Q3 2023 Ardagh Metal Packaging SA Earnings Call
[music].
Please standby we are about to begin.
Good day and welcome to the Argos metal packaging third quarter 2023, Investor call. Today's conference is being recorded at this time I'd like to hand, the call over to Mr. Stephen Lyons Investor Relations. Please go ahead.
Thank you operator and welcome everybody.
Thank you for joining today for our metal packaging third quarter 2023 earnings call.
Which follows the earlier publication of a M P's earnings release for the third quarter.
We have also added an earnings presentation onto our Investor Web site for your reference.
I'm joined today by Oliver Graham a M P's, Chief Executive Officer, David Borde, a M P as chief Financial Officer.
Before moving to your questions. We will first provide some introductory remarks around A&P is performance and outlook.
A M p's, our earnings release and related materials for the third quarter. It can be found on a M. P's website at www dot or the metal packaging dotcom.
Remarks today will include certain forward looking statements include use of non <unk> financial measures.
Hello results could vary materially from such statements.
Review the details of our a M. P. As forward looking statements disclaimer and reconciliation of non <unk> financial measures shy of French financial measures ANP the earnings release.
I will now turn the call over to Oliver Grant.
Yeah.
Thank you Steven.
We delivered a robust performance in the quarter to achieve our guidance despite weaker than expected demand conditions in Europe.
Americas performance was slightly ahead of our expectation with North America benefiting from strong shipment growth, while Brazil was broadly in line.
The deterioration in European demand during the quarter negatively impacted performance against our expectations, which we anticipate will persist into Q4.
Our operating cash flow generation has significantly improved versus the prior year and.
What underpins our conviction and our strong food yeah liquidity up to.
We now anticipate that full year adjusted free cash flow post operative Capex, which is near its completion will be approximately $100 million.
This is double our prior expectation.
Adjusted EBITDA for the company increased by 22% versus the prior year quarter.
This reflected the contribution from increased shipments and a stronger recovery of input costs in Europe for <unk>.
Imminently due to the pass through of energy costs.
The prior year quarter also experienced a significant impact relating to metal valuation timing mismatches.
We still are hedging actions and reduced inventory positions, we have substantially derisked.
Global demand remains restrained by sustained retail price inflation and household financial pressures.
Against this backdrop, we recorded global shipments growth of 8%, which included 18% growth in the Americas offsetting a 2% decline in Europe.
Despite our strong shipments great current performance continues to be impacted by fixed cost under absorption.
We are committed to a disciplined balance thinking about network capacity ahead of a full recovery in industry demand through a mix of curtailment and longer time action as appropriate.
As previously outlined we target utilization in the low to mid nineties.
Last update we highlighted our intention to close the remaining steel lines in Germany by the end of the year, which will help to optimize our network and drive future earnings improvement.
Further to this we have today announcing that we are commencing a review the possible closure in Q1 2024 about Whitehouse production facility in Ohio, and North America.
While the possible closure.
<unk> is a difficult steps consider for our team members and our communities.
We must take steps to balance capacity and demand.
As part of our collective bargaining agreement, we have notified employees and Union Representatives and a final decision is expected before the end of this year.
As a sensitivity to those possibly affected and to the process, we will not be making any further comments on the review at this point.
We continued to progress our sustainability agenda and highlight to Nikolas included the expansion of our that's education stem programs to Brazil.
Or a 10 year investment will benefit approximately 200000 students across the communities in which we operate.
Through the can makers institutes in the U S. We made further investments into recycling infrastructure and also launched a sustainable zero emissions distribution partnership in them.
We expect to shortly publish our 2023 sustainability report further highlighting our progress and we are pleased that this continues to be recognized externally, which includes the award of a platinum rating by E. K bodies, the other agreed including A&P in the quarter.
Turning our attention to Amc's third quarter results.
We recorded revenue of $1 $3 billion, which represents an increase of 10% as the contribution from high volume mix and stronger non metal input cost recovery.
More than offset the pass through of lower metal prices.
Adjusted EBITDA of $171 million was up 22% on the prior year.
The impact from higher shipments and stronger input cost recovery.
Set by higher operating costs due to fixed cost under absorption.
Total beverage can shipments and Nicole at two 8% higher than the prior year with 18% growth in Americas offsetting a 2% decline in Europe are working capital net inflow of $53 million compares favorably with a net outflow of $50 million in the prior year quarter and drove a strong overall cash performance.
Now looking at <unk> results by segment.
Revenue in the Americas in the third quarter increased by 8% to $732 million, which reflected shipments growth, partly offset by lower input costs largely as a result of lower metal prices.
In North America shipments grew by 20% for the quarter.
This strong shipment growth is driven by the contribution from customer contract commitments backing our investment program assessing a platform for future growth.
Well as the benefit from a diverse mix in our portfolio, which included some favorable high growth segments, such as functional energy drinks.
Looking at the market overall demand has remained constrained by sustained higher retail pricing and promotional activity and lower promotional activity, which although increasing slightly remains limited in terms of its debt relative to historic levels.
Inflationary pressures are moderating, which give some cause for optimism regarding a recovery in industry demand.
What remains apparent through these demand pressures is that the county is still winning in terms of substrate mix and also to the launch of innovative new products favoring beverage cans as the package of choice.
We're encouraged by the increased annual growth in shipments across the most two recent consecutive quarters as well as the early momentum into the fourth quarter and this supports our forecast for shipments in our North America business to grow by over 10% this year.
In Brazil third quarter shipments increased by 8% outperforming the low single digit increase in the market, which benefited from improving economic conditions and favorable weather towards the end of the quarter.
Market demand overall remains challenged by consumer inflationary pressures and a higher mix of returnable glass bottles than anticipated in the market.
Relative outperformance reflected a recovery calling customer destocking during Q2.
We would note the negotiations between the major customer and its creditors are concluded and an agreement has been reached under the court supervised reorganization process alright.
