Q1 2022 Ardagh Group SA Earnings Call
Welcome to the hardware group S. A first quarter 2022 update conference call today's conference is being recorded.
Welcome to the ARDRAW Group SA first quarter 2022 update conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Paul Coulson, Chairman and CEO , please go ahead.
At this time I'd like to turn the conference over to Mr. Paul Coulson Chairman and CEO . Please go ahead.
Welcome everybody and thank you for joining us today for our first quarter 22 bondholder call. Today's call follows the release of our results for the quarter earlier today and I'm joined on the call today by Sean Murphy our COO and John Sheehan our CFO .
Welcome everybody and thank you for joining us today for our first quarter 'twenty two bondholder call.
Today's call following the release of our results for the quarter earlier today and I'm joined on the call today by Shaun Murphy, our COO and John Sheehan, our CFO Artem.
Our remarks would, as usual, conclude certain forward-looking statements. These reflect circumstances at the time they're made and the company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors.
Our remarks will as usual includes certain forward looking statements. These reflect circumstances at the time, they're made and the company expressly disclaims any obligation to update or revise any forward looking statements actual results or outcomes may differ materially from those that maybe expressed or implied due to a wide range of factors.
Our first quarter financial report can be found on our website at rdogroup.com.
Our first quarter financial report can be found on our website at <unk> Dot group Dot com.
I'd like to emphasize that like so many people globally we are horrified at the events currently taking place in Ukraine And we very much hope that this conflict is brought to a halt as soon as is possible
Uh huh.
I'd like to emphasize that so many people globally, we are horrified at events.
Taking place in Ukraine, and we very much hope that this conflict gets brought to a halt as soon as possible.
Whilst we have no presence in Russia or Ukraine.
Whilst we have no presence in Russia or Ukraine in our Doha, and we don't source any materials or services directly from these countries, the conflict has led to steep increases in commodity prices in Europe , most notably in energy.
And Uh huh.
And we don't source any materials or services directly from these countries. The conflict has led to steep increases in commodity prices in Europe .
Most notably in energy.
Supplies of inputs have enough.
date been interrupted but costs have risen sharply and this is a topic to which I will return later in this call.
To date been interrupted but costs have risen sharply and this is the topic to which I will return later in this call.
Earlier today, Ardagh Metal Packaging, AMP, posted its first quarter earnings and held its earnings call, a replay of which can be accessed at aardaghmetalpackaging.com. On this call, we will not be providing any additional information regarding AMP.
Earlier today, our metal packaging A&P posted its first quarter earnings and held its earnings call a replay of which can be accessed at all.
<unk> met and packaging Dot com.
On this call, we will not be providing any additional information regarding a M. P.
So let me move to the results for the first quarter. Group revenues of $2 billion represent an increase of 19% in prior year levels on a constant currency basis.
So let me move to the results for the course first quarter group revenues of $2 billion, representing an increase of 19% from prior year levels on a constant currency basis.
Demand remains strong in our markets with volume mix up 5% and the balance of the increase represented by the pass-through of higher input costs, chiefly in respect of metal and energy.
<unk> remained strong in our markets with volume mix up 5% and the balance of the increase represented by the pass through of higher input costs cheaply in respect of metal and energy.
Adjusted EBITDA for the quarter of $253 million declined by 12% of constant currency versus the same period last year. Growth in AMP was more than offset by the impact of input cost inflation, especially in glass Europe and a weaker than expected operating performance in glass North America.
Adjusted EBITDA for the quarter, a $253 million declined by 12% constant currency versus the same period last year.
Today M. P was more than offset by the impact of input cost inflation, especially in glass Europe and a weaker than expected operating performance in glass North America.
Looking at things segmentally, starting with a brief recap of AMP, global beverage hand shipments grew by 1% in the quarter, reflecting a strong prior year comparable and driven by growth of 3% in North America. Shipments in Europe were unchanged on the prior year following a very strong fourth quarter of 2021 which depleted inventory.
Looking at things segmental Leigh starting with a brief recap of A&P global beverage can shipments grew by 1% in the quarter, reflecting a strong prior year comparable and driven by growth of 3% to North America shipments in Europe were unchanged from the prior year following a very strong fourth quarter of 2021.
Which depleted inventories.
Brazil showed progressive improvement during the quarter. Revenue of 1.1 billion increased by 25% of constant currency, reflecting volume mixed growth and the past through of higher input costs. And AMP's first quarter adjusted EBITDA was $145 million, slightly ahead of its guide.
Brazil showed progressive improvement during the quarter.
Revenue of $1 1 billion increased by 25% at constant currency, reflecting volume mix growth of the pass through of higher input costs in Anp's first quarter. Adjusted EBITDA was $145 million slightly ahead of its guidance.
AMP's growth projects advanced well in the quarter, and we will see both Europe and North American ship and growth accelerating sharply in the full year.
A&P as growth projects advanced well in the quarter, and we will see both Europe and North American shipment growth accelerating sharply in the full year.
AMP today guided full year 2022 adjusted EBITDA of the order 750 million compared with previous guidance of 775 million.
A&P today guided full year 2022, adjusted EBITDA of the order of 750 billion compared with previous guidance of $775 million print.
principally due to the increased input costs seen in Europe in recent months.
Principally due to the increased input costs seen in Europe in recent months.
AMP reiterated its plan to return $400 million in cash to shareholders in 2022 via dividends with an initial $0.10 declared in respect to the first quarter.
A&P reiterated its plan to return $400 million in cash to shareholders in 2022 via dividends with an initial 10 declared with respect to the first quarter.
