Good day, everyone, welcome to the Ardagh Metal Packaging S.A. second quarter 2023 results call. As a reminder, today's conference is being recorded, all phone participants are in a listen-only mode, later you will have the opportunity to ask questions. Now to get us started with opening remarks and introductions, I am pleased to turn the floor over to Mr. Stephen Lyons with Investor Relations. Please go ahead, sir. Thank you, operator. Welcome everybody. Thank you for joining today for Ardagh Metal Packaging's second quarter 2023 earnings call, which follows the earlier publication of AMP's earnings release for the second quarter. We have also added an earnings presentation onto our investor website for your reference. I'm joined today by Oliver Graham, AMP's Chief Executive Officer, and David Bourne, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the second quarter can be found on AMP's website at www.ardaghmetalpackaging.com. Remarks today will include certain forward-looking statements and include use of non-IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward-looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release. I will now turn the call over to Oliver Graham. Thanks, Stephen. We experienced a challenging quarter against a global backdrop of sustained inflationary and household financial pressures, which was impacting on consumer demand. We recorded global shipments growth of 5%, which included strong growth of 18% in North America and a solid 2% growth in Europe, we faced difficult conditions in the Brazil market, where shipments declined by a double-digit percentage relative to a strong prior year comparative impacting profitability. Our performance in Europe proved resilient and was modestly ahead of expectations, supported by the anticipated stronger recovery of pass-throughs on energy costs following the contractual actions taken last year. Shipments growth reflected our broad European presence and diverse customer mix. North America, we recorded strong shipments growth, driven by a favorable customer mix on the ramp-up of our contracted new capacity. Our short-term profitability was impacted by timing issues on end sales and actions taken to right-size inventory, which did drive strong cash generation. Adjusted EBITDA for the company declined by 17% versus the prior year quarter, but is anticipated to improve through the remainder of the year on further volume growth. Europe's improved input cost recovery and more favorable prior period comparisons in the second half. Nevertheless, we have reduced our full year guidance due to anticipated further weakness in the Brazil market and a delay related to the financial recovery of customer volume commitments in North America. We continue to project positive adjusted free cash flow in 2023, with further improvement into next year, and are committed to our quarterly $0.10 dividend. Our strong Free cash generation in the first half allows us to raise our full year guidance to $150 million cash inflow from $100 million. Global demand remains restrained by sustained retail price inflation. Promotional activity continues to improve, albeit modestly, and ahead of a broader demand recovery, we continue to manage our capacity in a disciplined manner. This includes a mix of curtailment actions to balance our footprint ahead of growth in demand, as well as more permanent action where necessary, such as our intention to close our remaining steel lines in Germany this year. As previously outlined, we target utilization in the low to mid-90s. The AMP management team has deep experience across industry cycles, and our discipline reflects our belief that secular tailwinds favoring the beverage can remain intact. With our growth investment program completing in 2023, we are strongly positioned to capture our share of this future growth. On our sustainability agenda, highlights in the quarter included: In Brazil, we achieved certification by the Aluminium Stewardship Institute of our facility in Manaus, as well as our central office in São Paulo, which follows on from the certification into some of our European operations last year. We also published our second green bond report, providing an update on the allocation of the proceeds of our green bond issued last year towards various eligible green projects. Turning our attention to AMP's second quarter results. We recorded revenue of $1.3 billion, which represented a decline of 4% on a constant currency basis, as the pass-through of lower metal prices offset the contribution from higher volume mix and non-metal input cost recovery. Adjusted EBITDA of $151 million was down 17% on the prior year on both a reported and on a constant currency basis. The impact from higher shipments was more than offset by a less favorable mix of cans in the Americas, actions to accelerate the right sizing of inventory in North America, and higher operating costs due to fixed cost under absorption. Total beverage can shipments in the quarter were 5% higher than the prior year, with 18% growth in North America, 2% growth in Europe, offsetting a double-digit percentage decline in a softer Brazil market. The working capital inflow, net inflow of $171 million, compares favorably with a net outflow of $70 million in the prior year quarter, and drove a strong overall cash performance. Looking at AMP's results by segment and at constant exchange rates, revenue in the Americas in the second quarter declined by 9% to $700 million, despite higher shipments growth, mainly due to the passer of lower metal pricing and a less favorable mix of cans and ends in the quarter. In North America, shipments grew by 18% for the quarter, supported by our growth investment program, which positioned us favorably for future growth. Demand remains restrained by sustained higher retail pricing, but with greater resilience experienced in non-alcoholic categories, which represent the majority of our North American business. There are also pockets of strong growth from which we benefit in segments such as energy, functional energy, spirits-based drinks, and other crossover varieties. We have experienced a broadening of