Our outlook is unchanged and the agreement is expected to be rectified imminently.
Following that destocking during the second quarter more normal order patterns with narrow assumed this.
This recovery as well as other customer mix effects underpin a higher relative shipments growth versus the market in the period.
Stability was modestly impacted by some timing related issues that should reverse in the fourth quarter.
Our forecast for maintenance or broadly flat shipments growth for our Brazil business in 2023, and we continue to balance our capacity curtailments at our network.
We reiterate our confidence in the medium term growth characteristics characteristics of the Brazil market, which has historically been a highly attractive attractive beverage can market.
Adjusted EBITDA in the Americas increased by 2% to $104 million in the third quarter as the contribution from higher volumes was offset by higher costs, including fixed cost under absorption remained elevated as destocking has prioritized in North America.
This destocking is now complete and has helped underpin our strong cash flow performance and improved liquidity in the period.
In 2023, we continue to expect shipments growth in the Americas and mid to high single digit percentage underpinned by continued strong shipments growth in North America.
Fixed cost under absorption that's about mitigating curtailment actions remains a headwind to our performance. We will continue to take the necessary action to balance our capacity in line with demand conditions and as mentioned we have today announced the review of a possible closure about white house facility in Ohio, which represents approximately 10%.
About North America capacity.
We anticipate a further modest sequential improvement in EBITDA into the fourth quarter supported by a momentum on shipments growth in North America in the seasonally stronger summer selling period in Brazil.
Our performance versus the prior year, we remain impacted by fixed cost under absorption and non repeating customer take or pay payment from Q4 2022.
In Europe third quarter revenue increased by 14% to $562 million compared to the same period in 2022, mainly due to more favorable input cost recovery.
Shipments for the quarter declined by 2% on the prior year as momentum through Q2 and into the early parts of the Sunday fell away impacted by consumer pressures adverse weather and customer destocking.
The softening in demand was broad based across categories and end markets, but it was more pronounced in Germany central Europe and in the beer market with the energy drink segment, one notable area of strength.
Third quarter adjusted EBITDA in Europe increased by 76% to $6 million to $67 million, despite the lower shipments, which predominantly reflected improved input cost recovery principally from the posture of energy cost.
But 2023, we now expect broadly flat shipments growth, which assumes a mid single digit percentage decline in the fourth quarter.
Reflecting this deterioration in demand both from market weakness and customer Destocking, we no longer anticipate a significant increase in adjusted EBITDA in the fourth quarter versus the prior yet.
As mentioned in our last quarter call. It remains our intention to optimize our footprint in Europe to the closure of our remaining stay aligned and Viking term, Germany by the end of the year and to fully migrate to two new efficient aluminium lines and we're making good progress in our discussions with the workforce.
I will now briefly hand over to David.
Each of our financial position, both before finishing with some concluding remarks.
Hello, everyone.
Moving now to our financial position.
We ended the quarter with a liquidity position that makes thats up half a billion dollars and we are no longer drawing on our ABL facility.
Our adjusted operating cash flow in the period again performed strongly changed the success about what capital initiatives.
A further rising about north American inventory, which is now complete.
<unk> EBITA performance in the quarter.
It's underpinned our strong cash performance, which was further enhanced by good progress on days sales outstanding for trade receivables.
The success of working capital initiatives allows us to further.
We increased our guidance for the full year working capital benefit.
<unk> $200 million.
This compares with our initial guide of $1 million.
Adjusted free cash right. The first nine months, so yeah, it is $310 million.
Try pay rent equivalents.
In the quarter A&P incurred additional growth capex.
$4 million and maintenance Capex of 28.
<unk>.
As previously indicated.
We're finding great investment plans are well advanced on cash outflows comprised the finishing of projects already underway.
As well as some capex.
Flexibility to our network.
Alright, spectation for the current year is unchanged.
Which includes correct investment of just under $4 billion with the cash flow element.
$3 billion.
We anticipate that Capex will fall.
Second over $1 billion in 'twenty, 'twenty, four and appeal.
I'll, let rich metric ended the quarter Alright, seven times last 12 months' adjusted EBIT.
Supported by a lower net debt.
That's a pretty big LCM adjusted EBIDTA.
This threat.
I'll turn of leverage relative to the phe position.
Which we indicated represented a peak position.
Supported by our stronger cash generation performance.
And the expectation of a stronger year end liquidity position.
$700 million.
We expect further reduction in net leverage into yearend.
In addition to our strong liquidity position, we have no near term maturities.
None of our fixed rate bonds maturing 2027.
With no maintenance covenants all helpful.
We have today announced a quarterly ordinary dividend 10 cents per share to be paid later in December.
In line with our guidance and supported by the cash generation of our business.
Our capital allocation strategy will continue to prioritize sustainable, let's say anti poaching.
With that I'll hand, it back.
Thanks, David and before moving to take your questions I will just recap on the key messages and our performance. So we achieved our Q3 guidance.
Global shipments growth of 8% led by strong shipments growth of 18% in the Americas offsetting a decline of 2% in Europe what.
While we do see demand and weak into Q4, our operating cash flow generation.
Continues to perform strongly and despite a low earnings forecast of 2022, we're improving our free cash flow forecast and anticipate a stronger year end liquidity position than previously forecast and we remain focused on prudently managing our capacity addressing our fixed cost under absorption.
<unk> future earnings improvement.
We lowered our guidance for 2023 to include global shipments growth of approximately a mid single digit percentage, reflecting the weaker than expected demand in Europe and expect adjusted EBITDAR in the order of $610 million, which also reflects the weak outlook in Europe.
In terms of guidance for the fourth quarter adjusted EBITDA is anticipated to be in the order of $158 million.
Which is broadly in line with prior year adjusted EBITDA of $159 million, having made these opening remarks, we will now proceed to take any questions.
