Good day, welcome to Smurfit Kappa Group 2023 half year results presentation call. My name is Priscilla, I'll be your coordinator for today's event. Please note, this call is being recorded, for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press Star Zero, you'll be connected to an operator. I will now hand you over to your host, Mr. Tony Smurfit, the CEO, to begin today's conference. Please go ahead, sir. Thank you. Thank you, operator, good morning everyone, and thank you for joining us today. You'll see from our disclaimer in the slide, I'll take that as read. As you would expect, I'm joined by Ken Bowles, our Chief Financial Officer. I'm very proud of the performance we continue to deliver with our half one results, which is an excellent outcome set against the challenging environment. We delivered a ROCE of 19% and an EBITDA margin of 19.1% during the period. Many of you are familiar with our vision, which guides our approach in Smurfit Kappa to the way we do business. We in Smurfit Kappa have continued to be delivered for our local communities, we are also doing our bit for the planet by providing our customers with innovative and sustainable packaging. Year in, year out, we have delivered excellent numbers that are superior to the vast majority of our peers. One of the key aspects to our success in Smurfit Kappa is our continued agility. This is reflected in our business model, which is dynamically delivered over many years. Investment, innovation, and capital allocation, combined with a performance-led culture, has allowed us to adapt and to deliver across all market conditions. In the current period, we've again outperformed our industry peer group, both in terms of volume, volume and value. This is a reflection of the model working in action. Ken will shortly take you through the detailed financials, but I would like to highlight that while the current environment is challenging from a volume perspective, during the second quarter, we encouragedly saw our shipments per day improve on the previous three quarters. This would lead us to believe that the significant destocking by our customers has abated, and that when confidence returns to economies, we expect stocks to normalize and demand to come back. Every company talks about its people. You've heard me say that past success is not a guarantee to future success. However, if you have experienced people who've done it before, it's a pretty good measure of future potential. I'm proud that in Smurfit Kappa, we have tremendous longevity of service at all levels in the company, which shows that our culture and living our values of loyalty, integrity, and respect, and safety at work is working. In return, Smurfit Kappa continues to significantly invest in its employees through advanced training and development programs and ensuring strong compensation opportunities. Our disciplined capital allocation decisions are and continue to be both disciplined and effective. Ken will take you through this team's multi-year track record against our established performance measures. While you've often heard me say that success is never a straight line, the trend line here has been inexorably upwards. Going back to history, since 2012, we have spent some EUR 6 billion to optimize our integrated system. Essentially, this has meant taking cost out of our mill system and making sure that our converting operations are optimally invested, to ensure that we meet our customers' expectations for quality and for innovation. While doing this, we've ensured that we continue to build balance sheet strength. In addition to optimizing our own system, we've allocated EUR 2 billion of capital to bring acquisitions into the Smurfit Kappa family. In practically all cases, we have delivered or exceeded our expectations of these acquisitions, which have integrated seamlessly into our systems, delivering the expected synergies. This is what we mean when we say our business has never been in better shape strategically, operationally, and financially. We've always put forward the integrated model as the most effective operating system for our business. This has been proven by us as the most effective way of running our operations over many years. It provides security of supply for our converting operations, which ensures our customers receive their products no matter what market conditions prevail. This was amply demonstrated during the COVID pandemic period. Our integrated system reduces cost in key areas such as transport and continually optimizes our stock levels. While integration is a key aspect of our success, undoubtedly, this does not work unless our converting business have, at their core, the USP of innovation. Our customer-led packaging business, with an expanding network of some 30 experience centers or innovation hubs, if you will, across our regions, reflect this focus. With over 1,000 designers across 36 countries, developing unique packaging concepts to solve our customers' pain and to provide thousands of sales executives with a competitive advantage in the market. You will see from our press release that in most markets, we have gained market share. Our gains were not at the expense of price, but were a result of this customer-led focus on delivering innovation and ideas to help our customers win in their own marketplaces. I'm also delighted to say that the number of industry awards we continue to receive is recognition of our leadership, the quality of our offering, and demonstrates our unique innovation capability. Sustainability is in our very fiber, and we've always been committed to our sustainability journey, but have been more focused on this over the last 16 years, when we published our first sustainability report. On every metric, we have improved, and while it is a never-ending journey, we continually showcase our success by the many awards and recognitions we receive and have achieved. We continue to make significant progress on achieving our sustainability targets, as outlined in our 16th Sustainable Development Report, published in March of this year. Compared to the baseline in 2005, the group has reduced its emissions intensity by 44% by the end of 2022, a 4% improvement year-on-year, leaving the group well on its way to reach its 2030 target of a 55% reduction, in line with the European Green Deal and another step forward on our journey to net zero. Since 2005, Smurfit Kappa has invested $1.2 billion to make our operations more sustainable. Of this, approximately $1 billion has been invested in different energy efficiency and CO2 reduction projects. We in Smurfit Kappa remain very proud of our commitment to work towards an improving sustainable footprint, ensuring that our products continues to be recognized as the product of choice in a world that needs sustainable products. With that, I'll now hand you over to Ken, who'll take you through some of the financials. Ken? Thank you, Tony, and good morning, everyone. In a moment, I'll be taking you through the group's financial performance for the first half of the year. I'd also like to spend a few minutes this morning outlining how we think about capital allocation at Smurfit Kappa, and what that means in terms of the delivery of our vision, which Tony has just discussed, and indeed, a central role in the transformation of the business over the last number of years, by looking in a little more detail at our financial scorecard to date. What I think you'll see is a structurally better business, delivering outperformance