promotional activity, though the depth of this activity, especially given the scale of retail price rises, remains below what we would consider normal. We are encouraged by the increased annual growth in shipments, the sequential quarterly growth, as well as our strong momentum into the summer months. This supports our forecast for shipments in our North America business to grow by approximately a high single-digit% this year. In Brazil, second quarter shipments declined by a double-digit%, underperforming the high single-digit decline in the market. The market declined against a strong 2022 comparator when the country emerged from the COVID-19 lockdown. Market demand remains challenged by consumer inflationary pressures and a challenging macroeconomic backdrop, pressurizing consumption. Our underperformance in the period reflected customer mix effects, as one of our customers' volumes was impacted by destocking as the customer trades through its reorganization process. Our performance was also affected by the pack mix shift towards returnable glass bottles, which we now expect to last for at least the remainder of the year. Profitability was also impacted by a lower ratio of ends to can sales in the quarter, which we view as a once-off impact. We now forecast flat shipments growth for our Brazil business in 2023, and we will take additional curtailment to balance our network, including the slower ramp-up of volume in Alagoinhas. We reiterate our confidence in the medium-term growth characteristics of the Brazil market, which has historically been a highly attractive market. Adjusted EBITDA in the Americas decreased by 28% to $87 million in the second quarter, primarily reflecting more challenging conditions in Brazil. Despite overall shipments growth, our performance was negatively impacted by increased fixed cost under absorption and some timing related issues in North America, including our decision to accelerate the right sizing of our inventory position through additional Q2 production cuts. This decision on inventory, while resulting in a short-term impact to our Adjusted EBITDA, helps improve our working capital position and drove strong cash flow in the period. In 2023, we expect shipments growth in the Americas of a mid to high single-digit%, underpinned by continued strong shipments growth in North America. Fixed cost under absorption, net of our mitigating curtailment actions, remain a headwind to our performance, and we will continue to take the necessary action to balance our capacity in line with demand. We anticipate an uplift in EBITDA generation into the second half of the year, supported by our momentum on shipments growth in North America and the seasonally stronger summer selling period in Brazil. Reflecting our challenges in the Brazil market and a delay related to the financial recovery of customer volume commitments in North America, we now expect a decline in EBITDA for the Americas for the year overall. In Europe, second quarter revenue increased by 4% on a constant currency basis to $555 million, compared with the same period in 2022, mainly due to a more favorable input cost recovery. Shipments for the quarter grew by 2% on the prior year, which we believe is broadly in line with a resilient market. Consumer demand strengthened across the quarter, supported by improved weather. This positive trend has continued into the summer. The non-alcoholic beverages market has proved more resilient, in particular with strong growth in the energy drink segment. Beer consumption in Europe has been more pressured. We have performed well due to our broad-based portfolio of customers in the sector, where there have been significant winners and losers, depending on the pricing strategy being pursued. Second quarter Adjusted EBITDA in Europe rose by 5% on a constant currency basis to $64 million, as the contribution from higher shipments and improved cost pass-throughs offset higher costs. Performance was modestly ahead of our expectations. For 2023, we continue to expect shipments growth in the order of a low single-digit%, and for a significant step change in EBITDA in H2 relative to the prior year through stronger input cost recovery. During the second quarter, we commenced production at our new line in the La Ciotat plant in southern France, which is slowly ramping up this year. As mentioned in my opening remarks, our intention is to close our remaining steel lines in Weissenfels, Germany, by the end of this, the year. This follows the installation of the two new efficient aluminum lines, the second of which will become operational from early next year as we migrate fully from our steel lines, which concludes our growth investment program in Europe. The earlier closure of the steel lines will help improve our 2024 financial performance through a reduction in our fixed cost under absorption. I'll now briefly hand over to David to talk through our financial position before finishing with some concluding remarks. Thanks, Ollie, and hello, everyone. We ended the quarter with a liquidity position of just over half a billion. Our adjusted operating cash flow in the period was strong due to the success of our working capital initiatives, including our decision to accelerate the right sizing of our North American inventory and our regional mix. We will continue to focus on working capital efficiencies. Our early visibility on this success allows us to increase our guidance to a full-year working capital benefit of $150 million, up from our prior year guide of circa $100 million. In the quarter, AMP incurred additional growth CapEx of $70 million and maintenance CapEx of $26 million. As previously indicated, our revised growth investment plans are well advanced. Cash outflows comprise the finishing of projects already underway. Our expectation for the current year is unchanged, which includes growth, investment of just under $0.4 billion, with a cash flow element under $0.3 billion. We anticipate that growth CapEx will fall to circa $0.1 billion in 2024. Our net debt was relatively unchanged on the quarter, which was ahead of expectations. Our leverage metric ended