Last fireside of the day. Gabe Hajde here, Wells Fargo Senior Packaging and Paper Analyst, joined by my colleagues, Richard and Bailey. We have with us this afternoon Ardagh Metal Packaging and representing the company is CEO Oliver Graham, and Stefan is here in the audience. Let's see here. As many of you know that Ardagh is a leading manufacturer of beverage cans globally, having number two and number three positions in North America, Brazil, and Europe. Kind of born out of the divested Ball-Rexam combination just about 10 years ago. Thank you all for attending. It's intended to be a fireside chat to the extent there are questions, please feel free to ask. With that introduction, Olli, if you want to make any opening remarks or we can go into Q&A. Maybe just a couple of themes from today's questions or anything like that. Yeah, sure. No, as you say, we're coming up to our 10-year anniversary in July; excited about that. It's been a great 10 years. I think we've added a lot to the company in that time and really globalized what were three regional businesses born out of the two companies. Yeah, very happy with where we're at. I think the themes of the questions have been a lot about growth. The sector is in growth that's very positive in the packaging world. Resilience, how do we see with the geopolitical environment, how do we see the business? Obviously, both stories are very positive. I think at our Q1 we were able to give very positive messages on both those aspects, and we see that from our peers as well. I guess that's a good opening remark. Just so you know, we got the year off to a good start. Yep. One question that we're asking all of our companies, unfortunately, and part of it is hopefully transitory, but to the extent that we obviously have input cost inflation, we're seeing it most pronounced in petrochemical derivatives. I'm assuming inks, coatings, lacquers, things like that. Just, from your vantage point as a CEO, how do you view this inflation wave compared to, or contrasted with, kind of the pandemic, maybe? Again, maybe it's a little bit different. Yeah is it durable? Is there a portion of it that we think could be transitory? Well, yeah, that's a good question. Every day it's transitory. I think it feels a bit less broad-based than post-COVID, when obviously there was a very sticky supply chain situation initially, which took a long time to work out as people got those supply chains all back again. You had the big energy shock following Russia and Ukraine, which was obviously a big deal and was very unmanaged for a while. We had energy prices at levels never seen before. This one, obviously, energy is up, but it's not up like that. In the meantime, more resilience has been built into supply chains and the European energy market compared to then. We don't see it at that level. I think we do see an impact in coatings. We mentioned it at Q1 that we'd expect in the second half to have some headwinds from coatings; we also said we don't see that affecting our guidance, we can absorb that and manage that. I think, again, to the point I made earlier, the resilience of the model at the moment is pretty strong to this situation. Cans are winning in the pack mix. They're also pretty good in times when people are facing cost of living issues. At the moment, I think we don't see major issues this year from the situation. Okay. I got a couple different angles on, we'll call them "costs" as well as "demand." Sticking with the demand cadence in the first half of the year, or however you want to frame it, would it make sense from your vantage point and maybe the obvious answer is yes, it's a function of just like what happens in the back end. For customers to try to channel fill, I know you've kind of been asked a question about pre-buy; we've got a couple of events this year. It's not the first time, again, maybe it's the third time that customers are living through this, whether it's supply shocks and fears of availability of raw materials or otherwise. Is that something that makes sense in beverage cans, maybe on the filled side, a filled product they can keep around for maybe 90-120 days? Yeah. They tend not to own. They tend to operate very just-in-time supply chains. The retailers are the same. They don't love holding a lot of stock. We do build inventory for our customers in Europe and North America in Q1 and into the first part of Q2. We start to see it run down as we go into the summer. This is around the time we get a good sense of the real demand for the season. Because if that inventory is not flowing through, we understand that actually the demand signal is a bit softer than everyone had expected. We're not seeing that. I think at the minute, we're seeing a decent level of demand. I don't think we're seeing anything that I'd call a major sort of channel fill or pre-stock or anything like that. Okay. Going back to contracts. I have, like I said, a couple of questions about this. We've lived through a couple of these shocks. I'm going all the way back to 2014 when it was first aluminum premium when none of us knew how aluminum actually moved around. It was fraught in 2018. You guys have done a really good job of these different iterations of putting in new openers more frequently and/or capturing more of the cost structure and pass-through mechanisms. Can you give us kind of an update of where we