across practically all metrics. Turning to slide 13 and the group's half year 2023 results, which, set against a challenging macroeconomic backdrop, continue to reflect the resilience of our integrated business model, the benefits of our investment program, and of course, the hard work and dedication of our people, providing our customers with value-adding, sustainable packaging solutions, all of which, as Tony has articulated, have positioned us for current and indeed future delivery. Group revenue was over $5.8 billion, down 9% of the first half of last year, or 7% on an underlying basis. Group EBITDA was $1.13 billion, down 5% on the first half of last year or 3% lower on an underlying basis, reflecting lower earnings in Europe and higher earnings in the Americas year-on-year. The group EBITDA margin improved from 18.4% of the first half of 2022, to 19.1% of the first half of 2023. Our margin also reflects the benefits from our investment program. Underlying box volumes for the group were down 6% for the first six months of the year, with volume performance in the second quarter improving, as anticipated, among the levels we've seen in the preceding two quarters. We also saw market share gains, not at the expense of price, across many of the countries in which we operate. Pre-exceptional EPS was 11% lower at EUR 1.972 per share, and the group's return on Capital Employed was 19%, well ahead of our stated target. Free cash from the first half of the year was a net inflow of EUR 119 million, compared to a net outflow of EUR 28 million in 2022, an increase of EUR 147 million. The EBITDA decrease of EUR 61 million, combined with higher outflows for CapEx, tax, and changes in employee benefits, were more than offset by lower outflows for working capital. The working capital outflow in the first half of the year was a combination of a significant decrease in creditors, along with an increase in debtors, partly offset by a decrease in inventory. The increase in debtors reflecting higher average box prices year-on-year, and the decrease in creditors reflecting considerably lower recovered fiber, energy, and other raw material prices. As a result, working capital as a percentage of sales was 11.7% at the end of June. We do expect this to trend back down as the year progresses to within our normal guided range of 7%-8%. It goes without saying, that the management of working capital, as ever, is a key focus for us. Finally, reflecting the confidence both we and indeed the board have in the group, and the strength and resilience of our cash flows and future prospects, we are pleased to announce a 6% increase in the interim dividend to EUR 0.335 per share. Looking now at slide 14, a reminder of our capital allocation framework. It is a framework that you are familiar with. It's also a framework that we've been consistent with over the last number of years. It is very much returns-focused, flexible and agile at its core, and this continues to be a key underpin to our success. At Smurfit Kappa, we believe that capital allocated to internal projects has been central to that success. We're in the final years of our accelerated investment program, where we've invested in our asset base to improve our environmental footprint, remove costs, improve operating efficiency, and to capture the long-term growth opportunities coming from the consumer's desire for the most sustainable packaging solutions. The acquisitions we've made over the years are clear indicators of how we see M&A as a group. As always, we have a number of projects in the pipeline focused on building out our strong geographic network, or indeed, further enhancing our product portfolio. We remain, of course, disciplined around M&A, and as always, benchmark them against all other capital allocation alternatives. The dividend is another cornerstone of our capital allocation strategy. Our dividend policy is a progressive one and aims to ensure that the allocation of cash flows to the dividend is proportionate to other forms of allocated capital over the long term. Fundamentally, the strength of the group's investment-grade balance sheet continues to secure long-term strategic and financial flexibility. The expansion of our capital allocation framework to now include other forms of shareholder returns, underscores the flexibility and agility of this framework and ensures that all avenues to create and return value for our shareholders are considered and benchmarked against all options. Ultimately, the framework at its simplest, is about creating long-term value for all stakeholders. Slide 15 shows how our integrated model and leadership in both innovation and sustainability provide SKG with a competitive advantage that drives consistent, profitable growth through the cycle. As mentioned above, our capital allocation framework is both iterative and consistent, investing to improve the asset base, but that also has a direct impact on our margin and indeed, its expansion. Through the integrated model, we are better able to deliver both security and quality of supply, and it makes us flexible and responsive to our customers' needs by offering a wide range of customizable packaging solutions. In a world where more and more businesses are looking back through their value chain to partner with the world's most sustainable suppliers, our integrated model provides our customers with responsible sourcing of renewable raw materials, and our streamlined operations allows us to achieve economies of scale and optimize energy use and minimize waste. This means our customers get the most dependable chain of custody certified packaging solutions that leverage innovative designs that can drive revenue growth, reduce costs, and help them achieve their own sustainability goals. Ultimately, in a business such as ours, return on capital employed is the key metric, and SKG targets a return of 17% through the cycle. Here on slide 16, you'll see that our ROCE targets have been repeatedly met and reset higher over the last number of years. At 19% at the end of June, in a period of significant growth CapEx, it is by any measure, an excellent outcome. I think this graph illustrates the management team's proven stewardship of capital over the years. What is central to our success here is our performance-led culture. This drives an ownership approach to investment decisions, which must deliver sustainable long-term returns. This places the capital into the hands of the best mill and plant managers in the industry, driving performance through teams which are committed and dedicated to our customers. Through both our 2018 and indeed, 2020 plans, we focused on investing and reinvesting in our paper mills, while also building out our corrugated system through expansion projects and adding state-of-the-art machinery. Today, more than ever before, we are seeing the benefits of having a world-class asset base with an integrated system of mills and box plants sitting low on the cost curve. A clear competitive advantage in the current macroeconomic environment. Slide 17 is yet another example of the transformation of the group. With net debt to EBITDA of 1.4x, our investment-grade balance sheet continues to provide us with considerable optionality. This slide also demonstrates how the actions we've taken in the past have set us on a favorable path for the journey ahead. I'd remind you, in September of 2021, we launched our Green Finance Framework with the lowest coupon bonds ever achieved for an issuer in our rating