Q3 2019 Earnings Call
Hello, and welcome to be <unk> third quarter 2019, Michelle throughout the call all participants will be interesting only mode and afterwards I'll be a question and answer session. Please note that this call is being recorded today I'm pleased to prevent <unk>, chairman and CEO piece again.
Good afternoon, and good morning, everyone and welcome to our earnings call coming to third quarter two September thirtyth.
Oh, which follows publication earlier today of our result.
With me on the call today, or David Matthews, Our CFO , Sean Murphy, our Chief operating Officer, John Sheehan.
Our corporate development in Investor Relations director.
Oh My remarks today will include certain forward looking statements. These reflect circumstances at the time, they're made or the company expressly disclaims any obligation to update or revise any forward looking statements actual results or outcomes may differ materially from those the baby expressed or implied due to a wide range you're factors, including those.
Set forth in RCC findings on our news release.
Our earnings release for the quarter sweaters, our financial report related materials.
Can be found that are not group dot com.
Information regarding the use of Nongaap financial measures May also be found no section of the release, which also includes a reconciliation to the most comparable GAAP measures of adjusted EBITDA and adjusted earnings per share.
Well details of the company's Dockery forward looking statements. This favour can be found in our S. T SEC filings.
So that's moved to the results are the results today.
Her show Arkutun, especially innovation.
Classified as discontinued operation within the group's results.
This follows our announcement last July .
Good and specialty business would be combined with XL.
To form Caribbean Patrick.
And I'm pleased to say that the trivia a transaction completed earlier today.
We're talking about definitely later in the call.
Looking to our results for the quarter.
We delivered a strong performance highlights of which our revenue of $2.4 billion in line with the same period last year and constant currency growth of 3% to in continuing operations.
Adjusted EBITDA of $424 million, an increased by 6% compared the same period last year slightly ahead of our guidance adjusted EBITDA from continuing operations increased by 9% at constant currency.
Adjusted EBITDA margin from continuing operations of 18.5% to the quarter and <unk>, 17.7% to New York today.
Three of our four divisions as well as our discontinued operation recorded constant currency growth in adjusted EBITDA for the quarter.
Last North America continue to stabilize with adjusted EBITDA growth achieved despite ongoing volume softness.
This follows the actions we've taken over the past two years.
Adjusted free cash flow for the group was 244 million in New York State an increase of 16% from the prior year.
Adjusted earnings per share of 60 cents for the quarter, an increase of 15% on the same period last year and including the impact of lower depreciation charges arising from the trivia and transaction.
We ended the quarter with cash and available liquidity of $1.1 billion, that's before the two and a half billion bought our passion, though today from the attributable transaction.
Demand for our sustainable packaging products is very strong.
We've increased our guidance for the full year in respect of continuing operations to reflect the stronger than expected third quarter retire.
So if I turn to revering significant performance for the quarter.
And my commentary will be focused on constant currency results.
Last Europe performed well in the third quarter, a strong operating performance combined with our diversified business makes an healthy market dynamics more than offset some weather related softness in beer markets.
Revenue of $414 million increased by 4% compared the same period last year with good growth in the food business and increased activity in our engineering business.
Adjusted EBITDA increased by 11% to $108 billion in the quarter compared with the same period in 2018.
This growth primarily reflected an improved mix strong operating in price cost performance.
And the impact of IRS 16.
The outlook for glass in Europe remains very positive consumers trust and appreciate the purely an infinite recyclability up the product, but our customers are attracted by the ability to deliver their premiumization and sustainability objectives.
We have a diversified business across Europe , with a proven record of sustainability quality and innovation and I've seen a strong and growing emphasis on partnering with our customers on the long term contract basis.
Market fundamentals are tractor our inventories are low on our capacity for 2020 is at this point in time burchfield. So.
Our glass business in North America continue to stabilize in the third quarter.
In what remains a challenging markets.
This result reflects the decisive actions we've taken over the past two years.
Revenue of $438 million increased by 1% compared with last year with a 1% decline in volume mix in the quarter.