Thank you, ladies and gentlemen, if you would like to ask a question. Please press star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is released to allow your signal to a greater equipment.
Again, it is star one if you would like to ask a question.
And we will go ahead and take our first question from Mike Roxanne with truly Securities. Please go ahead.
Thank you Ali David and Stephen for taking my questions.
Looking at North America volumes up 20% to re queue just wanted to get a sense of whether that was in line with your internal plan or better.
We see some of that is related to the new capacity brought online, but just trying to get a sense. It's really a very strong number try to get a sense, whether that was better than you expected and if so what factors were.
Driving that.
Yeah. Thanks, Mike I think he was appointed to above our internal expectation.
We did have.
Good growth prospects for this year in our plans, which we signaled at the beginning of the year.
And we repeated in Q2, so I think it was.
Better, but not dramatically better than than how we saw the year and how we saw the quarter and as I said in my remarks, I think we're sitting on some nice growth spaces in the market with the functional energy in particular, the other innovation that's coming through to the market I think the can continues to be the home of innovation.
<unk>.
Particularly in North America, and we're seeing some great products come to market and really pop.
We also had a strong performance in other categories. We had some good mix of locations and bottlers on the carbonated soft drink side too.
Yes, we definitely sat on the right side of the market and in the quarter I think we see the market broadly as others.
Others are seeing it so it's probably sort of overall flat to slightly positive with a balance that we see imports coming down and the import data. So domestic production will be a bit above him a few points above.
The market is still a bit depressed by the strong retail pricing customers that put in place in the last 12 months, but again I think we see that washing out in the next few months. So we feel good about 2024 in terms of the market returning to growth.
Good about our growth prospects for 24 and in North America as well.
Got it appreciate all the color there just one follow up if demand is so strong as you say you're expecting demand to further improve it.
Four.
Why do you feel the portfolio rationalization, you mentioned as necessary.
You may not be able to comment further or just with your ability. So if you'll remember I totally understand that but it just seems if things are truly getting better and you are exporting right now in August next year.
Makes sense to have all your assets in place to address that demand.
No I understand the question.
I think the market will improve next year I Didnt say, we'll do better than our performance. This year I think that would be that.
That would be a strong statement at this point and we're not guiding on 24, yet, but we do see good volume growth in North America. In 2024, So I think I think it's simply a question of the.
Growth than we originally expected both on the side of the hard Seltzer, but also generally in the market in the last two years has been a big step down for all players and expectations due to the inflationary price environment. So when we netted all that out looked out a few years, we were still carrying and we still are carrying.
Too much fixed cost.
Relative to that even with the strong growth that we've had so therefore, we felt it was appropriate to start the consultation process, which as you say our account selling any more about that at this point.
Got it thank you very much and good luck in <unk>.
Thanks, Mike.
And our next question comes from Anthony Pettinari with Citi. Please go ahead.
Hello, Good morning.
Operator: Please stand by, we are about to begin. Good day and welcome to the Ardaud Medal Packaging 3rd quarter, 2023 Investor Call. Today's conference is being recorded.
You know in Brazil, you talked about customer Destocking and I was wondering if you could just help us understand where customers are in that process and then with regards to glass containers.
I think you talked about the can winning globally just wondering how that dynamic is playing out in Brazil. This year and are there reasons to think as we look to 'twenty four that cans may.
Stephen Lyons: At this time, I like to hand the call over to Mr. Stephen Lyons, Investor Relations, please go ahead. Thank you, operator, and welcome everybody. Thank you for joining today for Ardaud Medal Packaging's 3rd quarter, 2023 Earnings Call, which follows the earlier publication of AMP's earnings release for the 3rd quarter. We have also added an earnings presentation onto our investor website for your reference.
<unk> regained some share or hold share lose share.
How would you describe the dynamic there currently.
Sure Yeah, Hi, Anthony.
Look I think there's every reason to be positive about future, Brazil demand and cans.
The market, probably flat should be flat to positive by the end of the year and what has been a very tough time for the can given the amount of inflation that came through from higher let me from the devaluation of the Reais.
Stephen Lyons: I am joined today by Oliver Graham, AMP's Chief Executive Officer and David Bourne, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook.
And what that meant for metal costs going into cans.
I think as those effects normalized and we are seeing the economy improve its definitely having a better year than forecast.
Stephen Lyons: AMPs are earnings release and related materials for the 3rd quarter can be found on AMP's website at www.rdamentalpackaging.com. Remarks today will include certain forward looking statements and include use of non-IFRS financial measures. Actual results could vary materially in such statements. These review the details of AMP's forward looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release.
We'll see retail pricing on Ken's normalize.
And we will see growth back in cans and I think there is a limit to the returnable.
<unk> recovery that's happened this year and so I think that will flatten out.
And we will go back to the trends that we saw but clearly we had missed a year or two growth and clearly therefore.
The absolute volume and cans in the market at the moment is down on what everybody anticipated and that's impacting our growth in the growth of others.
Oliver Graham: I will now turn the call over to Oliver Graham. Thank you, Stephen. We delivered a robust performance in the quarter to achieve our guidance despite weaker than expected demand conditions in Europe. America's performance was slightly ahead of our expectation with North America benefiting from strong shipment growth while Brazil was broadly in line. The deterioration in European demand during the quarter negatively impacted performance against our expectations which we anticipate will persist into Q4.
The Destocking I mentioned was a very specific link to that to the customer that went through the judicial reorganization. So I don't think were seeing broad scale Destocking now I think.
Brazil customers have rebalanced and we're seeing a rough good match between sales and shipments.
And as I say I think we had signs of good growth in the market already in the last couple of months it might be helpful for that continuing.