grid, with eight and 12-year bonds at interest rates of 50 basis points and 1% respectively. The result is a strong balance sheet with no significant refinancing requirements until 2026, over 95% of our near-term debt fixed, at an average rate of just over 3%. Again, capital structure decisions have been well-timed and well-executed, have been a hallmark of Smurfit Kappa Group. Finally, our track record of commitment to a secure and growing dividend can be seen here on slide 18. Since its reinstatement in 2011, we have returned approximately $2.4 billion to our shareholders, and an important reminder, did not cancel or cut our dividend during COVID. As I said before, our aim is to ensure that capital allocation decisions take into account all stakeholder groups, and we recognize the importance of this income stream to our investors, not least during these recent times of high inflation. Thank you for your time, and I'll now hand you back to Tony for some concluding remarks. Thank you very much, Ken. I'd like to think that our established track record of performance, as Ken has presented, is indicative of future potential from an ever-stronger base. The quality of our team today and tomorrow will continue to deliver. We see ourselves as owner-operators of this business, and we'll continue to treat capital as our own. Please recall that all senior management are stakeholders and aligned with shareholders. Our market position, with either a number one or number two position in our chosen markets, together with continuing innovation, allows us to provide our customer base with the most advanced packaging applications. Our core, our core products' own attributes also provide us with a competitive edge as the most sustainable, biodegradable, renewable, and environmentally friendly packaging medium. Our ever-expanding geographic reach and integrated operating model will continue to deliver future performance. As our track record shows, our system increases operating efficiency and lowers volatility, providing a consistent quality earning stream. I wanted to take a step back to go forward. You've often heard us refer to the steps we've taken and continue to take to position Smurfit Kappa for long-term growth. In this slide, we've outlined the total available capital that we've had to be been able to allocate. As you can see, we have allocated very significant capital, EUR 6 billion since 2012, to build a better business with very attractive prospects. Clearly, those capital allocation decisions are return-focused, and they're paying off. The return on capital employed are currently above our target of 17%. We've also sustained a progressive dividend with a CAGR of 22.5% since 2012, are returning close to EUR 2.5 billion to our owners in dividends, and we've built the strongest balance sheet in our history. Our choice has been to build a quality business, consistently delivering superior performance and growth, and we've demonstrated we've been doing that. As we conclude this current capital cycle, our business has never been in better shape, strategically, operationally, and financially. We're confident and excited about the long-term prospects for our business. As Kenneth said, the confidence is best reflected by our continued increases in our dividends over many, many years. With that, operator, I think we'll conclude the formal presentation and turn it over to you, and to any questions from the audience. Thank you, all. Thank you, sir. Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please press Star One on your telephone keypad. We'll take our first question from Charlie Muir-Sands from BNP Paribas. Please go ahead. Your line is open. Yeah, Morning, gentlemen. Thank you for taking my questions. I'll just stay with two, please. The first is that at Q1, you were very kind to give us a few of the moving parts you envisage on your cost base for the year, year-on-year, such as energy and some of the raw materials and labor and so forth. I wondered if you could just update us there. Then the second one is that I see in the technical guidance, you've increased the cash tax guidance versus six months ago, and I just wondered if you could explain that? Is that due to a different view on underlying profitability or just a timing effect? Thanks. Morning, Charlie. Tony has, has, thankfully given both those to me. You're, you're right. I, I suppose what we've seen is that, you know, as most people have seen, the, the cost backdrop has got progressively slightly better as we've gone through the year. I think a lot of that's down to the work we've done internally on controlling those costs. To, to give you some of those big buckets, I think at the, at the start of the year, we probably would've seen energy, something around a tailwind of EUR 100. I, I think we'd see that closer to EUR 200 now. I think we would've seen distribution as a, as a headwind. I think it's probably flat to a slight tailwind now. I think, I think wood equally would have been a headwind at the start of the year. I think we see that as a, as a bit of a tailwind now, maybe in the order of 10-20. I think particularly on labor, where at the start of the year, you know, we've seen labor as a kind of a $100 million-$120 million headwind. I think, again, to the good work done, not through 2022, but also through 2023, we're seeing that as less of a headwind as we kind of move through the year, probably more in the $60 million-$70 million space. I think they're probably the, the bigger buckets, Charlie, in terms of, of the cost we would've outlined at the start of the year. I'm sure if there's any other bits, I'm sure you can catch up with Kieran and Frank directly on them. In terms of taxes, it is just a timing thing. I think when we gave the guidance at the start of the year, remember, coming off our best year, EUR 2.4 billion EBITDA, the returns hadn't been finalized. As you know, cash taxes are a combination of last year, this year, and prospective next year. It really is just a change in timing and finalization of returns over the last six months. Many thanks. Thank you. We'll move on with Kevin Fogarty from Numis. Please go ahead. Your line is open. Hi there. Morning, everyone, thanks for the presentation and for taking the call. Just two, if I could just sort of pick up on working cap. Ken, you know, you sort of flagged obviously it's kind of higher in the first half of the year than perhaps it may normally be, sort of historically. The guidance obviously is for that to kind of unwind as the second half progresses. I just wondered, could you sort of help us with the sort of building blocks of that, just in terms of, you know, if you see a better kind of demand environment, clearly that sort of implies perhaps more investment in terms of kind of working cap. Just sort of what you see as the sort of building blocks to that in the second half of the year. I guess in terms of the second one on the balance sheet, clearly, you know, you, as you flagged it, sort of building the strongest balance sheet in the group's history, I just wondered in that environment, do share buybacks move up the agenda at all for you guys when you think about capital allocation? I'll do the first one and let you take the second. Okay. Yeah, or we can take the second one together. Kevin, morning to you. I suppose, you know, working capital is high for the right reasons, is the way I kind of characterize it. I think, you know, if we think about how we started this year, inventories are at quite a high