are in terms of how broad those are? They differ by region. I know Europe is a little bit different. Again, the Russia-Ukraine incident, as you pointed out, gave you an opportunity to say, "We need to have protections in place. Yes. I think it's exactly right to say that over time, the industry has got much better at passing through these big commodity movements. You can even go back to 2008 when the industry was still taking some risk on LME which didn't end well for people. Yeah, premium now is almost entirely passed through and increasingly fully hedged. The energy, increasingly hedged, also, in some cases, passed through in Europe. Freight in Europe, in North America, and Brazil pretty much fully passed through. In Europe, we actually do some hedging around that, which was a one-off benefit we mentioned in Q1. I think you're right. The resilience of the model to these shocks is much higher. We also have diversified supply chains much more, qualified many more sources of metal, and diversified around coatings. No question, looking at AMP today versus 10 years ago, the model is much more resilient to these kind of shocks. Okay. All right. You guys spend more time in Europe, I think, than you do maybe in the U.S. Just, I'm curious, the sentiment over there, it feels like, and again, this is anecdotal, but folks have gotten a little bit used to having conflict sort of in the backyard, if you will. Anything on travel season for 2026 that you're hearing customers talk about? Maybe two trips in Europe proper versus maybe doing something outside of Europe. Just the resilience of the consumer. Anything like that that you can offer up? Yeah. It's a little bit anecdotal at the moment, but I think there is a sense that there might be more European travel and less out-of-Europe travel and even home -country travel. The Middle East was quite a travel destination. A lot of people would go to Dubai and places like that. Then if you're trying to get to the Far East now, the air travel is much harder and more expensive. Cheap Far East holidays are also significantly impacted. Anecdotally, I've heard people saying that there's some significant uplift in domestic tourism impacts, which could be positive for a domestic industry like cans, just to have more people holidaying in the region. I think the European consumer is under pressure; there's no question about it. This has been repeated shocks, the energy price. The region is more vulnerable to energy shocks. We don't have the sort of energy resources that the U.S. has. Quite reliant on gas, and obviously that is getting under pressure again, though, again, much more resilient than it was in 2022. The European Union is taking a lot of action. The consumer is definitely a little bit more vulnerable to cost of living issues, I think, than over here. Generalizing across many markets, obviously. Sure. I think you do have some dynamics there that are a bit less positive. On the other hand, from a can point of view, you just have this very significant under-penetration of cans relative to the U.S. Apart from the U.K., every other country is significantly under-penetrated. You have a lot of glass still in the system, which is obviously suffering some big cost headwinds. Now with the energy situation, unfortunately for them, again, they are facing some more cost headwinds. You do have more anti-plastic sentiment and more sustainability initiatives where can recycling credentials are very important. I think there are a lot of positives for Europe for the can industry, and that's why you see the growth rates we've been getting. That's why you see the investments going in. I think if you listen to the peers, we're all commenting very favorably on the sort of timescales we think this can go for, which is long-term growth. Yep. I've been getting questions about that in terms of kind of the overall positivity towards European growth. If it can kind of be in that, call it 3%-5% window. You must be cheating and looking at my notes here. Front-running questions. I did want to ask; we used to get really good data from the BCME. I'm old enough and followed the industry long enough to remember that data. I actually have a copy of the report, where we got substrate mix by country. If you would, when you study the countries, you guys are bigger, a little bit more prominent in Germany, U.K., that you participate in. Can you talk about the major categories, maybe, I don't know, five- or 10-year increments or something like that, or some benchmark that we could look at relative to the U.S. in terms of can penetration? Maybe sticking with carbonated soft drinks and beer. In the U.S., I think the latest data that we published showed, at least this is for off-trade consumption, close to 80% penetration for cans of beer. Big number. Where you're at, and to your point, I think there's a little bit of a natural throttle in there in terms of it taking capital from your customers and filling capacity and stuff like that. Yeah. I won't have the exact data; what you can say is that the U.K. looks a bit like the U.S. Again, a big off-trade penetration altogether and a very big penetration in cans in the off-trade. Single-use glass down to relatively small percentages and no returnable glass to speak of. Actually, therefore, in the U.K., a lot of the penetration gains are also occurring more on the soft drink side