AMP also intends to raise 600 million in nonconvertible preference shares in the near term as previously outlined.
He also intends to raise $600 million.
Non convertible preference shares in the near term as previously outlined.
If I turn to glass packaging shipments.
Shipments during the quarter increased by 6% compared to the same period last year with double digit growth in glass packaging Europe and the stable year-on-year out turning glass North America.
Shipments during the quarter increased by 6% compared to the same period last year with double digit growth in glass packaging Europe and are stable year on year Outturn in glass North America.
The demand for glass packaging remains very strong and we are sold out every day.
Demand for glass packaging remains very strong and we are sold out everywhere.
Last packaging revenues increased by 13% to $911 million, reflecting increased shipments in higher selling prices.
Last packaging revenues increased by 13% to $911 million, reflecting increased shipments and higher selling prices.
Joseph Deeb at the A of 108 million for the quarter was approximately 10%.
Adjusted EBITDA of $108 million for the quarter was approximately 10%.
12 million below our expectation at the time we last updated the market, and this was due to higher energy and other costs in Europe and weaker than expected operating performance and higher costs in North America.
12 million below our expectation at the time, we last updated the market and this was due to higher energy I know their costs in Europe and weaker than expected operating performance and higher costs in North America.
Looking at our glass business in segments glass Europe revenue increased by 24% to $473 million in the quarter compared to the same period last year shipments were 10% higher year on year. Following a similar 10% increase in the fourth quarter of 2021.
Looking at our glass visit in segments, Glass Europe revenue increased by 24% to 473 million in the quarter compared to the same period last year. Shipments were 10% higher year on year, following a similar 10% increase in the fourth quarter of 2021.
and shipments were well ahead of pre-pandemic levels. We saw strong demand throughout the quarter across all categories led by spirits and beer. Our growth investment initiatives also contributed well.
Shipments were well ahead of pre pandemic levels, we saw strong demand throughout the quarter across all categories led by spirits and beer.
Our growth investment initiatives also contributed as well.
The Russian invasion of Ukraine stoked already high levels of cost inflation, primarily in energy and other products, as manufacturer requires heavy energy input.
The Russian invasion of Ukraine, stoked already high levels of cost inflation, primarily in energy and other products as manufacturer requires heavy heavy energy inputs.
under recovery of input costs resulted in adjusted EBITDA of 65 million in last year some 5 million below our expectation in February .
And under recovery of input costs resulted in adjusted EBITDA of $65 million in glass Europe , Some 5 million below our expectation in February .
In response to these cost pressures, which we are mitigating, we implemented significant energy-related price increases with effect from 1 April this year. We will continue to monitor energy and other input costs, and we will implement further actions as required to restore an appropriate level of profitability.
In response to these cost pressures, which we are mitigating we implemented significant energy related price increases with effect from one April this year, we will continue to monitor energy and other input costs and we will implement further actions as required to restore an appropriate level of profitability.
We expect to achieve substantial progress in offsetting these cost increases in 2022 with full recovery in 2023.
We expect to achieve substantial progress in offsetting these cost increases in 'twenty to 'twenty two with full recovery in 2023.
In Glass North America, first quarter revenue was $4.38 million, an increase of 3% in the same period last year. Shipments for the quarter were broadly in line with the prior year. Cost inflation was also a feature of the North American market, though at least in regard to energy to a lesser extent than in Europe .
In glass North America pressure, our first quarter revenue was $438 million, an increase of 3% from the same period last year shipments for the quarter were broadly in line with the prior year cost inflation was also feature of the North American market. So at least in regard to energy to a lesser extent than in Europe .
Operating performance lagged expectations, resulting in elevated out-of-pattern freight costs during the quarter. These factors resulted in a reduction of adjusted EBITDA to $43 million, some $7 million behind our expectation when we updated the market in February on our fourth quarter results.
Operating performance lagged expectations, resulting in elevated out of pattern freight cost during the quarter. These factors resulted in a reduction of adjusted EBITDA of $43 million from $7 million behind our expectation when we updated the market in February on our fourth quarter results.
To address the challenges in Glass North America, we have appointed a new chief executive and CFO for the business, and we are conducting a root and branch analysis of all aspects of the business, be it operational,
To address the challenges in glass North America, we have appointed a new chief executive and CFO .
And we are conducting erosion branch analysis of all aspects of the business be it operational commercial and organizational.
Our objective is to bring about improved data-driven decision making and embed a culture of operational excellence across the business where we have real scale and market presence.
Our objective is to bring about improved data driven decision, making and embed a culture of operational excellence across the business, where we have real scale and market presence.
This will reduce complexity and increase profitability.
This will reduce our complexity.
Complexity and increased profitability.
In North America, demand for glass is very strong, but due to capacity and operating constraints and existing contractual customer commitments, we are unable to accept significant and very profitable new builds.
North American demand for glass is very strong, but due to capacity and operating constraints and existing contractual customer commitments. We are unable to accept a significant and very profitable new business.
This position will, however, change as the majority of existing customer contracts expire over the next two years, and as the new executive team that we've installed drives improved operating performance.
This position will however change as the majority of existing customer contracts expire over the next two years and there's the new executive team that we have installed drive improved operating performance.
Turning to our growth investment program, our growth projects advanced well during the quarter and despite some increased supply chain pressures, they remain largely on track.
Turning to our growth investment program, our growth projects at times, well during the quarter and despite some increased supply chain pressures they remain largely on track.
Costs have seen upward pressure, but our teams are successfully managing these challenges.
Costs have seen upward pressure, but our teams are successfully managing these challenges.