level, and we've seen, you know, the in-zone working capital from inventories quite substantial in the first six months. As we kind of manage down, I think the industry has to getting back to what those normal safe levels are. I think the big impact you're seeing in terms of where working capital sits at the end of June, is more on the payable side. You know, if you think about where energy was this time last year in terms of, of price per kilowatt hour versus where it is now, that clearly has a significant impact on the payables, equally, where recovered fiber sits. Indeed, you know, the, the more work we do internally on integration and the more tons we integrate, actually has quite a negative impact, a negative effect on, on working capital because it removes third-party payables. Integration, particularly in the Americas, would, would help that. I think as we move forward, you know, we're, I suppose while sequentially box prices were down, actually, you know, year-on-year for the first six months, box prices were up, which is why you're not getting that kind of unlock or unwind of working capital in the first six months of this year. I think, though, as we kind of flagged before, you know, as you move to the second part of this year, as you see some kind of either index resets or, or some kind of, you know, slight fall in box prices, you will begin to see working capital unwind against that backdrop. That's, I think, that's, that's the, you know, the reason why when we think about where we are now versus moving down towards our normal range of 7%-8%, it really more likely is on, on the debtor side. You are correct, too. If demand picks up, clearly that will require some, some investment in working capital as demand comes back. If you, if you remember, too, in reality, the bigger impact on us is price rather than volume. The impact on price will be bigger than volume in that environment anyway. Sure, that's helpful. Yeah. Kevin, on buybacks, I mean we, we've never excluded buybacks, and indeed, we did a small buyback last year, which actually took us quite a, a very small one, took us quite a considerable amount of days to do, to do because of the rules under the London Stock Exchange. We don't exclude them. You know, obviously, we have a capital investment program that we're going through this year. Our debt levels are very low. It's always a, an option for the board. We'll, we'll make sure that we keep an eye on that in relation to how the world is looking and the uncertainty that's out there. W e've built a, a great balance sheet, and we intend to keep a great balance sheet. Clearly, if we've excess capital, we've always said that we would distribute it to, to our shareholders. We feel that, you know, our best use of capital has been to put it into the business up till this point. And we've proven with our returns that we're able to, to get a good reward for our investment in the business. We still see that as being the case. I mean, clearly, as wages has been the, the real only increasing cost that we have, significant cost increase that we, we foresee this year and next year, I think that it makes capital investment to reduce costs that much more, that, that much more attractive. We just have to think about, as we go forward, what's the best use of the capital for the owners of this business? Up to this point, our view has been always to invest in the business or acquire things, and we want to make sure that we have the, keep our powder dry, to be able to do all of those things. You know, as we have shown last year, we're not excluding buybacks, and, you know, we'll keep an eye on that. Great. That's very clear, very helpful. Thanks a lot. Thank you. Thank you. We'll move on with Justin Jordan from Davy. Please go ahead. Your line is open. Thank you. Good morning, everyone. I've got two separate questions, if I can, please. Firstly, just on Tony, you made a statement of destocking has abated, I think it was the phrase you used, in Q2 2023. I'm right in inferring that it looks like Q1 European box went through -7%, Q2 about -4%. Can you give us some sense of where perhaps the exit rate in June was, or, I don't know, any color you want to give us on July in terms of box volumes, just to give us some more granular detail on that ECB stocking? Second, kind of related to that, just on, you mentioned, I think it's in page four of your release, about taking commercial downtime of 260,000 tons in H2 last year, a lower number in H1 this year. Can you give us some sense of where industry inventories are? Are they sort of now at a normal level, as it were, helping that sort of more balanced industry picture as we look into the second half of 2023? Yeah. With regard to the, the inventory, situation, inventories are, you know, slightly above what we would consider, you know, normal, but only slightly. Where, so that has come much more towards the norm than we have seen for a considerable period of time. The downtime that we've taken is much less than the industry downtime because of what the actions that we've taken to bring forward in, into our own system, due to the fact that we had it, because of Verzuolo. We brought in, tonnage into our own system, instead of purchasing in the third party. It's not the most efficient tons that we have, but obviously, you know, we'd like to be busier so that we can run all of our mills with optimum tons, but it's better to run the mills with, with some tons rather than no tons. I think our downtime is relatively low compared to the industry. As I say, in-inventory levels are, you know, pretty well near norm levels. They're not under norm levels, but they're just a little bit above, I'd say. That gives us a little bit of encouragement that the downtime has worked, and by the industry. But ourselves, we've been taking less because of the things I said in my release. We've taken market share. You know, we're not being as impacted as, as perhaps others are. With regard to volumes as we've gone through the month, you know, I would say that it has got better as we have gone through the month. We were down 3% or so in January, or in June, circa 4% in May, and 5% in April. And we sort of see July as being a similar number to June versus last year. I think you know, it's better, it's not strong. I wouldn't like you to believe that it's strong, but I think that you know, it's better than it was in the first quarter and even the last quarter of last year. When we think about volumes abating, the whole level of destocking abating, I, I think that's the evidence that we see from our customers is you know, you have to go back, I think, 15 months or so, when there was no product around and everybody had double stocks and was double ordering and making sure that they had goods in the warehouse where they could have. We think that, that, that double ordering, of course, has stopped. We think that our customers are keeping their stock levels because of the generally tepid demand out there from the consumer, who has moved away from, you know, stay-at-home and durable purchasing towards travel purchasing and, and holiday and service purchasing. We think that the consumer our customers are keeping their stocks at min levels, and so we would expect that when demand does return, Your guess is as good as mine on that, are things normalized? I would suggest that, you know, Our customers will need to have normalized levels of stock, which will actually create some significant demand for us at some point. You know, when that happens, I don't have a crystal ball for that, Justin. Thank you, Tony. Thank you. Thank you. Thank you. We will now move on with Cole Hathorn from Jefferies. Please go ahead. Your line is open. Morning. Thanks for taking my question. I've got two I'll take them one at a time. The first on containerboard pricing and the related box pricing developments. I'm just wanting to understand: are you feeling a, a bit more comfortable around where box pricing is, is going to be from here? 