Oliver Graham: Our operating cash flow generation is significantly improved versus the prior year and underpins our conviction in a strong full-year liquidity outturn. We now anticipate that full-year adjusted free cash flow post our growth caps which is near its completion will be approximately a hundred million dollars which is double our prior expectation. Adjusted EBITDA for the company increased by 22% versus the prior year quarter. This reflected the contribution from increased shipments and a stronger recovery of input costs in Europe predominantly due to the transfer of energy costs.
Okay, that's very helpful.
And then just shifting gears you talked about the raised working capital guidance and the free cash flow performance, which is very helpful.
Can you talk a little bit more about the dividend.
<unk> is trading I guess, 14% dividend yield.
Standing youre, not giving guidance for 2024 I'm just wondering if you can maybe highlight some of the puts and takes for.
For free cash flow, maybe next year or going forward.
They can help us kind of think about.
The dividend and dividend sustainability.
Sure I'll kick it off and I'll pass to David for some other comments, but I think as you say, we just had a very strong cash performance, we see that cash performance improving into the into the year end.
Oliver Graham: The prior year quarter also experienced a significant impact relating to metal valuation timing mismatches which through our hedging actions and reduced inventory positions we have substantially de-risked. Global demand remains restrained by sustained retail price inflation and household financial pressures. Against this backdrop we recorded global shipment growth of 8%, which included 18% growth in the Americas offsetting at 2% decline in Europe. Despite our strong shipments growth current performance continues to be impacted by fixed cost under absorption. We are committed to a discipline balancing of our network capacity ahead of a full recovery in industry demand through a mix of procurement and longer-term action as approved.
And we see our capex coming down in 'twenty, four and beyond because we built out a very strong network with new efficient capacity that we can grow into for a number of years. So.
We think that that underpins the dividend.
We've got lots of other actions, we can take them.
And we feel confident about that so.
As far as we're concerned nothing has changed and we think the dividend is important to our shareholders and is a core part of our capital structure, but I'll also pass to David for any other puts and takes on cash flow.
Oliver Graham: Pritz. As previously outlined, we target utilization in the low to mid-90s. In our last update, we highlighted our intention to close our remaining steel lines in Germany by the end of the year, which will help to optimize our network and drive future earnings improvement.
Yes, it's all in.
Right.
So yes, obviously, we go into next year with enhanced liquidity well initial bottling wants to start with.
And that's all right.
David maybe there's something going wrong with that line do you still hear me Anthony.
Oliver Graham: Further to this, we are today announcing that we are commencing a review for the possible closure in Q1 2024 about White House production facility in Ohio, North America. While the possible closure of a plant is a difficult step to consider for our team members and our communities, we must take steps to balance capacity and demand. As part of our collective bargaining agreement, we have notified employees and union representatives and a final decision is expected before the end of this year.
I do I do.
Hi, there.
To that.
Yes, I can hear you.
Yes.
Alright, great. Thanks, Tony.
They say, it's only related to I think we go into the media it was stronger liquidity.
Which is clearly there.
Positive.
What we have is the impact of adoption right.
Oliver Graham: Out of sensitivity to those possibly affected and to the process, we will not be making any further comments on the review at this point.
So I think that's one capex spend.
Which will be of the order of $200 million and if you look at our working capital in flight issue. That's also you want to achieve $100 million sites. So you can think about the two in the same correct.
Oliver Graham: We continue to progress our sustainability agenda and highlights in the course where included the expansion of our Arda for Education's STEM program to Brazil, where a 10-year investment will benefit approximately 200,000 students across the communities in which we operate. Through the CAM-MAKERS Institute in the US, we made further investment into re-fighting infrastructure and also launched a Sustainable Zero Emissions Distribution Partnership in the Netherlands. We expect to shortly publish our 2023 Sustainability Report further highlighting our progress, and we are pleased that it continues to be recognised externally, which includes the award of a platinum rating to buy EcoVardis to Arda Group, including AMP in the quarter.
Sinking spring.
2024, and then we'll be modeling earnings Grace.
That's helpful.
Think about kind of free cash by popular chips that dividend at that stage.
Okay. That's very helpful I'll turn it over.
And our next question will come from George Staphos with Bank of America. Please go ahead.
Yeah, Hi, good morning. Thanks for the details this is actually Catherine killer on behalf of GA, We had conflicting calls this morning.
So first off you had pretty strong volume growth in the Americas overall, and I recognize there's fixed costs under absorption, but I guess are there any other factors and incremental margin such that we didn't see more volume through flow through to earnings.
Oliver Graham: Turning our attention to AMP's third quarter results, we recorded revenue of 1.3 billion dollars, which represents an increase of 10% as the contribution from higher volume mix and stronger non-metal input cost recovery, more than offset the pass-through of lower metal prices. Adjusted EBITDA of $171 million, with up 22% on the prior year. The impact from higher shipments and stronger input cost recovery would partly offset by higher operating costs due to fixed cost under absorption.
And I guess as we move into 'twenty for you Youre highlighting that you expect continued growth in North America. So just wondering about kind of the earnings trajectory for the Americas into 'twenty as well.
Oliver Graham: Total beverage can shipments in the quarter were 8% higher than the prior year, with 18% growth in America's offsetting and 2% decline in Europe. A working capital net inflow of $53 million compares favourably with a net outflow of $50 million in the prior year quarter and drove a strong overall cash performance.
Okay.
Yes. Thanks for the question I think he may have dropped off the line for a second and say Wow.
I apologize I have a small technical issues not hearing the question, but I have asked the question.
Put to me so I'll answer it.
About any factors other than fixed cost absorption preventing volume growth flowing through to earnings and Americas. So so yes, I think in Q3, we did have a couple of issues.
Oliver Graham: Now looking at AMPs results by second. Revenue in the Americas in the third quarter increased by 8% to $732 million, which reflected shipment's growth partly offset by lower input costs, largely as a result of lower metal prices. In North America shipments grew by 20% for the quarter. This strong shipment growth is driven by the contribution from customer contract commitments back in our investment program, setting a platform for future growth, as well as the benefit from a diverse mix in our portfolio, which includes some favourable high-growth segments such as functional energy drinks.