As outlined earlier today, AMP is ramping up production in facilities in Europe and North America, as well as progressing its announced Greenfield beverage can facilities in Northern Ireland, Brazil and Arizona.
As outlined earlier today A&P is ramping up production facilities in Europe , and North America, as well as progressing its announced greenfield beverage can facilities in Northern Ireland, Brazil and Arizona.
In glass packaging, our targeted growth investments in Europe have performed very well. We have also decided to construct a greenfield glass packaging facility in Brazil, backed by long-term customer contracts.
In glass packaging, our targeted growth investments in Europe have performed very well.
We have also decided to construct a greenfield glass packaging facility in Brazil backed by long term customer contracts.
This plant will be located on the same site in Minas Gerais where AMP is constructing a new can manufacturing plant.
This plant will be located on the same station mean, the shadows, where a M. P is constructing a new can manufacturing plant.
Following the completion of this investment in Brazil, which is expected to be completed in less than two years.
Following the completion of this investment in Brazil, which is expected to be complete in less than two years.
the group will have a presence in both beverage can and glass packaging manufacturing in each of Europe , North America, and Brazil.
The group will have a presence in both beverage can and glass packaging manufacturing and each of Europe North America, Brazil.
And this is a unique position for ARDA, which underpins our strong relationship with our global customer base.
And this is a unique position for our di which underpins our strong relationship with our global customer base.
Turning now to the acquisition of Consul, last November we agreed to acquire Consul, which is the leading glass packaging producer in Africa.
Turning now to the acquisition of console.
Last November we agreed to acquire acquire console, which is the leading glass packaging producer in Africa.
The Competition Commission in South Africa has now recommended approval of the transaction subject to conditions which are acceptable to us.
The competition Commission in South Africa is now recommended.
The approval of the transaction subject to conditions, which are acceptable to us.
Competition Tribunal, which is the final decision maker there, held a hearing this morning at which no material issues were raised and we expect the final clearance to be granted imminently with closing to follow very soon thereafter.
The competition Tribunal, which is the final decision maker there.
<unk> held a hearing this morning, which no material issues were raised and we expect the final clearance to be granted imminently with closing to follow very soon thereafter.
Consul is a very attractive business and one that we're excited to have joined our group. It operates four well-invested glass production facilities in South Africa, as well as smaller facilities in Kenya, Nigeria, and Ethiopia. It has a wide customer base, which is highly complementary to that of Ardaz.
Culturally, it's a very attractive business and one that we're excited to have joined our group is operating well and best in class production facilities in South Africa, as well as smaller facilities in Kenya, Nigeria in Ethiopia.
As a wide customer base, which is highly complementary to that of Argos.
Okay.
Glass consumption in consoles markets is growing strongly, driven by long-term trends, including population growth, heightened sustainability awareness, rising income levels, and shifts to premium one-way sustainable glass packaging.
Cloud consumption and consoles markets is growing strongly driven by long term trends, including population called heightened.
A heightened sustainability awareness rising income levels and shifts to premium one way sustainable glass packaging.
console will next month commission a second furnace at its nigel facility outside johannes
So we'll next months Commission, our second furnace at its Nigel facility outside Johannesburg and.
And we have committed to build a third furnace at this Nigel plant.
And we have committed to build a third furnace at this Nigel plaque.
Following completion of this third furnace, the Nigel facility will produce around 400,000 tons of glass each year.
Following completion of this started furnace Nigel facility will produce around 400000 tons of glass each year.
During the quarter, we continue to advance our sustainability agenda and pursuing the detailed roadmap which we have laid out.
During the quarter, we continued to advance our sustainability agenda.
Agenda.
We're pursuing the detailed roadmap, which we have laid out.
Recent geopolitical events in Europe have highlighted Europe's dependence on imported gas and have provided a renewed impetus to lower this reliance.
Recent geopolitical events in Europe have highlighted Europe's dependence on imported gas kind of provided a renewed an impetus to lower this reliance.
We have decided that we will employ new furnace technology in a scheduled rebuild of one of our existing furnaces in Germany next year. And this will enable the traditional gas and electricity mix to be inverted from where it is now in favor of gas to being in favor of electricity. And over time, this will allow the switch to renewable electricity as a fuel source, thereby materially decarbonizing the glass production process.
We have decided that we will employ new furnace technology and our scheduled rebuild of one of our existing furnaces in Germany next year.
This will enable the traditional gas and electricity mix could be inverted.
We're just now in favor of gas to being in favor of electricity and over time. This will allow us to switch to renewable electricity as a fuel source, thereby materially decarbonising the glass production process we.
We are also investigating other technologies to decarbonize the gas production process.
We are also investigating other technologies to decarbonize the glass production process.
During the quarter, we continued to develop our stem education program in the United States and elsewhere.
During the quarter, we continue to develop our STEM education program in the United States and elsewhere. Our U.S. program is now operational in some 320 public schools in the communities where we operate.
Our U S program is now operational and some 320 public schools in the communities, where we operate.
If I turn now to our liquidity and capital structure.
I turn now to our liquidity and capital structure. Cash and available liquidity was $2.4 billion in the group at the end of the quarter, including $1.7 billion in cash.
Cash and available liquidity was $2 4 billion in the group at the end of the quarter, including $1 $7 billion in cash $1 5 billion of this cash was that R&R group with some 100 $600 million of this to be used in the acquisition of console.
1.5 billion of this cash was at RDAB Group with some 600 million of this to be used in the acquisition of Consul.
In the current environment, we see merit in maintaining additional liquidity, enabling the group to take advantage of attractive opportunities that may arise such as...