'Cause I imagine after three months of Testliner being stable, you know, most of your contract negotiations with your index business, I'm thinking kind of the big FMCGs, you, you must be fairly, fairly far down the chain to understand what box pricing you're gonna be giving back to those customers. Just as a reminder, could you call out, you know, it's not just about the paper price, but also the non-paper clauses. Just trying to understand, as you look into Q4 and 2024, are you feeling a little bit more comfortable that you, you kind of know where, where your box pricing development's gonna be, all else equal, on, on the paper pricing? Thank you. Yeah, I think we are comfortable with where we think it's gonna be. We, we have gone for inflationary price increases with many of our customers to offset a lot of the inflation costs we had in the earlier part of this year and latter part of last year. We, we have implemented those into our customer mix, but we, we do have, you know, we, we are seeing some price falls based upon what's gonna happen to box prices based upon our index. As is always the case, we, we tend to have... Those tend to happen in three months, six months, one year, depending on the customer. Sometimes they're averages, sometimes they're point to point. Every customer is different, and we treat them differently. You know, we have a good sense of where, where box pricing will go, and clearly, our opportunities continue to innovate for our customers to make sure that we are able to mitigate some of those effects as we go forward into the years ahead. With regard to next year, I think it's a little bit early to see what's gonna happen with regard to paper pricing. You know, I think from, from the point of view of where is paper pricing today and where, where do we think it can go? We don't see, unless there's a very large cost movement downwards, we don't see any real downside movements going forward in paper, recycled paper, certainly. At some point, you know, when demand does pick up, I think there's, there's scope for increases, but it's a little bit early to say that, and that will obviously start that whole movement again in a different direction. In the meantime, Cole, as you'll know, you know, our whole emphasis has been to reduce our costs, as mentioned by Ken and myself in the script, is to really reduce our cost base on our mill side and really strengthen our innovation offering for our customers on the box side, and that has paid dividends and is paying dividends for us as we go forward, both in market share gains and in absolute margin terms. Then I've got a bit of a, a longer, longer question on CapEx, and, you know, I, I wanna link it to your slide nine, which, which I really like, of keeping your kind of mill, mill rates high and kind of integrating into your box business. If we go back to 2019, 2020, and when you kind of called out a kind of a step up in CapEx, you were probably ahead of the markets, getting in and locking in kind of better rates on machineries, et cetera, before kind of costs went up. You know, you've been very clear in targeting not only kind of cost savings CapEx, which I think everyone agrees you, you do throughout the cycle, but also select growth in, you know, plastic sort of placement machinery where you thought there would be growth. But from here, I'm just wondering, have there been any nuanced changes to your kind of CapEx plans? Are you emphasizing or de-emphasizing, you know, certain, CapEx spending into 2024? So for example, focusing more on kind of the cost savings, which are clearer to you, and maybe taking a, a bit of the foot off the gas on, on some of the, the growth, growth projects and, you know, maybe you'd reallocate that into M&A if that is looking more attractive versus kind of the CapEx. I'm just trying to understand if you're emphasizing or de-emphasizing certain areas on, on the CapEx side. Thank you. Thanks, Cole. Yes, absolutely. I mean, clearly, when we were investing in the last couple of years for growth, we were completely sold out, so we needed to make sure that our, our factories and our businesses had, or were able to capture the growth that was there. You know, we did an amazing job of supplying all of our customers during the pandemic when growth was, as we said at the time, you know, way above the norm and was unsustainable. We now have plenty of capacity in most of our markets to meet whatever growth comes to us, and that gives us a real strong view about how we'll be able to efficiently and effectively deal with any growth that comes in the future. There are many pockets of growth still, Cole, that we will still invest in. I mean, for example, I was in a factory in a particular country where we are a smaller part of that particular region, and we're completely sold out, and we have tons of demand, which we will need to build another factory for, to meet that demand. Equally, we're starting up a new factory in Fortaleza, in northern Brazil, next month. That's where we have almost no market share in that region, and we believe we're gonna take a lot of market share as we go forward in that particular region. We do see pockets of growth. The unfortunate thing is that the general market has, despite taking market share, the general market has, you know, taken a leg down for all the reasons that you're familiar with. Therefore, we have to we have the capacity to, to meet that general market when it comes back. With regard to our, our priorities. W e've always said that we're going to be agile. So while, you know, a lot of the bigger projects, the big paper mill projects do take a long time, the, the, the box projects are less they're, they're much quicker. Clearly, we can decide where on the box side of things we want to emphasize our capital, and with wages going up, it makes it much more attractive for us to, to invest in, in cost reduction, projects next year and the year after. With regard to, you know, labor savings that we will, we will, we will attain. You know, again, for the agility point of view, we, we are spending $1 billion this year. We'll spend close to $1 billion, or we will have spent close to $1 billion last year. You know, our, our current plan is to continue to keep ourselves as open as possible, to be sure that our balance sheet remains strong, that we continue to generate cash for cash flow, and continue to be able to continue to take the opportunities that are presented to us, whether they be acquisitions or share buybacks or whatever. Thank you. Thanks, Cole. Thank you. We'll move on with Ephrem Ravi from Citigroup. Please go ahead. Your line is open. Thank you. Two questions. Firstly, you mentioned that you are taking share, and that's clearly visible from your volumes, being better than your competitors. Can you give us a sense whether these are on average, higher margin tons or higher margin boxes, compared to your current mix? I.e, kind, and this, and this follow on is, are these more kind of opportunistic tons, or is there more longer-term