the quarter at 6.2x last 12 months Adjusted EBITDA, due to lower Adjusted EBITDA in the denominator. We expect this to represent a peak in the leverage metric, with a reduction over the remainder of the year through earnings growth. Our projected 2023 year-end metric has increased to 5.5x last 12 months Adjusted EBITDA, following our revised full-year earnings guidance. A meaningful reduction in leverage is anticipated in 2024. As a reminder, in addition to our strong liquidity position, we have no near-term bond maturities, with no bonds maturing ahead of 2027 and no maintenance covenants on our bonds. We have today announced our quarterly ordinary dividend of $0.10 per share to be paid later in September, in line with our guidance and supported by the cash generation outlook of our business. Our capital allocation strategy will continue to prioritize dividend sustainability and deleveraging in the near and medium term. With that, I'll hand back to Ollie. Thanks, David. just before taking questions, I'll just recap on the main messages. firstly, our global shipments grew by 5%. That was led by strong growth of 18% in North America and a solid 2% in Europe. with the shipment declines we had in Europe, in Brazil, higher fixed cost under absorption and some of the timing-related issues in North America, we did end with Adjusted EBITDA below expectations in the quarter, although cash flow generation was very strong. We anticipate Adjusted EBITDA to return to growth in the second half as shipment growth continues. as demand normalize, we're focused on the disciplined management of our capacity, such as our actions in Europe, and on improving our business through actions in operations, in procurement, supply chain, where we have very strong teams in place. These actions underpin our expected earnings growth in the years ahead. With our investment program now well advanced, we anticipate improved adjusted free cash flow generation in the remainder of 2023 and beyond. This, in turn, supports our dividend policy and balance sheet deleveraging. We're lowering our guidance for 2023 to include global shipments growth of a mid-single-digit% and Adjusted EBITDA between $630 million and $640 million. Our guided free cash flow remains neutral, thanks to increased working capital inflows. In terms of guidance for the third quarter, Adjusted EBITDA is anticipated to be between $170 million and $175 million, which compares with a prior year Adjusted EBITDA of $143 million on a constant currency basis. Having made these opening remarks, we'll now proceed to take your questions. Gentlemen, thank you. To our audience joining over the phone, if you would like to ask a question, you may signal by pressing Star and One on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Press Star and One to ask a question, and we'll pause for just a moment to allow everyone the option to signal. We'll take our first question today from the line of George Staphos at Bank of America. Hi, everyone. Good day. Thanks for the details. Thanks. Ollie, David, a couple of questions for you. First of all, you said that America's EBITDA should be down this year, and we'd imagine, obviously, Brazil is the bigger factor there. You aren't implying that North America will be down, are you? Just wanted to get some confirmation there. More importantly, can you go a little bit further into what was the comment or what was behind the comment on delay of the financial recovery of customer commitments in North America? What does that actually mean in terms of your results and the outlook? Sure. No, you're absolutely right, George. We're not saying that North American profitability will be down in the year. We're not saying that. As you say, in the Americas. Overall, Brazil is definitely the major factor. Look, it's in the public domain. You know, we had a set of volume commitment clauses in our customer contracts in North America that were supportive of our investment program, which is something we've talked about on these calls. We were expecting to receive compensation around one of those this year, and you know, we had outside advice that that was pretty secure. You know, we attempted to resolve that in a collaborative fashion, again, with outside support, and that hasn't been successful at this point. We still remain confident in some, in the recovery, but we can't see that coming in, in 2023 at this point. Okay. That's fine, but that is, you would have expected to have been able to resolve that this year because of what had been in your contracts. Would that be fair? The external advice we'd received and the process we were in. Yeah. That's right. Okay. Just poking at that one last time, and I'll let it go. Is that a function of other market participants, you know, perhaps interfering in your ability to gain on your contractual commitments? Is there a competitive factor that we should be mindful of or no? Then last, and I'll turn it over, the timing, basically, the lower than prior year shipments on ends. Can you go through what was behind that and the effect on mix? Thank you. Sure. No, it's, it's nothing to do with competitive dynamics. It's just different interpretations of the contract. Yeah, no, no competitive angle to that. Yeah, we had a couple of ends effects in the quarter. We had one, just a, a natural one that can happen in North America, where some ends sales got out of line with can bodies. You know, they are on different ordering cycles. That'll resolve very rapidly through Q3, Q4. It's a few million dollars. You know, it's relatively minor in the context of the overall year, but it did impact the, the quarter. A more material one was in Brazil, where we had anticipated some degree of imbalance just because we'd, we'd had some buildup on the positive side. We got a much more sharp reversal, and that was linked partly to the, some specific factors around the judicial reorganization and, and the way that that customer is now ordering, which is obviously different than, than previously. That was more material because more of the profit is, in the end in Brazil for various reasons. That did have a bigger impact on