In the current environment, we see merit in maintaining additional liquidity, enabling the group to take advantage of attractive our position opportunities that may arise such as console.
A significant proportion of the 770 million dividend declared last December was used to repay $485 million of our whole code debt.
A significant proportion of the 770 million dividend declared last December was which was used to repay $485 million of our holdco debt.
We do not envisage any further distributions to HOLCO in 2022 or 2023 other than dividends of approximately 100 million required to fund the HOLCO interest coupon payment.
We do not envisage any further distributions to holdco in 'twenty, two or 'twenty three other than dividends of approximately 100 million required to fund the holdco interest coupon payments.
So, before I conclude and to recap and turn to the outlook for the remainder of 22, demand has remained strong in our market.
So before I conclude and to recap and turn to the outlook for the remainder of 'twenty two.
Demand has remained strong in our markets Testament to the customer and consumer appeal of sustainable glass and metal packaging and.
testament to the customer and end consumer appeal of sustainable glass and metal packaging. And despite supply chain and logistical challenges, our growth investment program, which, as you know, is mainly focused on AMP, is largely progressing to plan.
Despite supply chain and logistical challenges our gross investment program, which as you know it was mainly focused on A&P is largely progressing to plan.
the acquisition of Consol in Africa as a new strategic growth platform to our business.
The acquisition of console in Africa, as a new strategic growth platform to our business.
Events since our last update have exacerbated already elevated input cut pressure as well as creating increased economic uncertainty.
But then since our last update have exacerbated the already elevated input cost pressure as well as creating increased economic uncertainty.
Demand for our customers' products and for our packaging has demonstrated resilience in all environments, most recently during the pandemic. We anticipate that this will remain the case now. In terms of inflationary pressures, we are actively working to recover these increased costs through pricing actions and other measures. We expect to make good progress in the current year with the balance recovered in 2023.
Demand for our customers' products and for our packaging has has demonstrated resilience in all environments. Most recently during the pandemic. We anticipate that this will remain the case now in terms of inflationary pressures. We are actively working to recover these increased costs through pricing actions and other measures we expect to make good progress in the car.
Jerry with the balance recovered in 2023.
We now anticipate full year 2022 adjusted EBITDA of the order of one point to $7 billion compared with previous guidance of $135 billion.
We now anticipate full year 2022 adjusted EBITDA of the order of $1.27 billion compared with previous guidance of $1.35 billion.
and including consult from 1 May, full year 2022 EBITDA is expected to be on the order of 1.4 billion of which 750 million comes from AMP. Year end net leverage at RDA Glass including consult and the receipt of the dividend from AMP is expected to be around five times adjusted EBITDA.
And including consult from one may full year 'twenty to 2022, EBITDA is expected to be of the order of $1 4 billion of which 750 million comes from A&P.
Year end net leverage at R&R glass, including console and the receipt of the dividend from A&P is expected to be around five times adjusted EBITDA.
So having made these initial remarks, we'll be very happy to take any questions which you may have.
So having made these initial remarks, we will be very happy to take any questions, which you may have.
Thank you.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again has star one to ask a question.
Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. And we'll take our first question from James Finnerty with Citi. Please go ahead.
And we will take our first question from James Finnerty with Citi. Please go ahead.
Morning, thank you. Just on the guidance, I didn't get a chance to run the math yet, but what's the implication for Glass-Ibida based on the new guidance for four-year 22?
Good morning, Thank you.
Just on the guidance I didn't get a chance to run the math, yet, but what's the implication for glass EBITDA.
So the new guidance for full year 'twenty two.
Well, it's the guidance is down, as I said.
Well, let's say the guidance is down.
As I said.
to 1.27 billion from 1.35 billion. So it's of the order of 50 million in glass and 25 million in AMP.
$212 7 billion from 135 billion. So it's up the order of $50 million in glass and 25 million in A&P.
Great. Thank you and then on on hedging I, just want to get an update there in terms of.
Great, thank you. And then on hedging, just want to get an update there in terms of how you are hedged going into the year and how you're hedged currently, especially against that gas.
How how you're hedged going.
Going into the year and how you're hedged currently especially against a nat gas prices.
Prices and energy prices.
Yeah, in respect of gas, we were hedged about 70%, which is our normal policy going into the year, and then we generally lower it during the year. Now, obviously, following the war and the start of the war, gas prices jumped, and as I said earlier, we've taken steps to charge our customers for these hikes in gas. And I'm talking about last year, right? And.
In respect of gas, we were hedged about 70%, which is our normal policy going into the going into the year, we generate leverage during the year now obviously following the war and started the war gas prices jumped.
As I said earlier, we've taken.
Steps to charge our customers for these hikes in glass Indian gas, rather and I'm talking about glass Europe and.
The situation now is that we have about 30% of our remaining gas for 2022 unhedged, but that's masked by the fact that in the event that it goes above certain levels or current levels or levels that we've estimated now with customers, customers will be billed for that. But we do plan as we are all the time layering in more hedging as we move through the year.
The the situation now is that we have about Turkey percents of our remaining gas for 'twenty, two unhedged, but that's masked by the fact that in the event.
That it goes above certain levels. Our current levels are levels that we'd estimate it now with customers our customers will be billed for that but we do plan as we are each all the time layering in more hedging.
We go through the year.
Thank you and then Oh.
Just a technical question, what's the RP capacity at the APCA level?
A technical question whats the RP capacity at the Opco level.
At $1.3 billion.
Great. Thank you so much.
And if you find your question has been answered, you may remove yourself from the queue by pressing star two. We'll take our next question from Ed Brucker with Barclays. Please go ahead.