sort of sticky tons, as a result of this? I.e., kind of, how can these share gains be expected to sustain for 2024 and 2025? Related to that, in terms of price cost spread, obviously with Tesla and prices kind of stabilizing, okay, second half prices are going to be lower, but your costs are also going to be lower. Arguably, those costs are probably going to be lower further in 2024, if energy prices remain where they are. Should we look at price cost spreads improving into 2024 as it stands, if assuming Testliner prices remain stable? Okay, Ephrem, I'll take the first one, and let Ken take the second one. You know, our, our business model is built on selling innovation and selling trying to solve what our, our customers' pain is. Now, I don't want to be too pure about it and say that all of our business is like that. That's, that's not true. Sometimes we get opportunities because our customers need us to take over simple boxes because our competitors have let them down or something like that, or sometimes we are opportunistic ourselves. In, in the round, Smurfit Kappa sells on innovation and, as I say, solving our customers' pain, whatever that is. That is the skill set of making sure that we get rewarded for that. You know, that's why we've built all these innovation centers. You know, they are a cost. Our designers are a cost. If we don't get, you know, well remunerated for that, we should definitely not do it. Evidence is that we have done it and are getting well remunerated for it. I f evidence is that we're gaining market share, not at the expense of price. As I say, I don't want to be completely pure, because there's some times that we do gain a piece of business that is basically, call it, a commodity piece of business. By and large, this company is selling on, on value for our customers and solving their pain, and that's the mission that we've been on for many years. When we talk about innovation, we live and breathe it. When we talk about sustainability and solving our customers' problems, we live and breathe that, and that's what allows us to, to, to gain market share, because we're, we're good at what we do. Hey, Ephrem, on the second point, probably need to get out my crystal ball a bit for 2024 at this point, and kind of maybe get slightly ahead of ourselves. I think, you know, you referenced energy there being down, but remember, I think it's important to realize that, that, you know, it's not that long ago that energy was kind of EUR 15 megawatt hour, and now we're looking at rates in kind of EUR 40-EUR 50. I think structurally, the kind of cost base of the industry has changed. It's yes, some costs are going down, and we've seen that through 2023, and some of that may pertain to 2024. As Tony referenced earlier, areas like labor are not. We continue to invest to kind of reduce costs. That area is going to be important. Energy will probably remain structurally higher than it has in the past, while, while kind of normalizing around these levels. Equally recovered fiber is probably higher than it has been in the past. You know, when you look at some of the capacity that, that slates to come on, I think there are quite different backdrops in terms of cost, market, and price than it might have been when those, those projects were first anticipated or announced. I think it's, it might be a bit early to get into whether, spreads will increase or expand into 2024 just yet. I think it's important to, to kind of reflect on the, the backdrop as we move towards that in terms of change around either, the underlying cost base and the inputs into it. You know, the cost of running projects and, and, and rebuilding and building mills also has changed. It's, it's, it's a kind of different, it's a different phase we're moving into 2024, structurally higher. As Tony said, for us, really, it's about the integration and, and how we do on the box side. What we do for our customers will decide whether or not overall we, we do better. Thank you. Thanks, Ephrem. Thank you. We'll now move on with Lars Kjellberg from Credit Suisse. Please go ahead. Your line is open. Thank you. Just a couple of questions left. Just to be clear, on Q2, you commented about sequential decline in box prices. Can you call that out for us, please, albeit being up year-over-year? Also in slightly longer term, as, as you alluded to, you've spent quite a lot of money, and you clearly had demonstrably a very high operating leverage as volumes were good. As and when volumes do recover, what sort of benefits should we think about in terms of operating leverage on the back of, you know, the current CapEx programs and what you've done in the past? I think in the past you called out maybe 15 million-20 million-25 million per percent in volume. How should we think about that number going forward? Also, this year, you did comment about the benefit of prior year spend in terms of removing costs. Any chance you can give us some help on how to quantify that in absolute EBITDA and similar number for 2024, based on what you're doing in 2023? Delighted to give all those questions to Ken. Lars, thank you. Thanks, Lars. I think in terms of box pricing, sequentially, Q2 over Q1 was about 3.7% down. Year-over-year, Q2 over Q2 last year is about 2.5% down. They're the key numbers there. In terms of the price volume dynamic, you're right, in the old days, 1% of volume would have been about 15. I think that's probably more like in the kind of 20 space now, given where we've seen things move. Equally, I think, you know, that 1% on the price equally moved up more towards 55-60, rather than the kind of 45-50. On the second part, which is how should we see things coming through? I think in the past, you know, like we've always said that, you know, when we look at our capital investment program and our total CapEx of, you know, call it around that one billion, you know, 500, 550 is generally designed for, for maintenance CapEx. The rest is. Although we'll have some elements of growth and efficiency in it, traditionally, the bit above is the growth piece, or certainly the bit that's targeted in terms of where we're thinking about the overall return. Generally it's designed to meet and beat that kind of 70% ROCE through the cycle. I think then it's about on average, it takes on the box side, you know, 12-18 months to see those projects come through. Some of the middle projects might be longer. It's hard to give you a kind of defined number, Lars, what we're seeing coming through. Clearly, I think when we look through the margin performance and the resilience, you're seeing a lot of that good work done in the previous years coming through, particularly, I think, on the mill side and cost efficiency, and the kind of ever-increasing move towards more renewable sources in terms of energy and kind of, you know, being able to offset, you know, that, that kind of volatility in energy price you might have seen. I think on the box side, box side, I think it goes back to the answer Tony just gave, which is, you know, really, you know, it's, it's about the stickiness of customers and what we give to them. I think what we're seeing come through is not just the innovation and sustainability aspects of it, but also that CapEx that was put in, in kind of 19 and 20, which during those years of very high demand, our customers got served. I think we're you know, we're seeing the benefits of that as we come into this environment, around that strength and relationship and how, you know, if you like, very