our, on our results. Thank you very much. Thanks, George. Next, we'll hear from the line of Anthony Pettinari at Citi. Good morning. This is actually Brian Bergmeyer sitting in for Anthony. You know, maybe just following up on George's question a little bit. I'm wondering if you can provide a little bit more detail on Brazil. You know, it feels like a lot of moving pieces with some customer restructuring and destocking, but you're also, you know, forecasting a stronger end to the season. You know, do you view destocking as kind of largely completed now? I know there was a customer that you were sort of over-indexed to, and you needed to pull back from. You know, is that resolved now? Just any more detail you can add there would be great. Yeah, sure. Look, I think Brazil is, is obviously going, still going through difficult economic times overall and much more impacted by the inflationary environment across the world with the devaluation of the real. The inflation, therefore, much more impactful on cans in Brazil because of the price of the LME, the Midwest premium, and the pricing of cans being heavily in $. That is the general macro context where although inflation has impacted us in all markets, I think it's particularly been severe in Brazil. And then the piece that we've talked about and others have talked about is the, the 180 degree change in strategy by, you know, the major brewer down there from a, what had been a strong pivot into cans, to, to go back more into returnable bottles for short-term reasons. I think at the beginning of the year, we had the sense that that would unwind more in the second half with, you know, the inflationary pressures reducing on the can. Our sense now is that it's not clear that there's a significant recovery in that in the second half, you know, and possibly could even persist somewhat into 2024. I think that's why we've pulled down our, our guidance, plus, obviously, we were down further than we anticipated in the, in the quarter. That's a, a significant piece because that's where we saw some growth coming. The second piece was with a major customer that went into a judicial reorganization. We think that with the change in order patterns that that necessitated, you know, that they did some destocking in April and May. They seem to be back trading well in June and July, they're doing well in the market, we're not worried about that. It did impact their ordering patterns onto us, as I said in my reply to George, both on can bodies, but also particularly on ends. That was a very unexpected one-off impact in the quarter that we think is washed through. I'd say overall, yeah, we don't think there's a major customer stock issue. I mean, maybe a little bit in the market from being slightly slower than realized, but definitely the overall market is down and looks like it'll stay down for a little bit longer. That's, as I say, why we called down our guidance for the year. We're very well-balanced. In terms of the question about our portfolio, I think we're very happy with our portfolio in Brazil, where we're balanced across the major customers. We don't have any concerns there. I think it's just, you know, mostly market, and then, as I say, some very specific one-off issues that arose in the quarter, you know, unexpectedly. Got it, got it. Thanks for all that detail. You know, last question for me, you know, Europe, I think, was a little bit ahead of our forecast in 2Q. You know, can you maybe remind us, is there like a key trigger date for your PPI cost pass-throughs? Did that take effect in 2Q? You know, relative to your expectations at the start of the year, is cost inflation in Europe maybe coming down a little bit faster than you might have forecasted? Thanks. I'll turn it over. Thanks, Brian. I guess the second one first is cost inflation is pretty much where we thought it would be because we were prudent around hedging out and contracting most of our big cost inputs for the year. For our customers, they should be seeing some benefit from LME hedges coming off through the year. There should be some input cost moderation for them and possibly in other input costs as well. For us, in particular, the big one, we'd hedged out the energy in 2023, in 2022 for this year to make sure that we were prudent around what was still a very unclear situation geopolitically. I think that that is what we see on the input cost piece. The PPI recovery, as we said at the Q1, it does accelerate through the year. We see in Q2 more than Q1, mainly for accounting reasons on the recognition of the inflation recovery. That does mean that we have higher input cost recovery in our numbers in H2 relative to H1, which is one of the reasons we see our H2 EBITDA higher than H1. Once again, to our phone audience, that is star and one, if you would like to ask a question. We'll hear next from Arun Viswanathan at RBC Capital Markets. Great, thanks for taking my question. I guess I just wanted to ask, it sounds like in North America, how would you kind of assess the overall market? You know, one of your peers is thinking about, you know, down 3%-5%. Obviously, you know, you're, you're well above that. You know, given your strong performance, I guess, this year from a volume standpoint, will you be facing tough comps next year? Does that mean that, you know, in North America, you'll, you expect a decline in volumes next year? No, absolutely not. Look, we see the market probably slightly more favorable. I mean, it's hard, right? Because we don't all have great data for it at the moment, so you're sort of picking up a mix of different data sources. We'd still be more sort of flat, maybe slightly negative, maybe slightly positive. Obviously, we're, you know, we're positive about our performance, and we're positive about our performance to the year-end. I think we're also very positive about our 2024 outlook. I think one thing that's happening for us at the moment is in Europe and North America, we're getting a much better stabilization and visibility on our customer forecasts, our forecasts, and the realization of volumes against those forecasts. That really strengthened, I'd