And if you find here a question has been.
Answered you may remove yourself from the queue by pressing star Kim we'll take our next question from Ed Brucker with Barclays. Please go ahead.
Hey, thanks for taking the question. So you mentioned that you expected to use substantial progress in 2022 and then full recovery in 2023, which sounded like, I guess, the cost recovery. Is that just because you're expecting inflation to go down from here or stay the same and you are able to pass more prices through? I just wanted to get a better sense of what.
Hey, Thanks for taking the question. So you mentioned that you expect to achieve substantial progress in 2022, and then for covering 2023, which sounded like I guess I guess the cost recovery is that just because you're expecting inflation to go down from here or stay the same and.
You are.
Are you able to pass more prices there just wanted to get a better sense of what.
But you're saying there well no I don't expect inflation to go down and far from it but what I'm, saying is that you know.
No, I don't expect inflation to go down far from it. But what I'm saying is that, you know, there are, there may well be to the extent that we don't recover costs and there's many costs here, much more than just energy. You've got other input costs like soda, like, like packaging materials, et cetera.
There are there may well be to the extent that we don't recover our costs.
Many cost here much more than just energy you've got the other.
Their input costs like soda ash like crazy like packaging materials et cetera.
many, many other things where there's a very severe inflation as well, and to the extent that these aren't recovered from customers through the additional measures we've taken this year, our pricing would be rebased to reflect these costs and recover them next year.
Many many other things where there is a very severe inflation as well.
To the extent that these aren't recovered from customers through the additional measures. We've taken this year, our pricing would be rebased to reflect these costs and recover them next year, that's all I was saying.
Got it.
Got it. And then, you know, I think, you know, margins, especially in Europe , are probably a bit more of a miss than I had expected here and maybe a bit more of the competitors, too. I just want to get a sense for the reason behind that and are you able to give a breakdown or even a rank and order of how, you know, energy and logistics and then raw materials affected results and maybe especially in Europe .
And then you know I think you know margins, especially in Europe were probably a bit more of a miss and I had expected I here and maybe a bit more of the competitors too I just wanted to get a sense for the reason behind that and are you able to give a breakdown or even a rank in order of how energy and logistics and then.
While materials affected affect our results and maybe especially in Europe .
Well, I mean, the in Europe , the reduction is about five million dollars, but it's made it's largely energy or energy related matters. There are other things like logistics, like other inflation as well. But by and large, it's and it's operating overheads being a little higher as well than we're planned. But the main the main elements in it are our energy and other products which are heavy users of energy.
Well I mean, the in Europe . The reduction is about $5 million and it's made its largely energy or energy related matters. There are other things like.
Logistics like other inflation as well, but by and large it's operating.
Operating overheads being a little higher as well.
Some of our plant, but the main the main element.
Our our our energy and other products, which are heavy users of energy.
So, I mean, it's a relatively small amount of difference to what our expectations were.
So I mean, it's Josh.
So relatively small amount of difference to what our expectations were.
Got it and then.
No.
You mentioned last call that you're looking to reduce leverage and that that could be a priority. I just wanted to get a sense for where you think that that's gonna come from. And you've already said you kind of want to simplify the cap structure. What would that look like? And then what's your plan to do, you know, maybe with the artifact pick notes that become callable here in November ?
You mentioned last call that youre looking to reduce leverage.
And that that could be a priority.
I just wanted to get a sense for where you think that that's going to come from and you've always said you kind of want to simplify the cap structure, what would that look like and then what you plan to do maybe with the artist and Pik notes that become callable here in November .
Well I'm not sure I ever indicated we wanted to simplify the capital structure and we have no plans to do anything with the the arts and toggle notes when they become callable later this year.
Well, I'm not sure I ever indicated we wanted to simplify the capital structure, and we have no plans to do anything with the ARGFIN toggle notes when they become callable later this year.
What I have said today is that we will not be making any further distributions to Holco shareholders, which would mean also, as you know, under that mechanism, half of any distributions that would be going to Holco shareholders would go to reduce Holco debt, but we're not planning to make any distributions to Holco shareholders at all in 2022 and 2023 except to cover the interest on the toggle notes. So our position is very clear.
I have said today is that we will not be making any further distributions to.
Holdco shareholders, which would mean also as you know this.
You know under that mechanism half with any distributions that would be going to.
To Holdco shareholders would go through juice holdco debt, but we're not planning to make any distributions to holdco to shareholders at all in 'twenty, two 'twenty three except to cover the interest on the toggle notes.
So our position is very clear on that.
Got it thank you.
And we will take our next question from Roger Spitz with Bank of America. Please go ahead.
And we'll take our next question from Roger Stitz with Bank of America. Please go ahead.
Thanks very much. I just want to make sure I heard a few of these things correctly. Did you say that glass Europe , the volumes was up 10% and the glass North America, the volumes were stable? Did I hear that correctly?
Thanks, very much I, just want to make sure I heard I've heard these things correctly did you say that hot glass Europe volume was up 10% and the glass North America. The lines were stable did I hear that correctly.
Correct.
Good. And then the full year EBITDA, well, I think you said $1.4 billion. And then, of course, MPEV went down by $25 million. I'm sorry, the EBITDA last quarter, on the last quarter's close, I thought it was 135.0. So this is up 50.
Okay.
And then.
Full year EBITDA.
<unk>.
But I think you said $1 $4 million.
Yes of course Hum.
Went down by $25 million.
I'm sorry.
EBITDA last quarter on last quarter's calls I thought it was 135 hours. So this is up 50.