This was offset by the pass through of increased costs.
Beer end markets remained soft partly offset by growth in wines and spirits.
The capacity adjustments to rightsize, our footprint combined with initiatives to optimize our cost base since 2017.
I have enabled us to better manage softer industry demand on our third quarter, adjusted EBITDA increased by 15% to $77 million, including IRS 16 effects.
It is now a little over a year since the initial in position all in the U.S. South tariffs on Chinese coal imports.
Since then we've seen some moderation in imports from the peak levels, though they remain high by historic standards.
We've previously outlined initiatives, we've undertaken to strengthen our business, including capacity reduction Congress investment.
And mark and repositioning and enhancing labor flexibility.
And in parallel with these actions, we and others recently filed an anti dumping protection against imports of Chinese glass containers.
This petition is currently before the International Trade Commission on the U.S. Department of Commerce in Washington.
As a producer of U.S. made glass containers, employing approximately 5000 colleagues and high quality grows we're keen to see action taken against what we view us on economic at effectively subsidized dumping of product into the U.S. marker.
Given a level playing field and the various internal improvements, which we are making we believe that the U.S. glass business as a promising and profitable future.
It has scaled business, producing a premium sustainable and infinitely recyclable product, which enjoys a food safe advantage over most other substrates.
If I turn to our beverage can businesses unit volumes shipped in the third quarter increased <unk> percent.
The increase sorry by 7% an aggregate.
With strong demand in both regions.
In Europe .
Revenue was $412 million this increased by 4% compared with last year with volumes up 3%.
Adjusted EBITDA of $68 million declined by 6% constant currency, reflecting the continuing impact of less than full recovery of input costs.
Year to date volume shipped in Europe is also up 3% and market demand remains healthy with our available capacity for the year ahead.
Actually also.
We remain well placed to capitalize on this growth given our specialty footprint, which is being augmented by targeted investments as well as an improving cost base.
In the Americas metal beverage packaging markets remained strong and our end market focus leaves us attractively positioned revenue increased by 5% to 460 million $464 million in the quarter.
Volume mix growth in the quarter was 11% with strong gains made in both North America on Brazil.
These gains were partly offset by the pass through of lower input costs.
Business mix remained positive in both markets.
I'd like to a strong operating performance contributed to adjusted EBITDA growth of 18% to $67 million in the quarter.
Since the completion of the beverage can.
Business the acquisition of the business in 2016, the Americas business has made significant progress.
Operating performance has been strong and targeted investments in our plant network.
Including the completion of our new ends Blanton monopolists in Brazil in mid 2018 have enhanced an already strong footprint.
In addition, we have considerably diversified our customer base and business mix Reoriented to better performing cash raised last remaining focused on achieving value for all our products.
We view prospects for continued growth through favorable end market exposure ongoing packs mix shifts can gradual sustainability driven conversion from other substrates as attractive.
In both North America in Brazil are available capacity is fully sold for the remainder of this year on for 2020.
Demand is strong.
Finally, our food and specialty business, which as I noted earlier is now classified as the discontinued operation recorded third quarter revenues of $649 billion that reduction 2% from prior year.
This resulted from a second successive week harvest in Europe , which more than offset volume growth and other areas as well as a delayed food pack in North America.
In response to timely cost reduction initiatives across the business as well as the impact of IRS 16 led to adjusted EBITDA growth of 6% $204 million in the quarter.
The dynamics of the European markets remain attractive. Despite recent disappointing harvest in 2018 and 2019 demand is stable. While there is also attractive growth opportunities are also attractive growth opportunities in areas, such as pet food and nutrition.
Abroad, and well invested footprint combined with the continued focus on efficiency and cost recovery will benefit future performance.
In North American food and specialty.
We have the industry best invested asset base following significant capital expenditure in the 2013 to 2015 period.
It remains well placed to continue the strong progress made in recent years through a highly competitive cost based on a superior product offer.
And as with dry foods specialties, so focused on infinitely recyclable method packaging position as well to benefit from heightened consumer awareness.