simply, they were not let down by Smurfit Kappa. I think you'll see the benefits of that come through, too. Difficult in this kind of environment to kind of say to, you know X% of that CapEx will deliver Y. It's kind of through it. I think you see it more when you look through the margin build and performance, if you think about where we are, and still delivering margins about 19% and a return on capital employed of 19%, with the free cash flow we've generated positive in the first six months and leverage 1.4x. I think you can see that the capital is going in and working. Sure. Just one, one more question for me. On a sustainable side, given, you know, the economic headwinds most companies would have at this stage, are you seeing any change in interest in investing in that? Does that momentum continue to build and providing a pipeline as we head into better times ahead? How, how, how should we think about sustainable packaging as a growth, engine for you? I think, I think, Lars, you know, I haven't seen any customers changing their view on what they have to do, and the reality is that, you know, the European Union is not taking its foot off, off, off the gas, so to speak, and they're continuing to move forward with, you know, new, new rules in relation to different types of packaging. You know, we are very happy so far that, that, you know, corrugated packaging and fiber-based packaging is considered an environmentally positive thing, rather than other forms of packaging. That is going to be pushed through legislation as we go forward. A lot of customers, you know, are actively working with us and obviously with others as well, but to remove, you know, plastics where possible. Polystyrene is getting outlawed in many countries and, and, plastic products are, are moving away from plastic into paper-based. There's no real change. I mean, sometimes the, the, the, the, legislation is slower than we would like it to see, but that's, I suppose, historical. The move away from fossil-based packaging towards renewable-based packaging or reused-based packaging is very much there and alive and, we're well positioned. Final question from me. Americas' performance looks comparatively very strong, but both versus your, the European performance, of course, but also peers in that region. Can you share with us what you're seeing on the ground? There's been quite a lot of talk about, you know, onshoring, nearshoring activity, in particular in Mexico, et cetera. Is that a meaningful component of that, or what is going on in that business versus a year ago? Well, we have a As you know, we have a very strong businesses and, you know, in, in, the Latin American region. You know, those businesses operate differently in different countries, and, and each have their own different dynamic. You know, sometimes, for example, two years ago, Brazil was very poor for us. This last year wasn't so bad. This year is actually growing, for us, and, and we have a lot of projects in the country that we are implementing, to take advantage, as I mentioned, about a new factory in Portela. Mexico is benefiting from onshoring. That is going to, but it has been also hurt by the durable move that I talked about in Europe. There's, there's pluses and minuses in every country. I think what I would say is that, you know, we're very happy with our Americas business. You know, they didn't go up as quickly as the European business did, so their performance last year was very solid, very good, as it is this year, very solid, very good, and probably improving. So I think, you know, it's, it's from a less, less explosive base upwards versus last year. You know, we're taking advantage some of the projects that we've, we've done in the country. You know, we have a very large mill project that will come on stream mid-next year that will benefit us in 2025 very significantly in Mexico. I think, you know, the future is looking very interesting and positive for our Americas business, but, you know it's, it just didn't go up as much last year as Europe and, and, as, you know, it's not feeling the same negative effects that we've seen in certain countries over Europe. Very good. Thank you. Thanks, Lars. Thank you. We'll move on with David O'Brien from Goodbody. Please go ahead. Your line is open. Good morning. Thanks, guys, for taking my questions. Firstly, if I could start on corrugated pricing. Has there been any irrational behavior from a pricing perspective from the non-integrated box makers out there? Or what's, what's the backdrop been like? Secondly, the freely negotiated contracts and customers that you're talking to, you know, are usually a little quicker to come back to you on price. What have those negotiations been like? Are they rewarding the, the value add, excuse me, and the reliability that you brought them over the last 12, 24 months and beyond? How has that experience been? Switching to CapEx, it's clear the balance sheet's very strong. You're saying there's a lot of opportunity out there. Are you guiding us that the CapEx number is, is going to be EUR 1 billion into 2024 as well? How should we think about that going forward? Finally, last one from me. Interested to see the entry into North Africa during, during the period. Maybe you could talk to us about the ambitions or prospects for growth in, in North Africa overall, or any other regions you could maybe enter? I'll take the first and the last one, and then, Ken, you can think about the middle one. Basically, with regard to Morocco, you know, we see that as an opportunity. We've been exporting to Morocco from Spain for a number of years and building up our base there. Obviously there's a significant transport cost to do that from Spain to Morocco. We've built enough of a base business to justify a factory, and given the fact that the market is, you know, very dynamic and growing and strong and agriculture and other things are very good in that market, and as I say, growing, so we, we see that as an opportunity. I, I don't, I don't say that we're going to go into many other countries in Africa at this moment, but, you know, if there's an opportunity, we'll obviously look at it. There's nothing on the agenda right now. Morocco was just a specific case in point where we built up a pool of business that we could load a, a factory with initially, and then, build from there, but with our own sales force and our own management team, and so we decided to take that opportunity. With regard to corrugated pricing, you know, there, there is always sometimes irrational behavior in the corrugated business when business goes out for tender. That said, you know, most of the time you're able to retain the business because the business is kind of sticky. So I think overall, as we said, we've been gaining market share, and, you know, corrugated pricing, you know, tenders are, are reflecting some of the paper markets that, that are out there, but with a plus, I would say. With regard to the normalized customers, yes, we are getting rewarded for our service to them and our innovation and our design and our security of supply from both, both contractual customers and, let's call it free, free market customers. So clearly that's something that we intend to maintain as best as possible. Morning, Dave. On, on CapEx, not getting specifically on 2024 at this stage, as you can imagine, but, you know, I think it's fair to say that this is the, this is the third year of our 2020 CapEx program of the $1 billion. There's clearly, you know, capital