But of course, you know, Arno Metal Packaging went down 25. Am I thinking about that right or did I write stuff down incorrectly?
Of course, and you know.
<unk> are a metal packaging markdown 25 might think about that right or did I write stuff down and correctly.
Okay, well, I can take you through that. You're quite right. The guidance in February was 1350 for the group for metal, of which 775 was in AMP and 575 was in glass. Right, glass Europe and glass North America.
Well, let me I can take you through that so you're quite right. The guidance in February It was 135 O for the group for a vessel of which 775.
A&P and $5 75, syngas right last Europe and in glass North America.
We've taken down our guidance for 50 on the glass, the European glass North America for the year. We've taken our guidance in AMP down by 25. So that takes you from 1.350 down by 75 to the guidance we've given today of 1.275.
We've taken down our guidance for 50 of the cost that Europe in glass North America for the year we've.
We've taken our our guidance today M. P down by 25. So that takes you from 135 O down by 75 to the guidance, we've given today of $102 75.
Now, if you then add Consul from 1 May, which, and we expect to close Consul in the coming days, as I mentioned, I don't know if you heard me mention that there's been a tribunal hearing today, which is the final arbiter thing. We expect clearance imminently, and then we'll close it immediately. That adds it and takes it up to 1400 market guidance. That's where the 1400 comes from, and that includes contribution from Consul from the first day.
Now if you then add console.
From one may which we expect to close console in the coming days.
As I mentioned I don't know you heard me mentioned that they're going to try to be able to hearing today, which is the final arbiter, we expect clearance.
Imminently and that will close as immediately.
That adds such and takes it up to 1400 market got in touch with a 1400 comes from and that includes contribution from <unk>.
Console from the first of May.
Okay.
Perfect. And then, lastly, did you give any guidance on Ardell Group S.A. for 2022 CAPEX cash action and working
And then lastly did you give any guidance on.
Uh huh.
For 2022 Capex.
Cash taxes and working capital.
John .
Yeah, hi, Roger. 2022 for the group.
Yeah, Hi, Roger.
2022 for the group.
Taxes will be, you know, around the 80, 85 million mark. Interest.
Taxes will be.
Around the 80 to 85 million Mark.
Yes.
Interest will be in the.
the high 300 million mark cash interest, and then we've got maintenance capex, which is again the high 300 million. We will have some other spending on sustainability and projects like that as well. They could add to over the course of the year to maybe another 60, 70, between that and a couple of other topics, but on the pure maintenance side, it's the kind of upper 300 million.
The high 300 million Mark.
Cash interest and then you've got maintenance Capex, which is again the high 300 million.
We will have some other spending on sustainability and projects like that as well.
They could add to.
Over the course of the.
The year, so maybe another.
60, <unk> couple of other topics.
The pure maintenance side.
Kind of over $300 million.
Great. Thank you very much.
Thank you.
Thank you.
Yeah.
And we'll take our next question from Chris Courthouse with Schroeder. Please go ahead.
And we'll take our next question from Chris Gretel with Schroeders. Please go ahead.
Hi, thanks for the opportunity to ask questions. I just want to follow up on that last one. So, total glass CAPEX maintenance and growth is what for 22 and 23?
Hi, Thanks for the opportunity to ask questions I just wanted to follow up on that last one so total glass capex maintenance and growth is what for 'twenty, two and 0.3.
Well 2022, Chris.
total maintenance would be, you know, in the, for the whole group, including AMP, would be in the upper 300 million.
Total maintenance would be.
For the whole group, including AMD would be in the upper 300 million so the A&P.
I'm just trying to get glass, so I'm modeling this as glass. The high $200 million that would be, and then there will be some spending on things like sustainability separate to that, but the maintenance of the glass business would be the upper $200 million.
Glass so what's.
The collateral.
$200 million that would be and then there will be some spending on things like sustainability and separate to that but the maintenance on the glass business would be the opera 200 million the growth investments this year business growth it would be.
The growth investments this year, business growth, they'd be rounded to about $100 million.
Rounding to about 100 million.
They're separate, they're in the business growth area and then we haven't given anything yet in 2023.
They're separate there and the business growth area and then we haven't given anything yet in that 2023, but as he said the profile of the <unk>.
But as we said, the profile of the business growth investment is largely skewed towards the ANP business.
Business growth investments is largely skewed towards the MP business.
there's more selected opportunities in GLAAD.
More selected opportunities and are in glass.
And cash restructuring in the glass.
And cash restructuring.
In the glass business for 'twenty.
<unk>.
Nothing major there, you know, we have start with costs across the group, but they would be in AMP, so nothing major on the restructuring side in glass.
There's nothing major there.
We have stock of cost across the group, but they would be.
So.
Nothing major on the restructuring side.
Yeah.
Just.
It's hard to break them all out, but it doesn't look like you're expecting much free cash flow from Glass Business in 22.
It's hard to break them all out but it doesn't look like you're expecting much free cash flow from glass business in 'twenty two is that fair.
Well, there will be then the dividend that we referred to coming in from AMP.
Well there will be.
Then the dividend that we referred to coming in from Matt M. A&P.
But absent that it looks like a burn rate.
There's a quite a lot of investment going on and you know it's the current year there is a headwind from input costs, but as we said
So theres a quite a lot of investment going on.
Curtains here there is the headwinds from input costs, but as we said we've taken a fairly aggressive action to recover that make substantial progress on that this year with the balance because next year and demand has ties in all of our markets.