Resulting brand owner engagement.
If I could say few words about trivia.
The transaction closed today, following which are now we'll hold a stake of approximately 43% in the business with Ontario teachers are partners of the joint venture hold a controlling the balance of 57%.
Caribbean has the scale telair and metal packaging with over 50 production facilities worldwide that principally located in Europe in the Americas and generating pro forma annual revenues of approximately $2.7 billion.
Premium holds leading positions in substantially all the main markets observer enjoys a strong reputation for innovation service and quality.
And we look forward to working with Ontario teachers in supporting trivial and its management team led by Michael makes to achieve its growth and development potential in the years ahead.
Arda also receive cash proceeds today, two and a half billion dollars, which we will use for cash repatriation.
Today issued redemption notices related to.
This two and a half billion and use the proceeds and this is in line with coffee set out in July .
And the dash repayments will reduce year end 2019 leveraged to approximately 4.5 times adjusted EBITDA pro forma.
For the divestment approval specialties, so thats four and a half times adjusted EBITDA pro forma for the divestment of proven specialty distributor.
In terms of financing, we took advantage of a favorable market in August to refinance.
1.65 billion senior notes June 2024, and we obtain significant interest cost savings and extension of maturities to 2026.
We now have no debt maturities arising in Arda before September 20 to 2020 to.
This refinancing and in conjunction with the use of the Caribbean proceeds to repay debt would reduce our annual cash interest costs by approximately $180 million.
This will further underpin free cash flow generation.
So as we look to the future we remain focused on working with our customers to meet their evolving needs for sustainable Macrilen glass packaging.
Whilst at all times trying to ensure that we derive appropriate value for our products.
We've increased our full year 2019 outlook to reflect performance in the first three quarters.
Which were partially offset by a slight increase currency headwind since our last update.
Our revised guidance is now swallows, we expect adjusted EBITDA of 1.16.
To $1.18 billion pro forma for the divestment or food and specialty and this compares to previous guidance of at least 1.15.
We expect earnings per share of between 1.65, and 1.7 $5 per share and this will include of course, the benefit us through the specialty fluids and October divestment.
Net leverage as I said earlier, approximately four and a half times adjusted EBITDA is expected at the end of December 2019, again pro forma for the divestment of food and specialty and the receipt of the funds relation to that transaction.
So having made these opening remarks, we'll now begin to take any questions that you may have thank you.
And ladies and gentlemen, if you wish to ask an audio question. Please press zero and then one on your telephone keypad now if you wish to withdraw your question you may do so by pressing zero and then two to cancel.
The first question is from the line of.
Are you from Citi. Please go ahead your line is now.
Good morning, guys effects of Randy Tole sitting in for Anthony.
I just wanted to focus on glass packaging in North America.
Yes showed year over year improvement, while some of your competitors struggled in the region can you just talk about current pipe demand dynamics in the region for our dog, specifically and on the industry more broadly. Thank you.
Well as I said in my remarks Randy.
The market is soft and last North America.
But we did anticipate this and took steps for the last couple of years to reduce capacity in to rightsize, our capacity and we are comfortable where we sit now.
Pricing is weakish Theres [noise].
Capacity and.
Asked me, but but the industry should be doing I believe there's overcapacity there that the rest of the industry needs.
To do something about we've done what we're going to do we're comfortable where we fit but.
I think others will have to assess the situation and take out capacity.
Gotcha understood and then with all the cost cutting you've done in North American glass this year and the capital you put in through automation and your other various projects how should we think about that bump and earnings in 2020 at business independent of any volume changes.
Yes.
I think one should assume improvement, but you know.
I think has as with all businesses that are stabilizing and working and non operating in an NOL soft markets.
I wouldn't be anticipating massive increases.
Okay. That's helpful apparel or thank you.
Next question is from Jeff Edwards from Goldman Sachs. Please go ahead. Your line is now.
Hi. This is Travis I was just a quick question on fundamentals.
