it's hard to say exactly what it is that's, that's causing the drag. And in terms of, you know, you have a large holder, in terms of what you can articulate or what they've articulated, you know, from a long-term perspective, in terms of maybe increasing the free float. I don't know if there's anything that you can— Yeah, nothing really to add. I think they've been public about the options they have at their disposal, of which one is, you know— Yeah. Obviously, the AMP stake. But nothing to add at this point. Clearly, no desire at this point to do anything with it. Always tailwinds and then, closure with the savings aren't added in yet. Have you tried to, or are you willing to put out what is, like, a run rate earnings target, or what the underlying earnings power of the asset base might be when, you know, all these kind of temporary things, positive, negative, wash out? Yeah. Probably don't. I'm not gonna put an exact number on it today, but I mean, if you take the SPAC, you know, whatever it was, 1.1, there's a significant amount of FX, you know, that's come off that, and you can do that math. The seltzer thing is a reduction both in volume, but also in mix, and that's a pretty significant number. And then we've also not built out the network to the level we said we would, and as you say, we've taken some capacity down. So, you know, call it $6 billion or $7 billion, less than was in the projections. So, you know, you can take those big categories, and obviously, they bring you down, you know, quite a long way. But nevertheless, you'd still say from where we are today, that gives us quite a lot of growth. So, you know, that's the positive, the positive angle on it. If you think about 2024, where we stand now, like, what do you think would be the biggest swing factors for you that you're not sure about right now? Probably European, yeah, volumes. You know, they're the least, you know, clear right now. I think North American volumes, we, we sort of have reasonable visibility on. Brazil, if this trend continues, we've got decent visibility on. I think Europe, we need the customers to come to the table with, you know, exactly what they are planning to do in, in 2024. Right. You had a competitor that acquired one plant in Germany. It's a very consolidated industry, but is there any room for bolt-ons or M&A, or do you see anything? It's either yourselves or others. Yeah, it's difficult, you know, particularly after the Ball-Rexam merger. Yeah. You know, in these markets, there was clear demarcation of what could be achieved. I think single plant deals are possible. I mean, we couldn't do that one with our market share in Germany. So yeah, we could do a single plant deal somewhere with independents where we're not present. But there's relatively few of those in our markets. So yeah, I don't see a lot of M&A activity at the moment. Any thoughts? Great. Well, all of them. Thank you very much. Thank you very much. Thank you. Thanks so much.