say, from sort of mid-May onwards, we really saw that come through. You know, we have good visibility into 2024. We have contractual positions that we're confident will come through. We definitely expect further growth in 2024 in North America. Okay, great. Thanks. Just on the Brazil situation, you know, assuming that the, the, the challenges from the inflation, I guess, persist potentially into 2024, are there further actions that you would contemplate, maybe some reductions in capacity or anything that would reduce the, you know, decremental margins and fixed costs on absorption? Yeah, on the current forecasts, to protect our position. Just lastly, this shift back for returnable glass, do you think that that is a broader trend that could continue and potentially spread to other markets in Asia, a glass-bottled beverage, or is it, you know, increased consumption at, you know, on-premise? You know, how does this? You know, I guess, what do you feel as far as this being a structural event and the possible potential for it to spread to other regions? Thanks. No, thank you. I mean, we definitely don't see this as a structural event. I think the structural event that occurs in every market over time is the decline of returnable into one-way packaging. There's some good reasons for that structural event around consumer preferences, around the economics of off-trade consumption versus on-trade consumption. This is a very much one-off, short-term impact in our view, linked to some extreme inflation sitting in the can relative to returnable bottles. Also, you know, the particular needs of customers at a time when they need to generate short-term cash versus necessarily think about their long-term market position. I think that the same dynamics that occurred in 2016-2019 will occur again, which is off-trade volumes will start to grow, and at that point, people will move back into the off-trade to defend share and defend brand equity. Yeah, for us, this is a clear short-term impact. We're not in, you know, Africa and Asia, I wouldn't expect anything different to be happening, except for, as GDP per capita grows, you get a shift out of returnable packaging into one-way, as the consumer moves and organized retail, you know, takes advantage of one-way packaging, particularly in beer and soft drinks, to drive traffic. Yeah, we're very confident that this will reverse. We're very confident the Brazil market has got significant growth in the years ahead. I think we're looking at a speed bump, and we had a particular speed bump in Q2 for some unique and unexpected reasons, you know, specific to ourselves. Thanks. Next, we'll hear from Kyle White at Deutsche Bank. Hey, good morning. Thanks for taking the question. In North America, just kind of curious how the quarter progressed for you guys, and how I think you talked about momentum carrying into July. How is July looking? What do you think the market growth rate was during the quarter in North America? Yeah. Hi, Kyle. We had a very similar shape to the one outlined earlier this week. April was a bit weaker, May and June strengthened, and July still looks good. We're confident going into the summer. We, as I say, think we're sort of picking the market as sort of flat to slightly negative. Maybe if, I mean, there's some players that you just, we've not got sight of, some of the newer players who could be getting quite a bit of growth that we don't see. You could imagine there's a tick up, but it's probably flat to slightly negative in our, in our perspective. I think, you know, as I say, we, we feel very confident about the, the pathway through to the year-end, and we feel very good about 2024 as well. Got it. I know you've touched on this quite a bit, but in Americas, is there a way to put a finer point on the profitability from a year-over-year perspective in Americas? I think you're down $33 million. How much of that was driven by the ends in Brazil? How much of it was driven by the right sizing of inventory that the actions you took there? Any way to actually put dollar amounts to some of these line items? Look, the year-on-year change was all Brazil. What you've got in the year-on-year change is some volume and some ends, and, you know, maybe David will comment on that in a second. I think those, you know, they're the specifics of that. I think versus our guidance, there was some in North America, and that was the two effects we've talked about. One was, again, end sales, slightly lagged can sales. The other thing was that because April was a bit weaker and we went into the first part of May, still, you know, not on the strongest side, we took more aggressive action around curtailment to control inventory. When the quarter strengthened strongly through the second part of May and into June, what that meant was we drove significant additional cash off the back of that improved inventory position. It did impact our EBITDA because of the increased under absorption on those assets when we didn't run the lines. The good news is we ended up, as I say, with a really strong cash generation in the quarter in North America, and the combination of that and other working capital measures means that we can, as I said in the remarks, up our forecast for working capital inflow by $50 million for the year, and that offsets entirely the drop in our EBITDA guidance. Free cash flow-wise, we're in exactly the same place for the year-end as we expected. Just to build on Ollie's point, Kyle, on Brazil, if you take the delta to prior year, you could almost call out 3 factors. You've got the post-COVID reopening coming into the prior year quarter, you know, which was a positive double-digit effect. You've then got the volume down in this quarter for us relative to our expectations, and you've got the ends rebalancing piece. I would attribute a third, a third, a third to each of those, i.e, all 3 are low double digit. Got it. That's helpful. Thank you. I'll turn it over. Thanks, Kyle. Our next question comes from the line of Gabe Hajde at Wells Fargo Securities. Ollie, David, good morning. Hi, Gabe. Good morning. I was curious if you can, I guess, speak a little