One was that we didn't produce as much we regulated inventories and thats what drove the strong cash flow performance and so that did impact EBITDA relative to cash flow because we we curtailed some production we.
We did have some planned and sourcing cost headwinds one off cost headwinds in Q3, including a provision and release them for.
If a bang energy after the takeover so that was a negative <unk> <unk>.
In the quarter for North America.
On the South American side those.
Oliver Graham: Looking at the market overall, demands remains constrained by sustained higher retail pricing and lower promotion activity, which, although increasing slightly, remains limited in terms of its depth relative to historic. Levels. Inflationary pressures are moderating, which gives some chords for optimism regarding a recovery in industry demand. What remains apparent through these demand pressures is that the can is still winning in terms of substrate mix, and also through the launch of innovative new products favouring beverage cans as the package of choice.
Small timing issue that we mentioned in the remarks.
Also impacted Q3.
So I think those are the main things looking into the fourth quarter.
<unk> said in the remarks, you did have a specific take or pay.
In Q4 in North America that doesn't repeat so that's a negative.
We have some also some we had a very strong quarter for ends in Brazil in Q4, 'twenty two that we're not going to be able to lap fully which is a small negative in Brazil as well relative to the volume growth. We anticipate so hopefully that addresses the question.
Oliver Graham: We're encouraged by the increased annual growth in shipments across the most two recent confective quarters, as well as our early momentum into the fourth quarter, and this supports our forecast for shipments in our North America business to grow by over 10% this year. In Brazil, third quarter shipments increased by 8%, outperforming the low single-digit increase in the market, which benefited from improving economic conditions and favourable weather towards the end of the quarter.
Great.
I appreciate that and understand.
You're fairly limited on what you can disclose.
But just with regards to this potential closure in North America are you able to talk about at all.
How this plant's cost position sits relative to the rest of your network and then I guess as an overall industry how would you characterize the operating rates.
Oliver Graham: Market demand overall remains challenged by consumer inflationary pressures and a higher mix of returnable glass bottles than anticipated in the market. Our relative outperformance reflected a recovery following customer destocking during Q2. We would note that negotiations between a major customer and its creditors are concluding, and an agreement has been reached under the court's supervisory organisation process. Our outlook is unchanged, and the agreement is expected to be ratified imminently. Following their destocking during the second quarter, more normal order patterns have now resumed.
For the Bev can market at the moment in North America.
Oh, Okay assumption.
Having some technical difficulties I'll pick up the answer to that.
Oliver Graham: This recovery as well as other customer mix effects underpin our higher relative shipments growth versus the market in the period. Profitability was modestly impacted by some farming-related issues that should reverse in the fourth quarter. Our forecast remains for broadly flat shipments growth for our Brazil business in 2023, and we continue to balance our capacity to determine what our network. We reiterate our confidence in the medium-term growth characteristics of the Brazil market, which has historically been a highly attractive beverage can market.
Obviously, we are limited in.
And what we are able to say well the white house.
It shouldn't.
And we'll see where that debt so you bet.
White House is one of the highest cost plants in our network.
Yeah.
And it all depends where that's a mouthful.
Yes it has.
Fixed cost attached to it which would be helpful.
Typically with the plants at that magnitude.
There was something a bit later.
Oliver Graham: Adjusted EBITDA and the Americas increased by 2% to a hundred and four million dollars in the third quarter, as the contribution from higher volumes is offset by higher costs, including fixed cost under absorption that remained elevated, as destocking was prioritised in North America. This destocking is now complete, and has helped underpin the strong cashflow performance and improved liquidity in the period. In 2023, we continue to expect shipments growth in the Americas of mid-to-high single-digit percentage underpin by continued strong shipments growth in North America.
Yeah in terms of the actual cost take out for that.
And.
But top of class a office today by spreading volumes to reach.
To other plants.
You get some potential fixed cost overhead absorption benefits fishing.
Yes.
Oliver Graham: Fixed cost under absorption, net-of-arm mitigating concealment actions remains a headwind to our performance. We will continue to take the necessary action to balance our capacity in line with demand conditions. And as mentioned with today announced, the review of a possible closure of our White House facility in Ohio, which represents approximately 10% of our North America capacity. We anticipate a further modest sequential improvement in EBITDA into the fourth quarter, supported by our momentum on shipments growth in North America and the seasonally stronger summer-selling period in Brazil.
Yes.
Yeah.
And we'll move to our next question from Erin Vasco Nathan with RBC capital markets. Please go ahead.
Yeah.
Hi, sorry about that.
Thanks for taking my question just real quickly.
Oliver Graham: Our performance versus the prior year will remain impacted by fixed cost under absorption and a non-repeating customer-taker pay payment from Q4 2022. In Europe, third quarter revenue increased by 14% to $562 million, compared with the same period in 2022, mainly due to more favourable input cost recovery.
Leverage is relatively high at five seven times, maybe you can just discuss.
If the 100 million of free cash flow would be used.
How would that be used towards deleveraging and maybe where you plan.
Planned to end up.
Maybe fiscal 'twenty for Ed.
Thanks.
Yes, David do you want to take that yes.
Oliver Graham: Pettinari. Gipment to the core to decline by 2% on the prior year as momentum through Q2 and into the early parts of the summer fell away, impacted by consumer pressures, adverse weather and customer destocking. $17 million, despite the lower shipments, which predominantly reflected improved input cost recovery, principally from the past through of energy costs. For 2023, we now expect broadly flat shipments growth, which assumes a mid-single digit percentage decline in the fourth quarter. Reflecting this deterioration in demand, both from market weakness and customer destocking, we no longer anticipate a significant increase in adjusted EBITDA in the fourth quarter versus the prior year.
Yes, Thanks, Keith for the question.