We've taken fairly aggressive action to recover that. We make substantial progress on that this year with the balance recouped next year. And demand is tight in all of our countries.
and as we said in Europe volumes up 10% in the quarter, that's not a sustainable level to be up that much year on year but very healthy and it's a positive environment for the product.
And.
In Europe volumes up 10% in the quarter, that's not a sustainable model to be up that much year on year for very healthy.
It's a positive environment for our products.
And, Paul, what's the, you know, operational issues in North America and the outlook for turning them around, you know, time frame? Because I mean, if I look at what we're down in Q1 and you're only guiding the 50 down for the year, it seems pretty optimistic.
Yes.
Oh, what's the operational issues in North America, and the outlook for turning them around.
What time frame.
I mean, if I look at what were down in Q1, and you're only guiding to 50 down for the year seems pretty optimistic.
Most of the, a lot of that 50 is in Europe because of energy and energy related costs and things like that, Chris. But the issues in North America are operational at a small number of plants, but that small number of plants is dragging the productivity and the output down.
Most of the a lot of a lot of that that 50 is then is.
In Europe , because of energy and energy related costs and things like that Chris but.
So the issues in North America, our operational there at a small number of pilots, but that small number of clients. It's dragging.
Productivity in the output down.
Secondly, on the commercial side, we have to cycle our way out of some contracts which are not as profitable as they should be, which were entered into at a time when the market was not strong in terms of demand. It's quite the opposite now. There's not enough glass and there's very strong demand, so we're in a position to change that.
Secondly on the commercial side, we have to cycle, our way out of some contracts, which are not as profitable as they should be on.
Which were entered into at a time when when the market was not strong in terms of demand.
Quite the opposite the others, there's not enough Clos it looks very strong demand. So we're in a position to change that.
And, you know, I think it's a whole series of a mixture of commercial and operational thing. The positive side of it is that there are a number of steps that can be taken, which can have a material effect on the numbers going forward. And I certainly would be very disappointed if we started to start to see progress next year.
And I think it's a whole series of a mixture of commercial and operational thing. They the positive side of it is that there are number of steps that can be taken which can have a material effect on the numbers going forward, although I certainly would be very.
If we'd start to start to see progress next year.
given that we can cycle out a lot of these contracts and given that we are taking the actions that are required to sort the thing out.
Given that we can cycle out a lot of these contracts can give them that we are taking the actions that are required to sort of the thing out.
Okay. I mean, just looking at where were down in Q1, I did my math, right, we're down $40 million or so and you're down.
Okay. I mean, just because looking at where we're down in Q1, I did my math right. We're down 40 million or so, and you're down 50 for the year. That implies that sort of this April 1 surcharge gets Europe to be comping positive. Is that the right way to read it?
For the year that implies a throw this April one surcharge gets Europe to be Comping positive.
That's the right way to read it.
Well I know Europe will be down from Europe will be down from last year.
No, Europe will be down from last year because the original guidance for Europe for the whole year was fairly flat on last year, and we're taking that down, so Europe will be down a fair amount, and North America will be down, but I think your earlier question, it's not right to extrapolate the numbers from.
Because they got the original guidance for Europe for the whole year was fairly flat on last year.
We're taking that down so Europe will be down.
Little bit will be done.
A fair amount in North America will be done, but I think to your earlier question.
No it's not it's not right to extrapolate.
The numbers from <unk>.
from Q1, Nutway again, the shortfall to expectation in Q1 in North America was $7 million.
From Q1 that way again, the shortfall to expectations in Q1 in North America with $7 billion.
Right and then the final one is natural gas I just wanted to make sure I understand all the scenarios. So.
And then the final one is natural gas. I just want to make sure I understand all the scenarios, so.
If we go into a situation where gas is rationed, i.e., the amount of gas is being cut down because Russia cuts it off.
If we go into a situation where gas is rash I E. The amount of gas is being shut down because Russia cuts it off.
Is that a force majeure so that you can not serve your clients and you don't have any costs? And then also, you know, other competitors in the market have said that that could potentially be a force majeure of that. Is that true or not?
Is that a force majeure, so that you can.
Not serve your clients and you don't have any costs and then also.
Other competitors in the market has said that that could potentially be of course Europe .
Is that true or not.
I think well I mean, we haven't obviously, we haven't reached that are situations, where there is actually no got physical gas available that Hudson arisen.
I think, well, I mean, we haven't, you know, we obviously we haven't reached that situation where there's actually no gas, physical gas available that hasn't arisen. As I said to you, we've taken measures to increase prices to reflect these gas price increases that have taken place since the, particularly since the war started in terms.
I said to you we've taken measures to increase prices to reflect these gas price increases that have taken place. Since then, particularly since the war started.
In terms.
of what would happen if the Russians cut off the gas. I imagine that that would become a force majeure situation linked to the war. But we haven't
Of what would happen if if the Russians cut off the gas.
I imagine that that would become a force majeure situation.
To the.
So the war, but.
No we haven't.
We haven't taken formal advice on that to that extent to this stage, but obviously we're hoping that that doesn't arise and that if there is rationing that we're, we're left intact.
We haven't taken the form of advice on that so that's up to that extent at this stage I mean, obviously, we're hoping that that tells them to rise.
That gets there is rushing look where we're less contract.
As for Poland in Bulgaria, you don't have any significant exposure I can't remember.
For Poland and Bulgaria, you don't have any significant exposure, I can't remember.
Well, we have operations in Poland and we have can operations in Poland, we don't have anything in Bulgaria.
We have operations in glass operations in Poland, and we have the kind of operations in Poland, We don't do anything in Bulgaria.
Okay. So the recent thing on the payment of in rubles for gas for Poland. You still think that that plant's still thinks it's going to be able to get the gas from somewhere else.