with the resistance to single-use plastic. You see that starting to pick up and get closer to where the U.S. is now trending. You go outside the U.K.; every other country in Europe is well below those sorts of numbers. In Germany, you still have significant two-way glass, some of that will stay for sustainability reasons, but a lot will leave the market. With the efficiency of the can and the retailers wanting to promote multi-pack cans to drive traffic. Wherever you look, soft drinks or beer, you find significantly lower levels of penetration compared to the U.K. and the U.S., and that's why you see this growth trajectory. Germany is the lowest because of the deposit legislation that was put in place in 2003 that was very unfavorable to the can. There's just been this long trajectory back to get to more normal per capita consumption of cans, and we still see double-digit growth rates for cans in soft drinks, in particular in Germany every quarter. We are still getting, actually now, Metal Packaging Europe data, but with a big lag for competition reasons. It is showing again; this 3-5 is very solid, if not the lower end of it sometimes in terms of can growth. Every quarter we get the data for our markets. Every quarter we outgrow plastic, we outgrow glass. That's been a consistent trend for two or three years now. Got it. I guess what's preventing it? Is there a route to faster adoption? Again, is it just customer stage gating their investment? How should we think about that? I think it's lots of factors, and that's why once it goes in, it's also hard to reverse because you've got everything from our customers thinking about their marketing campaigns, their promotions, their shelf space planning that they take to the retailer, and their innovation pipeline. I heard from a customer last week that whereas they used to launch in single-use glass first to sort of get that premium halo over the innovation, cans could come later. Now they launch them together straight into cans as well. These are quite structural factors within our customers. You've got the retailers, the shelf sets, the way they're thinking about it, and then you get consumer habits. Obviously, you've also got filling capacity. How many can lines have they got relative to glass filling or plastic filling? All of it's quite a big structural element, and as you move that forward into basically more cans, you also start taking out some of the capacity that was there for the other substrates. Yeah, then especially once you get to that point where the consumer's really saying, This is where we're at. These are consumer goods companies. They need to be where the consumer is at, and if the consumer's more at cans, then that's what they'll respond to. Which was a debate for the U.S. this year. Everyone's like, "LME's high, premium's high," some of which is hedged at the moment, but you've also got to deal with where the consumer is, and if the consumer's wanting the substrate, then you have to some degree match that. One last one on Europe, sort of sustainability regulation or regulatory impulses. How does that affect the various substrates from your vantage point? I mean, a disadvantage to cans, I think, is that a lot of times they're weight-based, which probably is negative for glass unless it's returnable. Yes. I think they're moving much more to real recycling. Yeah. Real recycling is hugely in our favor because there are things that are recyclable, and then there are things that are recycled. Cans are recycled. That is where they're going, and it is true environmental performance depends on it actually getting recycled and actually coming back into the productive life of cans or other products. That's massively in our favor. If you look at recycled content targets and recycling rate targets, that's obviously hugely in cans' favor. There are refillable targets, so that could hold some of the glass situation more than you'd have expected, but they've calmed down a bit. They started at some very high numbers. They've come down. Yeah, some of the weight-based stuff is actually going away, which there is some legacy of in some of the EPR legislation, but largely now they're going much more into these real recycling environmental performances. Then we're increasingly going to product a carbon footprint. That's where our customers are taking us. Yeah What is, again, the true product carbon footprint, which is something we're all working on in terms of standards and which, with the developments that are going on in the whole aluminum supply chain, again, I think will be very favorable to the can? Sustainability is definitely a part of why the can is growing in the mix. The U.S. is just waiting for Europe to get the map put together; then they'll just replicate it. The U.S. is sort of traveling in a different direction. What's interesting is global customers operating in Europe and also often signed up to Science-Based Targets, they're equally putting pressure on us for measurement and reporting on these areas. It's not just a European customer phenomenon. It is global customers, as well. Switching gears, North America, for Ardagh specifically, this year you called it out as being a transition year. You weren't bashful about it. You're owning it for a variety of reasons. Can you just remind us specifically what's embedded in that? I'll stop there. I think