in the, in the one-year cycle. A lot of projects kind of continue in two, three, four years. As we look out, you know, as we sit here today, clearly less committed capital for 2024, even less so for 2025. I suppose we go back to the framework we put in place, which is one of flexible and flexible and agile at its heart. There's certain projects that will continue true. If we think about some of the bigger projects like the, the machine that Tony talked about in Mexico, or indeed, you know, the Cali boiler, for, for, ESG, or indeed some of the projects around Europe in the mill system, but retain a lot more flexibility on the box side. While, while not, not specifically guiding on 24 yet, I, I think, you know, you, you know us well enough to know that, you know, we, we take a look ahead, flexible and agile where, where we see that and can flex up and down as, as the market demands. Great. Cheers. Thanks very much. Thanks, David. Thank you. We'll move on with our next participant, Andrew Jones from UBS. Please go ahead. Your line is open. Hi all, thanks for the for the call. Just on the third quarter, can we just talk through the moving parts for that? Because obviously... pricing is coming down. Are you seeing that kind of accelerating or decelerating versus the 3.7% down sequentially we saw in 2Q? On the volume side, you know, it seems like you've seen an improving trend in July, but, you know, if we take into account seasonality and your belief that volumes do seem to be sort of improving from the weaker levels we've seen in recent times, are we seeing a quarter-on-quarter volume improvement? If so, you know, approximately how much do you think? Then just on the cost elements, you know, I guess OCC is coming down, energy is coming down. Like, can you give us some sort of guide for how much cost relief potentially we could see in the third quarter? just for some clarification, I those full year cost bridge numbers you gave earlier. I heard the labor energy number. Can you just remind, remind us, what were you saying on distribution, wood, and other raw materials? Thank you. I mean, Well, we've never had to forecast a quarter. Andrew, we, we... It, it's, it's not something that we try- I mean, what we said in July is that it's a similar trend to June. Honestly, I'm not gonna forecast August and September right now because, you know, the, I don't, I, I just don't have a sense of... We think it, it feels like it's gonna be the same in August and September, but, you know, we're not 100% sure. It could be better, it could be worse, or it could be the same, frankly. I think, you know, we, we, I mean, we're trying to build a long-term business here, and we're putting in place all the planks to take advantage of business opportunities in various different markets. You know, while, while we need to think about every quarter and, and, and make sure that we report as best as possible every quarter, you know, we're, we're, we're more of a long-term business than that, Andrew. What I, what I guess, you know, we, we have put in place a lot of capital that will take advantage of opportunities when they're there, and we have people in the business that are, you know, dedicated towards making sure that we, we provide the, the, the best service for our customers, and that is leading to market share gains. That's, that's what we're going to continue to do, but- On the cost items, Andy, you picked up energy labor on distribution. I think we said it was about, initially at the start of the year, we thought about a $20 million headwind, probably a $20 million, $10 million-$15 million tailwind now. Wood, clearly start the year, probably about a $50 million headwind, probably slightly more, probably slightly positive now, maybe $10 million, $20 million. On all the other cost categories, we would have seen a lot of those as a headwind as we started the year, and they kind of maybe $50 million, I'd say. They're probably trending now to about between $75 million and $100 million as a kind of tailwind. Look, Kire- Kieran and Frank can, can take you through the, in, in more detail than that if, if you need it. I think it's fair to say that a lot of that work is done around our ability to control our own costs and the good work we've done around things like energy, where we're, you know, 76% hedged for the year, so very little open position, irrespective of what happens in those markets as we move through the back half of the year. Okay, cool. Just one follow-up on the industry. I mean, given the fact that obviously volumes are clearly a lot weaker than people were thinking when they were adding a lot of the capacity that's been coming through in recent times. Do you think the industry has done enough so far to sort of balance the market in the medium term? As, as a leader in that, I mean, in your view, how much capacity do you think needs to come out on the, on the Testliner side in the next sort of couple of years, given capacity additions? I think the industry is. I mean, as I think I mentioned earlier, you know, the price levels that exist today for non-integrated player are extremely challenging, and you've already seen a number of market sellers closing or shutting or announcing shuts of their, of their, of their mills. That's obviously gonna be positive. If pricing stays where it is for much longer, you're gonna see more, and that's gonna be positive. You also see very significant players who have announced increases of capacity, halt those capacity increases for either cost reasons or market reasons. Then you've seen other players delay the installation of capacity by upwards of 18 months at this juncture. You know, I think there's, there's, there's, you know, if you're not integrated right now, it's a very challenging market, and that's gonna come to the fore for people who are, who are trying to sell their paper in this kind of market. And I think that's gonna be, that's gonna set the, the, the plank for a new upward movement at some stage in the future. The question is when, not if. Hmm. Okay. Thanks a lot. Thank you. Thank you. We have reached to the end of the Q&A session. I'd like to turn the conference back to Mr. Tony for any additional or closing remarks. Thank you. Yes, thank you, operator. I'd like to thank you all for taking the time to be with us today. I, I think Smurfit Kappa, as I mentioned, has really put itself in a fantastic position for the future. You know, while we don't like to have down results, it is still the second-best first half in our history. You know, we've shown the resilience of our business model, through the years and, of course, through, through the first quarter, where our performance has been better than practically any of our peers that we've seen, reporting thus far. We feel pretty proud about that. We feel good that, that our business is in very good shape to take advantage of any of the opportunities that are going to be presented to us as we go forward. That's what we intend to do. I think that's, you know, the team is stable, the team is strong, the team is committed, and the team are aligned to our shareholders, and that's what will eventually make sure that this company continues to develop forward in the years ahead. I'd like to thank you all for your time and, and your questions and most especially, your support, both all through the years and hopefully into the future. Thank you all, and have a very nice day. Thank you for joining today's call. You may now disconnect. Have a nice day, everyone!