So, the recent thing on the payment in rubles for gas for Poland, you still think that Plantsville thinks it's going to be able to get the gas from somewhere else?
That is our current expectation. Obviously, these situations can change, but I'm not aware, as I said earlier, of any breakage in actual supply of commodities, such as gas and electricity that hasn't arisen. If it does arise going forward, we'll have to cross that bridge when we come to it, whether we cease production or cease supply or.
That is our current expectation obviously these situations can change but.
I'm not aware of as I said earlier, if any of any breakage in actual supply of commodities such as gas and electricity.
Hudson Tourism.
If it does arise going forward, we will have to cross that bridge when we come to us from other we ceased production or supply are.
We levy people for the increased cost of the of the of the energy. That's that we'll have to wait and see. Okay, thank you.
We love the people for the increased cost of the of the energy that's a that will have to wait and see.
Okay. Thank you I appreciate the opportunity to ask questions.
Thanks, Chris.
As a reminder, please press star one to ask a question we will take our next question from Jami Rubin with Goldman Sachs. Please go ahead.
As a reminder, please press star one to ask a question. We'll take our next question from Jay Mayers with Goldman Sachs. Please go ahead.
Good morning. Thank you very much for the opportunity to ask some questions here. I guess a follow-up on the questions from the prior speaker. Can you help us kind of think about the cadence of the cost recovery in Europe as we go through the year, kind of on the back of your guidance? I mean, you talked about a price increase going in on April 1st. Like, how should we think about the kind of price-cost recovery in 2Q, and then, you know, with your comments about full recovery by 2023 or in 2023? Should we think about, you know, improvement in that kind of lag in the second half of the year, or do you kind of think the pricing cadence you have now can get you positive in the second half?
Good morning, Thank you very much for the opportunity to ask some questions here I guess a follow up on the questions from the prior speaker can you help us kind of think about the cadence of the cost recovery in Europe as we go through the year.
Kind of on the back of your guidance I mean, you could talk about a price increase going in on April 1st like how should we think about the kind of price cost recovery in <unk> and then you know with your comments about full recovery by 2023 are in 2023 should we think about you know improvement in in that kind of lag in the second half of the year or do you kind of think.
The the pricing cadence you have now can get you a positive in the second half.
John .
John .
Yeah, hi Jay. As you said, we put the increases in place in April .
Yeah, Hi, Jay.
As we said we put the increases in place.
Eight.
April .
And, you know, we're pursuing those. There's a lot of moving parts, though. You know, there's increases across the board and things like freight in packaging. It's not just energy. So, you know, our view really is best on a full year basis.
We are pursuing those there's a lot of moving parts. So those increases across the board in things like freight and packaging, it's not just energy.
So our view really is better.
Full year basis is that taken account of those places.
is that taking account of those increases, continued headwinds, certainly at current levels on the open position that we have, they will be there for a while yet. That nets out to, for the full year, the £50 million reduction in glass overall.
<unk> headwind.
Certainly at current levels.
And some physicians that we have they will be there for one yet.
That's net.
Full year.
$50 million reduction in glass overall so.
You know, it's taking a little bit of time, but there's a lot of fun to take there.
Yes.
It looks like you're a little bit of time.
Okay Sir.
Understood. But I think, Jay, the plan would be to rebase things anyway from the start of next year to restore to what we would regard as normal profitability. That's what we were doing.
Understood and then put on but.
And I think Jay the plan the plan would be to Rebase things anyway from the start of next year any way to restore the gardens normal profitability okay.
Okay.
Okay understood and then just some of the kind of cash items. This year. So you mentioned console, that's going to be $600 million.
And then on just some of the kind of cash items this year, so you mentioned console, that's gonna be 600 million.
of cash for that acquisition. You know, we didn't talk about Trivium. I'm curious if you have any kind of update on the sale process there. And then, you know, roughly $300 million of cash coming in from Ampev. So obviously, you know, have some kind of cash needs that we talked about operationally. But other than kind of those operational cash needs, how should we think about your priorities for that liquidity coming into the business this year?
Cash for that acquisition.
We didn't talk about trivium I'm curious if you have any kind of update on the sale process. There and then you know roughly $300 million of cash coming in from from Ambev.
So obviously you have some kind of cash needs if he talked about operationally, but other than than kind of those operational cash needs. How should we think about your priorities for that liquidity coming into the business. This year.
Well in regards to the trivium process nothing to add there, but we said the last part about the company has set us up with the sale process underway.
Well, in regards to the Trivium process, nothing to add there. I mean, what we said the last time about the company has said is that there's a sale process underway. No further comment there at all. Secondly, in relation to cash inflows, our priority will be to de-leverage.
Further commentary at all.
Secondly in relation to cash inflows.
Our priority will be to deleverage.
All right, understood. Thank you very much for the time and good luck this quarter. Thank you. It appears there are no additional questions.
Alright understood. Thank you very much for the time and good luck this quarter.
Thank you.
It appears there are no additional questions at this time.
Operator are there any other questions no.
There are no additional questions at this time.
Okay. Well then thank you everyone for joining us.
Okay, well then thank you everyone for joining us on today's call and we will look forward to talking to you again in July . Thank you for at the end of July . Thank you with our Q2 results. Thank you very much indeed.
Today's call and we will look forward to talking to you again in July . Thank you Brad at the end of July . Thank you with our Q2 results. Thank you very much indeed.
This concludes today's call. Thank you for your participation. You may now disconnect.
This concludes today's call. Thank you for your participation you may now disconnect.
Okay.