post-COVID, we wrote as an industry quite a long set of contracts that all came out in sort of 2025, 2026. There was a big set of resets that occurred between 2024 and 2026, and at the last part of that, we lost some volumes that were mostly about footprint situations, either customers closing filling locations and rationalizing or competitors having built plants that were then in more favorable locations, or in one case, we didn't build a plant that would've been in a more favorable location, and therefore it went back to a previous supply location. Mostly footprint, perhaps a little bit of competitive activity, some people wanting the sort of growth rates that we had in the previous few years. That means our volumes in North America this year will be softer than the market, which drags our overall global volume performance. As part of those resets, we're actually picking up some locations; next year we expect to grow roughly at or maybe even above market. We called it this transition year for that reason: we're a bit softer this year, and we expect to be a bit stronger next year. Yeah, that's the guts of it. Point of clarification. A little bit stronger next year, better than the market because we've got visibility into some of these wins that transpired? Yeah. Oh, okay. Exactly. I know you're going to get frustrated with me. If I were to put a number somewhere around that billion unit range, is that directionally appropriate? Yeah. A little on the high side. A little on the high side? Okay. Yeah. It's a meaningful level of volume. Okay. South America, it's always been a little less linear down there in terms of growth rate, even whether it's annual or quarter-to-quarter. I don't know if every single one of my numbers down here are right; for the past six quarters, down 15, up 4+, 12, and minus. A lot of volatility. You get the point. What's driving some of that? I appreciate that typically whenever we talk about the market down there, we say, Hey, listen. Roughly directionally 80/20 in terms of beer versus other drink categories. You've got a big beer customer down there that has some self-made assets, and they tend to move around their purchases. Just help us understand if there's anything else beyond that that we should be aware of or think about. Yeah. I think it's 80%+ beer in the market, in cans. I think it definitely feels like it's got more volatile post-COVID, and I think you can start with the consumer. I think they were much less protected during COVID, so I think there's much more volatility in consumer spending and behaviors, depending on the state of the Brazilian economy, the elections, the strength of the US dollar, and the inflation that's coming through. I do think that that element of volatility is definitely there. I think if we look at our customer base, that also has, I think, become more volatile. You now have more players competing harder in the off-trade. Ambev obviously has come much more strongly into the off-trade in the last five years, as you say, building their own manufacturing. That means everybody, quarter to quarter, is promoting harder at times or taking their foot off the gas and maybe going for a little bit margin. You do see strong effects based on customer mix, and you see it in our P&Ls: depending on which customer is really pushing that quarter, suddenly you can get a big uplift, and equally, when they stop pushing the next quarter, you get a big reduction. That, I think you had some of that pre-COVID, but I think you definitely have more of it now. Which overall is driving volumes and growth for the can, but it does mean we're, I agree, much more up and down than we used to be. You sort of have to ride it out. I think you have to look through it for the year, not worry too much about month to month and quarter to quarter. Okay. There's a new entrant, I'll call him, but someone who had not been down there, who's currently adding some capacity. Does that inform your view at all in terms of how you deploy capital, at least down in Brazil? I appreciate you've kind of two plants down there. Yeah, we deployed quite a lot of capital down there in the 2022-2023 timeframe. We still have spare capacity in there, so we've no need at the minute to add any more capital. That was a very specific situation, obviously, with a customer building a new brewery and making a choice about who supplied it. I think that was perfectly normal market activity, if you like. We expect the stretch for Brazil to be a growth market where everybody will get their share, make their investments, and get good returns. I think on November 25, we nerded out a little bit, and we're checking out a slide deck that you gave us some regional category breakdowns, and it's quite a bit different for you all, I would say, in terms of your regions. Again, we kind of talked about Brazil, but in the U.S., alcohol is a pretty low exposure for you all. Intentional or not, is that a market where you see opportunity, or is it just a function of maybe legacy relationships? Similar question for Europe, kind of your footprint and where you see opportunities. Yeah. It's clearly a legacy. We, in the divestment, we got Rexam's U.S. business, and Rexam is much more soft drink focused than Ball. Obviously you have MCC in the market, and you had RMMC in the market. You had players in the beer space that meant some of those volumes