Last quarter, you talked a little bit about how you're thinking about capacity expansion on the Bev cans side I know with industry appears announcing more capacity expansion I was just wondering if you revised so how you're thinking about potentially bringing on new capacity of some of your volumes are constrained.
Well I think obviously long with the rest of the industry, we're experiencing very strong for our products and as I said earlier, we have arch has no capacity to allocate to anyone.
In any of the regions were operating.
And we are looking at some interesting possibilities with customers as I think I've said previously were likely to make such investments on the back of agreements with customers saw we won't be building any new plants, but we will probably be adding selectively across our our footprint.
Q course.
Were looking now at our plans for the next three years, we're looking at our budgets. So I think but when we come back to talk again in February we'll be able to get a little bit bar guidance on that but we are talking positively at situations, which will give us appropriate returns on look after our customer demand.
Got it. Thanks Thats helpful. And then a question on the balance sheet. How this comes up most calls but with.
Think about the timing of the Holdco refinancing.
Okay, again, thats going to be more 2020 timeframe, but are there any sort of benchmarks are thresholds that you're looking to hit head of that transactions such as an overall opco leverage target or maybe a specific stock price are you just looking at broader market conditions ahead of that.
Well look I think broad market conditions are very important in this regard as we.
We assess our off.
Our financing situation and the markets on a very regular basis and I.
I don't think we're waiting for any particular stock price I mean I think.
We would see in terms of guidance on the Opco I think going forward, we expect to keep the opco leverage I mentioned that we'll be at the end of this year somewhere around four and a half times pro forma and we would expect that to keep that in the range of four to four and a half going for four to five times 4.5 times EBITDA going forward.
You mentioned, the Holdco and 2020 that could come sooner if we if we see off good market conditions. We have made any any firm decisions are buying decisions on that yet, but we are we're always looking and certainly the markets at the moment tell our seems to be in good shape and our debt.
Is performing well.
Awesome really appreciate the color I'll turn it over.
Next question is from fits from Bank of America. Please go ahead. Your line is open.
Hi, Thanks, very much on at September Thirtyth 2019, how much was outstanding on your off balance sheet securitization facility and how much.
That is relates to food in specialty packaging.
Yes.
Hi transferred to trim packaging.
Yes, Hi, Roger it's just over 600 Dems September just broadly similar to the end of June and just over 150 million will be traveling to distribute them.
Thank you and.
I think of the 333 capital leases in September .
Has 19.
How much will get shifted over to trivia Amazon I.
I think previously said around high eightys or something like that.
That's about right that will travel stay with Tribune.
Okay.
And the other thing is typically give.
For one quarter forward EBITDA.
And.
Free cash flow I Wonder if you might give us.
What your Q4, EBITDA guidance might be pro forma our with including 40, especially and what your 2019 free cash flow would be presumably that would be with 10 months of.
In specialty.
Yes, I think the easiest thing to boost to give guidance on the continuing operations could clearly trivia move drop away from this board who would.
I think if you look at Q4 the guidance if you look at the range for the full year comes out of it back to 50 to 75.
Compares to a constant currency loss year to 47, Thats will continue operations.
In terms of free cash flow, what we said on the last call for continuing operations is about 350 million.
That will improve as we go overboard in Mexico as a result, the reflects the pool mentioned earlier on Bucks around 350 free cash flow from continuing operations benign team is probably getting them to be working on at this point in time.
Great and just to be clear that add is before sort of the 90 million of quick payback.
That's correct, that's great to be lift lower than that because some of the short payback capex related to discontinued operations Center 75 ish of the short payback capex relates to continuing operations.
Thank you very much.
And next question is from Unnim shop from BMO capital markets. Please go ahead your line is out.
Hi, good morning.
Morning.
Good morning, and some impressive beverage can growth in North America that 11% volume mix growth can you unpack that a little bit how much is mix shift towards specialty cans. How much has just increased volumes any details it will give us there would be great.
Yes.
In the quarter it was that both regions were strong.
But we saw was that tap.
We were high single digit in North America, and we were significantly higher than not in South America.