bit about PPI escalators, de-escalators. I recognize that there's a decent amount of contract resets that are April 1, so we've got visibility into this year. I guess we have a little bit of carryover into Q1 of next year. I don't know if I look at the right indicator, but it looks like PPI is down this year, thus far, through the first 7 months. How would you think about or have us think about pricing in North America for next year? You know, relatedly, you guys have talked about kind of unspoken for or uncontracted business being a pretty small portion of what you do here in North America. Can you talk about that market at all? If it's, you know, sufficient supply or, you know, more customers coming to you that are sort of out of pattern, out of contract? Sure. Yeah, look, I don't want to overcomplicate the PPI discussion too much, but the truth is, most of our resets are Jan 1st, but in Europe in particular, and to some degree in North America, the accounting impact of that takes place much more Q2 onwards. That's why we talked about the acceleration of import cost, input cost recovery through the year rather than fully coming in in Q1. In terms of next year, I mean, in North America, we also have some slightly different indices where we use a mix of labor cost indexes as well as PPI indexes. As we look into next year, although there might be negative PPI indexes, we're very comfortable with the way that our inflation recovery should occur. Those resets occurred, you know, as we took over the business in 2016 through to 2020, where, you know, we got a much more secure inflation recovery into our North American contract. Looking forward into 2024, and as we've seen in the last three, four years, we feel very secure about inflation recovery in North America. In Europe, you know, we talked about it, we got the energy piece passed through separately. You know, we're not currently forecasting a great deal of over-recovery into next year in Europe. At one point, we thought there might be some over-recovery, there clearly is a bit of capacity in the market, we're being cautious around that number. The other thing we've been doing in the last few years is matching between our supplier contracts pass-throughs and our customer contract pass-throughs. We also feel, you know, pretty robust around that. On your question on uncontracted, there isn't a huge amount of uncontracted volume in the market, is our belief. We are, you know, 90% plus contracted through 2020 into 2025. And we think, you know, the major players in the market are in a similar position. There's a relatively small amount that's washing around at any one time. Clearly, there is now some capacity to meet that demand, but we still see the environment as fully rational. Yeah, my pricing slipped a bit from what was some very extreme levels for that smaller customer volume, but it's still in very healthy territory. Okay, thank you for that. I guess a little bit, you know, Kyle kind of probed on it in terms of July trends and sort of the acceleration that we've seen, and I think the commentary between yourselves and up here is pretty consistent in terms of promotional activity It is better, but maybe not what you'd like to, where you'd like to see it. I recognize that it's not perfect data, but it's what we have. When we look at sell-through, it's still tracking negative. You guys are kind of talking about positive shipments, you know, kind of sell in. Can you help us reconcile that? You know, we're kind of past the 2 big promotional holidays. We've got Labor Day out there, I guess, in September. Is it possible that we kind of get to September timeframe and there has to be a inventory correction on behalf of your customers? I'm just asking because this is the first time that I think I've heard a timing difference in terms of cans being sold in versus ends. I thought that stuff kind of happened real time with fillers. Yeah, look, it's just because when you order a consignment of ends, they're much smaller, right? You order a big truckload of ends, and you get a lot more ends like that than cans. You can get some imbalances just because of some order patterns. We wouldn't normally call it out, but one of them got a little bit bigger than normal in this quarter in North America. I wouldn't focus too much on that side of things. I mean, North America and Europe, we get some movements through the year, but by the end of the year, they usually reconcile. The only reason to call it out in Brazil is, again, because of the additional profitability sitting in the end, and also the very specific event that occurred in the quarter. Look, I think we need to see the whole market report. We won't see everybody, of course, but there clearly are some quite big differences in the market, alcohol, non-alcohol, and not being exposed to mass beer has been of benefit to us in this quarter and this half year. This is what we see, right? Year-on-year, customer mix plays through in our results. Sometimes we're up, sometimes we're down. Being on the non-alc side of the market, I think in this half has been helpful. We also had some very specific situations, as I say, with functional energy players and some of the innovation that's in the market, where, again, you know, we happen to, I think this, at this point, have a favorable customer mix. We think we have a pretty favorable mix on the CSD side in terms of bottlers and locations in this half. You know, these things can go up and down. Our belief, and I'm pretty confident in this, is there's not a lot of inventory sitting in the supply chain that needs to destock. I think we're just seeing across these different results and these different numbers, different pockets of the market and different pieces of growth or decline. I think we need to see the whole picture. Understood. Thank you, guys. Thanks. We'll hear next from Mike Roxland at Truist Securities. Thank you, Ollie, David, and Stephen, for taking my questions. The first question, in terms of your market, you just made a comment, Ollie, or a response to a question about not being exposed to mass beer, which has been a benefit. Given some