Okay.
In our opening remarks really we.
Have a very clear capital allocation policy.
We look at the tape it ends a sustainable.
And we'll continue to adult top 10 circles that Paul.
Yes.
That strong cash generation, you've seen in the last quarter, we Deleveraged Chen.
During this quarter from six two times, which we said would be at eight five point Kevin.
Anticipate for <unk>.
Thanks.
Our next question will come from Gabe <unk> with Wells Fargo. Please go ahead.
Hi, This is Alex on for <unk>.
Oliver Graham: As mentioned in our last course call, it remains our intention to optimize our footprint in Europe to the closure of our remaining steel lines in vice and term Germany by the end of the year, and to fully migrate to two new, efficient, aluminium lines. And we are making good progress in our discussions with the workforce.
I just wanted to ask about the stocking in North America.
That's now complete.
Is that based on your conversation with customers or is that based on.
Order books can you just help us understand.
Destocking.
David Bourne: I'll now briefly hand over to David to talk you through our financial position before finishing with some concluding remarks. Hello everyone, moving now to our financial position. We ended the quarter with a liquidity position in excess of half a billion dollars, and we are no longer drawing on our ABL facility. Our adjusted operating cash flow in the period again performs strongly due to the success of our working capital initiatives. The further right sizing of our North American inventory, which is now complete, impacted on our EBITDA performance in the quarter.
Three of them.
Yes.
For next year.
Yes.
I guess to be clear.
And we mean, our destocking that we've been reducing inventories in Q2 and Q3.
And that's why we and that's the explanation for why we don't have the level of EBITDA growth that you might expect with this level of volume growth because we've been prioritizing reducing those inventories.
Just what's driven the cash flow I mean, if we tend to the customer I think pretty.
Pretty much all that Destocking is complete in the North American customer base in our part of the market. Obviously, we're not sitting with a mass spec position and we've not been impacted directly by the by the issues with.
David Bourne: But this underpinned our strong cash flow performance, which was further enhanced by good progress on days sales outstanding for trade receivables. The success of working capital initiatives allows us to further increase our guidance for a whole year working capital benefit for approaching $200 million. This compares with our initial guide of $100 million. Overall our adjusted free cash flow for the first nine months of the year is $310 million better than the prior period equivalents.
One particular brand in North America. This year, so you know.
There may be stock sitting in supply chain and in those parts of the market, but if you look across soft drinks energy and the mark sparkling waters the markets the way of playing and we don't see customers, having elevated levels of stock sitting on that and we also and this has been very important this year don't see them having.
Elevated levels of expensive imports sitting in their stocks, which they needed to run out so from our point of view, that's all cleared out.
We've been doing this year is also right sizing our inventories to drive our cash flow.
David Bourne: In the quarter, AMP incurred additional growth capex of $54 million, and maintenance capex of $28 million. As previously indicated, our revised growth investment plans are well advanced, and cash outflows comprise the finishing of projects already underway, as well as some capex to add flexibility to our network. Our expectation for the current year is unchanged, which includes growth investment of just under $0.4 billion, with the cash flow element under $0.3 billion. We anticipate that growth capex will fall further to circa $0.1 billion in 2024 and beyond.
Okay. That's helpful.
So.
You guys talked about softer demand conditions.
Can you maybe just help us restore.
Let's turn that has been getting worse from Q2 and.
Q3.
It was unclear what it looks like for next year.
Yes, I think visibility into next year.
Not strong right now and I think one of the major players came out and said they also needed a bit more time on their business planning and I think we're seeing that with all our customers in Europe that they're going through their business planning cycle I think that well.
I guess is that leads to is an increased focus on volume relative.
Relative to price because I think when you see what's happened over the summer it's clear the price lever I think is pretty much done and also I think input costs are moderating.
David Bourne: Our leverage metric entered the quarter 5.7 times last 12 months, adjusted EBITR, supported by lower net sets and improving LTM adjusted EBITR. This represents the decline of half a turn of leverage relative to the Q2 position, which we indicated represented a peak position. Supported by our stronger cash row generation performance and the expectation of a stronger year end liquidity position of circa $700 million, we expect a further reduction in net leverage into year end. In addition to our strong liquidity position, we have no near-term form of maturities and none of our fixed rate bonds maturing ahead of 2027, with no maintenance governance on our bonds.
And so I think we will see we'll see a prioritization of volume.
Relative to price into 2020, full but they've not gone through that cycle and food yet. So we don't have the detail and obviously, we'll be able to update much more on that in February.
I mean, what we saw during the quarter was a deterioration from essentially the first part of August. So we had a strong June 9%, it's a pretty strong July 5% and then we ended up at minus six minus six in August and September and when we then got the Nielsen data or another market.
Data what was clear is that from July through August.
Sales retail deteriorated and it looks like the combination of a very pool somewhere across northern Europe together with the weakness in consumer spending.
David Bourne: We have today announced our quarterly ordinary dividends 10 cents per share to be paid later in December, in line with our guidance and supported by the cash generation of our business. Our capital allocation strategy will continue to prioritize dividends, sustainability and the leveraging.
Up to now have rule.
Weakness our customers had not anticipated a tool so they therefore stock into the summer and when they realized that they weren't getting the sell through obviously they stopped buying from us and we saw that then come through in the second part of August and September. It has stabilized now in October and that guidance has also been given by.
Oliver Graham: With that, I'll hand back to Ollie. Thanks, David. Before moving to take your questions, I'll just recap on the key messages in our performance. We achieved RQ3 guidance by Global Shipments Growth of 8%, led by strong Shipments Growth of 18% in the Americas offsetting a decline of 2% in Europe. Where we do see demand week into Q4. Our operating cashflow generation continues to perform strongly, and despite our lower earnings forecast of 2022, we're improving our pre-cashflow forecast and anticipate a stronger year end liquidity position than previously forecast.