And across both standard on specialty it was that was very healthy.
Thank you.
And then.
On the quick payback projects.
You have any contribution built in for 29 can answer how much and then also 2020 EBITDA contribution.
Good where you some contribution coming through just to remind everybody. What we've done we spent about 60 million last year with spending about 90 million. This year that that's coming through during the goals. This year. So once we get 2020 . The full benefits will start to come through from these various projects, which are sort of around three years payback period.
Good.
And can you identify and EBITDA contribution amount now.
Well, there's about three years once we get things 2020 .
It will be roughly 40 million from continuing operations, because clearly some additional payback.
And as also beat in the food and specialty business, which we clearly traffic trivialize attribute to move the benefits of actual capex items.
Got it okay. Thank you very much.
Next question is from Debbie Jones from Deutsche Bank. Please go ahead your lines out things.
Hi, good morning.
My first question is you're one of the few companies that can look at that metal.
And glass and have a commissioners your customers out whats can help their sustainability goals and I'm wondering if you could just give us some color on kind of glass market are you, having those conversations with your customers, because clearly, helping and metal and I think for investors, just a little less and less.
You can't really see if that's something that's going to help mitigate goals essentially.
Well, obviously, Debbie we are where almost unique in that we have the two in our stable.
We are yes, there are discussions I think it's fair to say these discussions are intensifying the both in beverage cans on involve us.
I think you probably see beverage can benefit from the sustainability tailwind before glass although.
It will also come in in last two I mean, obviously capacity in European vast industry is extremely ties anyway, not just for sustainability reasons, but because you've had a number of the bigger customers moving forward with premiumization campaigns on boss is seen as a way of doing that.
And we've also seen very strong demand from.
Vast customers with people, who are already using costless substrate in Europe .
With that accuse awareness are much more stronger awareness amongst our customer base all the importance of the supply chain supply base.
Okay and loss and looking for longer contracts to make sure that they have capacity available to them.
To support their brands as they go forward.
I I think there hasn't been a wholesale conversion yash, what you're seeing bolt in last sand and then in metal obviously as you can see from our peers as well as the effects of sustainability Tailwinds coming there we haven't yet seen mass conversions, but we are seeing a lot of new products.
Longstanding in metal and someone glass as well I think it will come probably slightly laser in glass on a macro but that's not to say that the asphalt and important role in the sustainability and we're quite comfortable every bit of into two of them and that and in our stable.
Okay. Thank you.
Your question you talked about a lot of different things that could potentially be opportunities for year two investment in the coming here just given the growth that you're seeing I'm curious if we were to just isolate.
Great and Latin America is is that something that you're happy with at this point or is that also on the table in terms of potentially getting bigger in that region.
While we are delighted across our business in Brazil on our team there has done a fantastic job I was there two weeks ago with my colleagues.
Visiting and.
We have a terrific operation down there which is growing.
Very well the market dynamics down there are very good given one of the big customers is moving away from returnable glass bottles to beverage cans. So you've got very strong demand features down there.
And we're well placed with with with the three plants. We have there the mouse pads is already too small the ads Bob.
We're going to have to look at some expansion. There I think we're probably more likely to want to invest in Brazil them further afield in Latin America quite frankly.
I think to focus on additional investment in our best Ken will be in the us on in.
And in Brazil, and in Europe , and where we're evaluating the different opportunities up we have at the moment trend.
That already on the call we'll come back to you guys are in the new year from when we completed our budgets and strategy strategic plans.
Okay. Thank you appreciate the comments.
Next question is from college credits from Guggenheim Partners. Please go ahead. Your line is now.
Hi, Thanks for the presentation.
What's currently the pro forma LTM adjusted EBITDA from continuing operations and of that number one.
The impact from my for 16.
The LTM the on September is about 11 75.
And for US 16 in the nine month was about 6 million.
But clearly the full year effect to that because I press sixteens IDBD first of January so putting into full year Congress sixteens by 18 million.
Okay perfect. Thanks.