of the moving pieces in mass beer or in the beer market over the last couple quarters, can you talk about possibly any share gains you may have experienced, whether it's be through CSD or maybe some of the other beers where you have more organic craft beers, energy drinks? Have you seen a shift away from mass beer into product categories where you benefited from what's happening in mass beer? Yeah, look, seltzers remain globally under quite a lot of pressure, but we actually had a decent quarter on, so I don't know if, if there was some shift back into seltzers. The spirits-based ready to drinks are going well. Again, maybe there was some shift into those spaces, but again, alc, generally, we think, was down a bit. And I doubt that there was a big shift into, you know, CSD. You know, that wouldn't be a normal, a normal shift, I don't think. I think most of those effects were going on within beer, and, and we didn't see it at the moment. You know, that, that wasn't something where we had, you know, the right side of that situation at all. It has impacted, if you like, any potential growth that we had, had planned in that space, you know, in the year. It's not that we've got any particular positives. There are some share shifts going on in mass beer, cans in North America, but they're not linked to that situation. There's just some, what I'd call, natural diversification of supply going on. Yeah, nothing particularly to report on from our perspective from that whole controversy. Got it. Appreciate the color. Just one last question. In terms of the right sizing of your inventory in North America, is there anything left to do in 3Q or 4Q, or has that largely been worked through in 2Q? No, no, it's more than being worked through to the point where, you know, we actually probably have to rebuild a little bit. Yeah, no, we by taking, you know, decisive action, you know, relatively early in the quarter, we definitely got into a good place because of the strengthening of the sales line during the quarter. Got it. Thank You very much. Thank you. Again, to our phone audience today, that is star 1, if you would like to ask a question. Jupiter Asset Management and the line of Ning Yang. Please go ahead. Your line is open. Hello, caller. Your line is open. You may have us on mute from your end. Hello? Hi. Sorry, I was on mute. Yes, go ahead. Welcome. Great. Matt, I have several question. First, on the top line, in terms of the contract visibility, I heard that you were talking about, you know, 90% of volume visibility contracted into 2025. Just wonder, so in terms of the contracting kind of mechanism, do you have some kind of certainty in terms of the pricing, and the volume on those contracts? And secondly, on the cost side, so if we were to think about, aluminum and energy cost hedging, usually how well in advance that you would hedge the prices? Yeah Just to assess, you know, if we were to think about 2023, 2024, energy costs compared to 2022 level, what would be the magnitude of shift? Sure. That will change by. All the customer contracts have pricing agreed with the relevant inflation clauses, that's all set in those contracts. Volumes are also agreed in those contracts. We have taken a more cautious perspective on the volumes listed in those contracts on the basis of the last few years. I think, as I said in earlier remarks, I think one thing that's been very encouraging in the last 6 months is the stabilization between our customer forecast, our forecast, and the outcomes we're seeing in Europe and North America. Clearly, we cannot say the same yet for Brazil, we need the same stabilization to happen in Brazil. In our 2 major markets, I think we've got a much more visible picture on volumes and much more security around that volume growth and volume outlook. In terms of costs, we have rolling hedging on LME, where we do it. Sometimes our big customers do it for themselves, you won't see any impact of that in our EBITDA line. You'll only see it in the revenue line. Energy costs in Europe, which is where, everywhere we hedge on a multi-year basis, we're rolling forward on a multi-year basis. We're probably sitting above 50%-60% for 2024 at this point, and we'll have some of 25 taken already. With the way the energy market has now developed in this year, we don't see any concerns on those costs, you know, over the next few years. Thank you very much. Approximately, you know, how much, in terms of percentage of pass-through, aluminum prices, on average, like, yeah, can you give kind of a rough kind of idea? Is it more or less, you know, entire or almost entirely passed through, or, like, or, you know, 80%-90% pass-through? The LME and premium parts of the aluminum price are all passed through directly. The only piece in some markets, not a, you know, not in a good part of North America, but in the part of North America and in Europe and Brazil, is what we call the conversion cost, so the cost of buying the coil. Call that 30%, 40% of aluminum gets passed through on the PPI mechanisms as opposed to on a direct pass-through with the LME or the premiums. Understood. My second question related to cash flow. In 2024, that we're expecting the CapEx to go down significantly, when do you expect the next investment cycle to pick up, if we were to look at forecasting the next seven years? Not for two or three years. I think, you know, we've been clear that we're curtailing this year. Now with the additional action we took in the quarter, we're over $3 billion of curtailment in North America, over $1 billion in Europe. Now we're trending that way in Brazil as well. We've got plenty of capacity to grow into. Mm-hmm ... you know, we've got a cash-free period, if you like, of, of growth. I don't think you need to model anything for the next two or three years. Understood. In terms of the working capital positioning, you know, if we were to think about the working capital as a percentage of sales, do you expect that to normalize at end of this year and, you know, 2024? Like, is there any kind of guidance that you can give us? I think we've guided that we've got an inflow this year, and then I don't