The customers that have come to come out with that.
Remarks, though it's still fragile I'd say, but it's definitely stabilized in October we had last year, a pretty strong end of Q4 in November December so we're being cautious.
<unk> guidance through the remainder of the year and as I say I think there's lots of reasons to believe the positive outlook in 'twenty four despite the fact that consumer will remain under pressure, but I think that wage.
Wage growth will catch up with inflation cost pressures will mitigate I think the brands will look more to volume having played a strong game on price and that revenue growth for the last 12 months.
Oliver Graham: And we remain focused on prudently managing our capacity addressing our fixed cost under absorption and supporting future earnings improvement. We lower our guidance for 2023 to include Global Shipments Growth of approximately a mid-single-digit percentage, reflecting the weaker and expected demand in Europe, and expected just the EBITDA in the order of $610 million, which also reflects the weaker outlook in Europe. In terms of guidance for the fourth quarter, adjusted EBITDA anticipated to be in the order of $158 million, which is broadly in line with prior year, adjusted EBITDA $159 million.
And so we'd be positive about growth and 24 in Europe, but at the moment, we can call. The exact numbers because we haven't got the details from our customers.
Thank you answer your helpful I'll turn it over.
Thanks.
Our next question will come from <unk> Silva with Great asset management. Please go ahead.
Yes.
Yes.
Operator: Having made the opening remarks, we will now proceed to take any questions. Thank you, ladies and gentlemen. If you would like to ask a question, please press star one on your telephone keypad. If you're using a speaker phone, please make sure your mute function is released to allow your signal to reach our equipment.
And your line is open.
Again caller your line is open.
Hi, apologies I just have a quick question, which is.
Michael Roxland: Again, it is star one, if you would like to ask a question, and we'll go ahead and take our first question from Mike Rockson with Truist Securities, please go ahead. Thank you, Ali David, and Steven, for taking my question. Looking at both America, volumes up 20% in 3Q just wanted to get a sense whether that was in line with your internal plan or better. Obviously, someone that's related to the new capacity of the EBITDA online, but just trying to get a sense, it's a really very strong number, trying to get a sense whether that was better than you expected, and if so, you know, what Deriving that.
I've seen them.
The growth Capex guidance for this year.
But could you give a guidance on total capex spend for this year and equally on the restructuring costs is there any kind of indication on what will be the total restructuring costs of the facility closures and the timing of those thank you very much.
David do you want to take those two right.
So.
Yes.
So capex will be.
<unk> 4 billion in terms of cash Capex.
Michael Roxland: Yeah, thanks Mike. I think it was a point or two above our internal expectation. We did have good growth prospects for this year in our plans, which, you know, we signal that at the beginning of the year, and we, you know, repeated in the Q2s. So I think it was better but not, you know, dramatically better than how we saw the year and how we saw the quarter. And as I said earlier in my remarks, I think we're sitting on some nice growth spaces in the market with the functional energy in particular, but other innovation that's coming through to the market, I think that can continue to be the home of innovation, particularly in North America.
That includes maintenance shouldn't change sustainability spend of approximately 130.
Which is around about a huge number of its fairly consistent year to year.
Aside from the business great investment Capex.
In terms of closure costs.
Our financial statements will gave you a number if you look at the exceptional section therefore bison inkjet in so Paulo.
Estimates around that and clearly whitehouse.
Earlier stage negotiations to come on strong at this point.
Michael Roxland: And we're seeing some great products come to market and really pop. And then we also had a strong performance in other categories. We had some good mix of locations and bottlers on the carbonated soft drinks side. So yeah, we definitely found on the right side of the market in the quarter. I think we see the market broadly as others are seeing it. So it's probably sort of overall flat to slightly positive with a balance that we see imports coming down in the import data.
Thank you very much.
Okay.
And with that that is all the time Lee.
If you'd like to ask a question. Please signal by pressing star one on your telephone keypad again. It is star one if you'd like to ask a question.
Michael Roxland: So domestic production will be a bit above a few points above. So the market is still a bit depressed by the strong retail pricing that our customers have put in place in the last 12 months. But again, I think we see that washing out in the next few months. So we feel good about 2024 in terms of the market returning to growth. And we feel good about our growth prospects of 24 in North America as well.
Okay.
Again, it is star one if you'd like to ask a question.
And with that I would like to turn the call back over to Oliver for any additional or closing remarks.
Oliver Graham: I appreciate all the color there. I'll just one follow up. If demand is so strong, as you say, then you're expecting demand to further improve in 24. What do you feel the portfolio rational vision you mentioned is necessary. And maybe you may not be able to comment further or to your ability. So if you are, I totally understand that. But it just seems, you know, if things are truly getting better and you're struggling right now and you're on this improvement next year, that would make sense to have all your assets in place to address that demand.
Thanks, Kelly and thank.
Thank you everybody just to summarize we achieved.
Q3 guidance as outperformance in North America backed by strong volume growth was slightly ahead of expectations and that offset some weakening demand in Europe, we delivered very strong operating cash performance again in the quarter, which reflected the success of our ongoing working capital initiatives. As a result of that we now expect stronger projected year end liquidity.
Around $700 million and we continue to manage our network in a disciplined manner to balance with demand.
Oliver Graham: No, I understand the question. So I think the market will improve next year. I didn't say we'll do better than our performance this year. I think that would be a strong statement at this point and we're not guiding on on 24 yet. Though we do see good volume growth in North America in 2024. So I think it's simply a question of the growth that we originally expected, you know, both on the side of the hard felt, but also generally in the market in the last two years, has been a big step down for all players and expectations due to the inflationary price environment.
So with that we look forward to talking to you again at our Q4 results. Thanks very much.
Okay.
With that that does conclude today's call. Thank you for your participation you may now disconnect.
Okay.
[music].