And next question is from Brian Maguire from Goldman Sachs. Please go ahead. Your line is now open.
Good morning, it's actually Arthur Omega on for Brian . Thanks for taking my question I was wondering if you guys could provide just a little bit more detail on the Bev can expansion that you guys are planning.
More specifically since it won't be coming from new facilities.
Are you more likely to do it through speed ups or.
Adding to existing facilities.
And what kind of incremental capacity are you seeing in each region. Thank you.
Well I as I said too when I was answering Debbie.
There were looking at various things at the moment within our existing regions.
Things like speed bumps are an obvious and very efficient way up increasing capacity on getting good return clearly our focus.
In the regions and.
In the regions, where we operate at the moment, who will be on making sure that we get very good returns that any investment, which we make and that its saw designed to support customers on is backed up by.
Appropriate commercial and contractual arrangements with customers, but we havent, yet where we were out we'll come back to that in early in the near year, but enough. When we've completed our budget process, but we are looking at various interesting projects, yet, but they will be within our existing facilities.
So no specific number.
No.
Okay, then just moving on to the contracts and that business now that the food business has been taken away from the metal packaging side of things how does it look relative to.
The legacy segments in terms of Passthrough timing and inclusion of non metal expenses in those pass throughs is it different and in what way.
I think in Europe , probably.
More favorable the at the bias of the business in beverage would be more tilted towards longer term contracts on multi year, whereas in that food would be roughly 50, 50 and lets you know the path to their annual basis as John has worked well also an annual negotiations the job in North America Oliver.
This is have always had very clean and quick and efficient pastors.
We have been adjusting some of our arrangements with customers over the past year to move from them.
Inappropriate PPI tied into that indicate that were constructed to more accurately math the cost of the product. So we've had some encouraging progress fare families. We thought about that.
Thanks, and I'll turn it over.
And next question is from our own the stemming from RBC capital markets. Please go ahead. Your line is helping.
Hi, good morning.
Good morning, yes.
Good morning.
Good morning.
Hi, I'm.
I was curious so if you look at the glass business, obviously have gone through some.
And changing market dynamics with weakness and match beer.
Is that your most profitable part of the glass business and most cash generative I'm just curious because.
Yes.
The declines continue would that continue to affect your EBITDA and cash flow generation.
No I think look I think it's about balancing the business.
The different sectors and depending on the plants than the machine lines, you have et cetra configuration is different for different aspects of the business.
Yes, the beer market has been weak, but there we as I said at the outset, we believe that we're well positioned now with our footprint to deal with the softer market as it is.
So were comfortable with that so I don't.
Not concerned in relation to seeing a drop off in EBITDA. If this further weakness and bear think theres theres other sectors there.
Where we have given I think some growth we've seen a reduction in nicely in Chinese imports as I said earlier I hope that to haul further tariffs are imposed as result of the actions, we and others have to in the industry have taken.
With the ITC in Washington, and following that I hope that that will also.
Lead to improved volumes through reduced imports.
But.
We'll see I mean I.
I think it's more about being balanced and having the right portfolio plans of the right footprint to deal with date, the smaller market that we find ourselves going from previously.
The amount of bankers straight.
So what we do in North American ads to get we pivoted away and part of the past few years.
And tempered capacity, we have taken as a b, 20% of our math spirit capacity over the past couple of years, so that sustained app.
Great positive.
Right Thats helpful.
So just on the on the metal side.
There's been some capacity additions that have been announced by some of your peers.
I guess, how are you viewing your your footprint both in North America.
And Europe , and maybe even Latin America.
Do you see the need to add to build any greenfield plants or are there enough brownfield opportunities or you're comfortable with your with your footprint as it stands. Thanks.
We will where as I said earlier, we see opportunities in.
Growing capacity selectively in some of our existing plants.
In all three regions of in all three areas, but we do not see.
Any greenfield plants note.
And we don't.
We don't see all so any likely development outside of the regions in which we operate for the moment.
But we see good opportunities within the us Brazil on Europe .
Thanks.