weren't available to the industry anyway. Yeah, we inherited Rexam's business, which was, as I say, much more soft drink focused, and then we aggressively diversified that with new customers and new categories. Again, principally in the soft drink space, though obviously we did a big play into hard seltzers and cocktails, and we still have a good portion of the business sitting in alcohol, but not in mass-produced beer. That portfolio has turned out to be a very advantageous portfolio the last five years, because if you look at a lot of the growth in cans, it was sitting in those categories, and particularly in the customers that we'd targeted and formed good relationships with. We saw a lot of innovation coming into cans, coming into those players and those categories that we were in, and we're still seeing that. Even though we have some losses this year, we can see very healthy growth in specialty cans in some of those innovative and high -growth companies and attractive categories. Yeah, it was somewhat intentional, somewhat legacy, but definitely played out well for the business. Europe was all Europe. Ball was more beer -focused. You have a sort of 50/50 split there of beer and soft drinks, which, again, played out very nicely for us over time, nicely diversified, but in the last two years, beer has clearly been under more pressure. You do see that last year and this year the beer category is suffering. Cans are still growing, but relative to other categories— Yep less. We're comfortable with that, though. I think that we'll continue to diversify our customer base. We've got good regional breweries as well as the big brewers, and they're going to sort themselves out. The pricing got a bit high, I think, post-COVID. They'll address that. They'll innovate. We have no particular concern with that position, but equally, we're very happy to grow in the soft drinks categories as well. Thank you. Now to the aluminum question. A couple aspects to it. I'll try to put some numbers on things, and I'm sure I'll get it wrong, but we're kind of using average 2024 as a baseline just because it's a decent reference point. If the standard 12-oz can costs some number and aluminum is, call it 50% of that roughly, our math says it used to be about $0.06 and now if we mark to market today, which, to your point, customers are hedged. They kind of layer things in on a three-year rolling basis. Mark to market would be another $0.06 on the cost of a can. Again, it's elevated. Our metals and mining analysts spent a lot of time across the hallway today saying that there's potential aluminum shortage, which suggests prices stay higher for longer. Long-winded way to say it is we're starting to see it in some of the NIQ data, at least domestically, where we saw the growth in the first part of the year; it's slowed kind of to flatish as we sit right now. More on the go, which probably shouldn't be a surprise. You fill up $100; you don't go in for smokes and Cokes. My point is, I think investors have a little bit of PTSD from Q4 2022. As you look at your customers, as you think about the consumer affordability, and all of these aspects, and I'll call it "inventory modulation," do you feel like you're better prepared this time around to kind of peek around the corner? Maybe it's a loaded question. No, I do think Q4 2022's a very different story just because, coming off the COVID wave, there was a lot more hope and expectation in forecasts, right? Okay. I think we're much more balanced capacity-wise and balanced in terms of expectations than Q4 2022. I did say at the beginning of this year that we have to be cautious in the face of that sort of headwind, what's been interesting, I think, is, again, customer dialogue that says, Look, this is no longer just a cost issue. It's not just, Your costs have gone up, so I immediately switch into another substrate." There is now a significant amount of consumer and retailer demand around the can that they can't just ignore. They're saying this to us. It's not us promoting it. That the consumer has shifted and isn't asking for single-use plastic, for example, and is looking more to the can and has gotten used to the fact that most innovation and new products are coming in cans, and that carries some halo with it. I think, yes, I think there is some significant inflation in the can, but I don't think it's as simple as saying, Okay, so then we just automatically switch out. I do think also all our customers took some very healthy amounts of price. In North America in the last three years. They have some room possibly to play and to play with the mix and not just immediately overreact. Yeah, I'm hopeful that I think if I look at the data, beer is what's really struggling, right? Energy, CSD, actually pretty healthy. Growth rates and energy on some tough comps. Yep. Some new products that are hitting national distribution levels now will so inevitably slow down a little bit compared to last year. I wasn't too concerned when I looked at that data. That looked like for the categories we're in, there are still some pretty healthy levels of growth. Okay. Maybe I'll give you the opportunity for whether it's the second quarter, the full year guide, or $650-$675—anything that you'd like to get out there for us numbers-wise? Typically don't- Close to Q2. Yeah, I think that what we saw at Q1 looks about right, from