know, David, if there's anything else. I think we'll guide on next year when we get into the spring, but clearly we wouldn't expect any adverse actual impact in next year either. Yeah. Yeah. Thank you. Yeah, thank you. Yeah, thank you very much. Thank you. Thank you. To our audience, that is Star and One. If you would like to ask a question, we will take a follow-up from George Staphos at Bank of America. Hi, guys. Thanks for taking my follow-ups. I'll try to make them quick. Just for posterity, could you give us your view, recognizing it's imperfect data, because we don't have one industry source, what you think North America and what you think Brazil, the markets did in 2Q in terms of volumes? Similarly, what your expectation would be for both regions for 2023? Second, one of the other analysts had raised this as an issue. I I think it was Arun. Can you tell us, given your perspective, what you're finding in terms of consumer perceptions on glass versus aluminum? I mean, again, we've covered the cycles in the past. Sure, you go into a downturn, you go to returnable glass, and then it comes back to, you know, one way in aluminum over time. Are you seeing any change in consumers' perception such that the recovery won't happen this time around? Last, Ollie, I think you've touched a little bit on capacity in South America for next year. I just wanted to probe what you were perhaps indicating there. Thank you, guys. Good luck in the quarter. Thanks, George. I think taking those in turn, I mean, our view, as I said on North America, it, it was probably flat to slightly negative, is our best guess. I think that we've got some people not reporting and not visible at this point where there could be significant growth linked to the beer situation in North America. That's the uncertainty in our minds. Therefore, you know, that's where we are. We think obviously there's negative drag from import reduction and domestic is, you know, probably in that flat sort of space. That's the domestic, you know, excluding the people that we, we can't see. I think expectations for the North American market, I remain in a low single digit place. I think once retail pricing normalizes, I think we're gonna see the impacts of the tailwinds that are sitting in the business, which is that there continues to be a strong sustainability tailwind for cans worldwide. We continue to see pressure on single-use plastic. We continue to see the benefits that can be driven for our customers from the decarbonization of cans, which is something that as recycling rates pick up and as our supply chain decarbonizes the electricity base, we will see in the can, and therefore we can really support our customers on that sustainability agenda. The other piece that we've seen really play out in this quarter is the innovation going into cans, particularly in North America, but also in Europe, where we see people pop. One of the reasons we've had a great quarter is because one or two of those players really popped, and that is about the portfolio. We're sitting with another that will, you know, we'll see our peers have that benefit, too, in North America when one in their portfolio pops. I, I believe those two trends, the sustainability and the innovation, mean that low single digit is a very confident forecast for the North American can market, you know, next year and beyond. Brazil, we know, was down high singles in the quarter. It's roughly minus 1% year to date. We expect it to sort of recover to a flattish position for the year. Possibly could be, if you're optimistic, a bit better than that. As I say, we've predicted ourselves in, you know, recovering somewhat from where we were. I think Brazil, we're still very comfortable in this mid-single digit. Look, I very honestly don't have a lot of consumer data. I mean, it's a very interesting question, which is, you know, would consumer perceptions be changing around returnable versus one-way packaging? I don't see it. Our customers also want to move into one way over time because they've got many more strategies they can play around that. Premiumization with single-use glass bottles, you know, cans driving the middle and the mass. I think they will lose brand equity and market share if they don't play significantly in the off-trade. I don't have any data that would prove that those perceptions have haven't changed or have changed in the consumer, but I think the overall trends have been so strong worldwide in this space, that I'd be very confident that we'll see that return to one-way glass and one-way cans in Brazil. And then on capacity, I mean, what we're really talking about, you know, is about 1 billion cans in Brazil potentially having to be taken down next year, with our current forecast. Ladies and gentlemen, I'd like to offer a final opportunity to our audience to press Star and Zero if you have a follow-up or would like to ask a question on today's call. We'll take just a few moments to make sure that everyone has had the chance to signal. We have no signals from our audience. Mr. Graham, I'll turn it back to you, sir, for any additional or closing remarks that you have. Thanks, Jim. Thanks, everybody on the call. I think that we covered the big points about what impacted our Q2 performance, but how we see the second half improving significantly in terms of profit growth, how we see this really as an inflection point for the business as we grow into the second half and into 2024, where we also see significant profit growth next year. We'll continue to manage our network in a disciplined manner, you know, to balance with demand. I think, you know, with our investment program largely complete and with our business growth investment dropping significantly into 2024, with the additional cash generation that we've achieved in this quarter and that we expect to achieve towards the end of the year, we're feeling very good about our dividend and our overall balance sheet deleveraging. We look forward to talking to everyone again at our quarter three results. Thank you very much. This does conclude today's call, and thank you for your participation. You may now disconnect.