And just as a reminder, if you do have any further questions. Please press star one on your telephone keypad now.
Next question is from Roger Spitz from Bank of America. Please go ahead, Sir your line is up.
Thanks, a follow up on starting with the pro forma guidance midpoint, 1.7, now and down to the 350 free cash. So can you provide the next phase capex cash interest cash taxes, working capital restructuring or other items at might go in between those two numbers.
Yes, I can do that I think this is continuing operations starting elevenseventy capex around full 20 interest, including the the benefits of the the funds coming in from Tribune.
I'll be back 310.
Tax around 80, and then the working capital inflows, which was broadly offset by the.
The capital amount that you have to pass on the leases that change the results of offer six students that comes to just slightly north of 350.
Perfect and.
We think of 2020 capex in the same for 20 or should we think of a different number there.
Well I think we're going to come back and update you in febres bold has settled we kept the Tom's on this call. We're looking at some very interesting opportunities investment opportunities. So we will come back and update you in February with us with the core level of maintenance Capex and how we see investment capex sitting on top that backed by the customer.
Contracts and very good returns.
Okay.
So.
Wanted to clarify one thing said earlier.
When you said the whole called Wi Fi could come.
Before 2020.
Maybe that was head or I didn't hear correctly, you mean historically as before fall of 2020 do you mean for fall 2020, our credit actually happening.
November December 2019.
I think what where we're watching we review the markets all the time and.
I was asked specifically whether it would it be 2020, it could still be funded 20, but it could be sooner. We haven't made any any firm decisions on that markets are attractive.
As we see them at the moment. So we are certainly having completed the TREVYENT transaction today.
You know assessing our options, but as I say no firm decisions, yet, but we start to see some attractive.
Input to listen to and how we it's possible we could look to deal with the holdco sooner rather than later.
And lastly in North American Beer do you think you gain share.
And the segment.
Only because of the others lost more than you.
I don't think particularly we have recently representation crop market, but the general bear market has been down I think pivoting some of our volumes away and basically taking as Pat take at half the app.
As set forth in our favor rather than care again.
Thank you very much.
Next question is from Kevin. Thank is from Doubleline capital. Please go ahead your line is.
Hi, Thanks for the time.
In terms of cost inflation, you're seeing out of Europe and metal Bev cans.
What are the main buckets of that and are you seeing those trends within.
Absolutely.
Now that the while we were starting to their principally while up as a couple of years, though we had a number of fat contracts that were up for renewal on the was new capacity coming into the market at the time. So the I know the recovery provisions that we haven't a number those contract wouldn't be as good as we might like so we've got about the past couple of.
Callers with us for another couple as well and on a related to non method for things like labor energy in got that App on its been NBS back in the beverage side principally.
And are you seeing the same trends within the food and specialty.
Yes.
No. There is that there's more of an annual as I said earlier.
That business has that 50 50 50 between annual so that the reset happens more frequently and it hasn't been that.
Same challenge.
It related to specific circumstances, there, but that two two and half years ago.
Excellent. Thank you so much.
And next question is from Amelia Apalon from tissue capital. Please go ahead. Please go ahead your line itself.
Yes, hi.
My question was also around sort of does the week of stability.
Yeah.
Thank you, Rob so you're saying like cost that Kevin.
I didn't quite get dance sorry seeking.
Yes no.
Recovery of therapy, and non method cost volumes in the business have been good seen there that over a 3% and the call. Her another year to date. So the market is healthy but have we deployed cycle too. If you beat that contract going back then, but the fundamentals of that market demand are very healthy and win.
At this contract.
Renegotiation that actually rolled off over the next at the next few quarters.
Okay. So you expect Aldo copper Macquarie.
Yes.
Okay. Thank you.
And there Chris no further questions registered so I'll hand, the call back to the speakers. Please go ahead.
Well. Thank you very much everyone for joining us today, and we look forward to talking to you in the new year, when we present our annual results. Thank you very much indeed.
This now concludes the conference call. Thank you all for attending you may now disconnect your lines.