what we're seeing in terms of the way our business is playing out and the markets are playing out. I think Europe's volumes are very healthy. We had a very strong Q1 2025, so our Q1 in Europe was a little weak this year. We also had a slow ramp of some new contracts that were coming on. Q2 looks much more normal for our European expectations, which is where we signaled it. The North American volumes still look softer than the market, which we expected, but the mix is good. We're feeling good about the U.S. business. Operational performance is very strong on both sides of the Atlantic. Yeah, Brazil is definitely a bit weaker than Q1, but still within the realms of expectation relative to the market. Again, nothing to worry about on the operational side. I think from an AMP point of view, 2026 is going well. It looks like it's going well for the industry when we look at some of the peer commentary that's come out recently. I think, again, the sector is very resilient in the face of its environment at the moment. Two things you brought up. Can size, I call it "shrinkflation." I think one of the prior companies call it pack mix architecture, price mix architecture. Can sizes, are you limited at all? Have you been making investments in the back end to have a little more flexibility? I think squat cans are something that's a little bit popular right now. Hit that 100 calorie price point or 100 calorie consumption point. No, actually, one thing I think we've done really well in the North American network the last few years is make it highly flexible. Okay. We're very resilient to different demand patterns in the season or in the inventory build. We also have particularly strong Sleek capacity because we obviously built it for the seltzer boom, but it's now playing out across a whole series of categories. That's been very good for us as a business. Yeah, multiple sizes of Sleek are absolutely fine. As you say, as people are managing portion control, that's a good trend for us, and we're well-placed for it. We have one or two more investments that we'll make in the North American network, I think, just to, again, increase that flexibility, give us all options between 12 ounce standard and Specialty. We've seen that this year that we've been able to flip capacity into the Specialty space, to make sure we cover that side. Then you mentioned a competitor and had some constructive commentary, I'll call it. I think some investors reached out to us and said, Their numbers look a little overstated or bigger than they should be. Just, does anything, again, knowing what you know from being a competitor, play out as you expected from a competitive standpoint? I think broadly, yes. We signaled that we lost some growth in Q1 from the metal shortages. Yeah. Probably that ended up elsewhere in the market. I wouldn't say it's a huge effect, but we're pretty sure that some of that was picked up by the competition, so that could be a factor. I think it looked off a smaller base with some of the contract resets. It didn't look completely out of line to me. The redundancies that you talked about building in for metal sourcing and things like that, I know it's tough to tell. It changes by the hour it seems like. Aluminum availability, expectations for disruptions. Yeah, no concerns, actually. Obviously customers have been asking, but actually, the Middle East isn't a huge factor in the setup for getting the ingots that come into our business and the coils, sorry, into our supply chain and the coils that we get. Right now we're not seeing any concerns for 2026 supply. Now that the situation in the U.S. with the fires in the domestic mill is resolved and now that those two new mills are coming up, the situation looks pretty good. Is it incongruent to think, because I think cans can be up to, let's say, 99% recycled content, you still might need a little magnesium in there or something like that, but maybe this is a bigger impetus to drive recycling and that would, right? You'd hope so. I think the U.S. is below 60. Well below 60. Yeah. below 50. Yeah. It's a shocking number for a developed economy to waste that much of a valuable resource, to be honest. Very weird, in terms of attitudes towards it. Anyway, I shouldn't criticize. Yeah, look, you'd hope- You should You'd really hope so because it's a complete waste and obviously massively important to national security as well, not to be wasting valuable materials like that, right? These two mills will put a lot of pressure into that system, whether they can really influence the politics behind it at a state level to get the material back, I don't know. I'm a little cautious to pronounce it because it's proved very difficult. Yeah, I'd really hope so. I think actually, an article hit a couple of days ago that said that there was an investigation or maybe there's going to be some pressure on exporting recycled From the U.S.? Yeah, UBCs. Yeah, I'm not sure you're doing a lot of that. You're bringing in a lot and that may get shut down because there are markets out there saying, "Why are we sending that to the U.S.? Sure. I think that's a challenge, and, yeah, look, it's a huge potential because you could transform the aluminum supply chain in the U.S. Perfect. I think with that, we're out of time. Thank you very much, Olli. Thanks, Gabe. Always a pleasure. Yep. Finish this up for the day. Thank you.