Oliver Graham: So, you know, when we netted all that out, looked out a few years, we were still carrying and we still are carrying too much fixed costs relative to that even with the strong growth that we've had. So therefore we felt it was appropriate to start the consultation process, which as you say, I can't say any more about that at this point. Guys, thank you very much and we could look before you. Thanks, Mike.
Anthony Pettinari: And our next question comes from Anthony Pettinari with City. Please go ahead.
Anthony Pettinari: Good morning. You know, in Brazil, you talked about customer destocking and I was wondering if you could just help us understand where, you know, customers are in that process. And then with regards to glass containers, you know, I think you talked about, you know, the can winning globally, just wondering how that dynamic is playing out in Brazil this year and are there reasons to think, you know, as we looked at 24, that cans may.
Yeah.
Okay.
[music].
Anthony Pettinari: You know, regain some share, or whole share, loose share, like how would you describe the dynamic there currently? Sure, yeah, Anthony, and look, I think there's every reason to be positive about future Brazil demand in cans. You know, the market's probably flat, should be flat, positive by the end of the year, and what has been a very tough time for the can, given the amount of inflation that came through from high LME, from the devaluation of the REI, and all of that meant for metal costs going into cans.
Anthony Pettinari: So, I think as those effects normalize, and we are seeing the economy improve, it's definitely having a better year than forecast. We'll see retail pricing on cans, normalize, and we'll see growth back in cans, and I think there is a limit to the returnable recovery that's happened this year. So, I think that will flatten out, and we'll go back to the old trends, but we saw that clearly we've missed a year or two of growth, and clearly therefore, you know, the absolute volume in cans in the market at the moment is down on what everybody anticipated, and that's impacting our growth and the growth of others.
Anthony Pettinari: The destocking I mentioned that was a very specific link to the customer that went through the judiciary organisation. So, I don't think we're seeing broad scale destocking now, I think Brazil customers have rebalanced, and we're seeing a rough good match between sales and shipments. And as I say, I think we've had signs of good growth in the market already in the last couple of months, and we'd be hopeful for that continuing.
Oliver Graham: Okay, that's very helpful. And then just shifting gears, you know, you talked about the raised working capital guidance and the free cash flow performance, which is very helpful. You know, can you talk a little bit more about the dividend, you know, the stock is trading, I guess 14% dividend yield, you know, understanding you're not giving guidance for 2024. I'm just wondering if you can maybe highlight some of the puts and takes for free cash flow maybe next year going forward.
Oliver Graham: They can help us kind of think about the dividend and dividend sustainability. Sure, I'll kick it off and I'll pass today, this is another comment, but look, I think, as you say, we've just had a very strong cash performance. We see that cash performance, you know, improving into the into the year end. And we see our capex coming down, you know, in 24 and beyond because we've built out, you know, a very strong network, you know, with new efficient capacity that we can grow into for a number of years.
Oliver Graham: So, you know, we think that that on the pins, the dividend, you know, we've got lots of other actions we can take, and we feel confident about that. So, you know, as far as we can turn, nothing has changed.
David Bourne: We think the dividend is important to our shareholders and is a core part of our capital structure, but I'll also pass David for any other puts and takes on cash flow. Yeah, thanks, Oli. Hi, I'm saying. So, yeah, obviously we go into next year with enhanced liquidity from where our initial modeling was start with. And there's all the right illusion. Maybe there's something's going on with our lines. Do you still hear me, Anthony?
David Bourne: I do, I do. Hi, there was that section out. Yeah, I can hear you. Yeah, sorry, sorry about that. So thanks, Holly, and hi, Anthony. So I was only alluded to, I think we go into the new year with stronger liquidity, which is clearly clearly positive. What we have is the impact of the reduction in our growth investment cap expense, which will be of the order of $200 million. And if you look at our working capital inflow this year, that's also the order of $200 million.
David Bourne: So you can think about the two in the same press when you're kind of thinking through 2024, and then probably modeling earnings growth over the top of that when we're thinking about kind of re-cashed by a public with the dividend on the top side.
Anthony Pettinari: Okay, that's very helpful.
Unknown Attendee: I'll turn it over.
George Staphos: In our next question, welcome from George Staphos with a bank of America. Please go ahead. Yeah, hi, good morning. Thanks for the details. This is actually catching through our map of Georgia. We had conflicting calls this morning.
George Staphos: So first of, you know, you had pretty strong volume growth in America's overall, and you know, I recognize there's the fixed cost on our absorption, but I guess are there any other factors in incremental margin such that we didn't kind of see more volume flow through to earnings? And I guess as we move into 24, you're highlighting the expected continued growth in North America. So just wondering about kind of the earnings trajectory for the America's into 24 as well. Yeah, thanks for the question.
Unknown Attendee: I think Oli may have dropped off a line to a second so I'll ask on his behalf. Okay, I think it's a bit of a small technical issue.
David Bourne: I'm not hearing the question, but I have had the question put to me so I'll answer it about any factors of them fixed cost absorption, preventing volume growth flowing through to earnings in America. So yes, I think in Q3, we did have a couple of issues. One was that we didn't produce as much. We regulated industries, and that's what drove the strong cash flow performance, and so that did impact EBITDA relative to cash flow because we could tell some production.
David Bourne: We did have some planned and foreseen cost headwinds, one of cost headwinds in Q3, including a provision release for bank energy after the takeover. So that was a negative also in the in the quarter for North America. On the South America side, there was a small timing issue that we mentioned in the remarks that also impacted Q3. So I think those are the main things. Looking into the fourth quarter, as I said in the remarks, we did have a specific take or pay in Q4 in North America, that doesn't repeat, so that's a negative, and we have also some very strong quarter for ends in Brazil in Q4, 22 that we're not going to be able to lap fully, which is a small negative in Brazil as well relative to the volume growth we anticipate.
David Bourne: So hopefully that addresses the question. Okay, appreciate that, and understand, you know, you're fairly limited on what you can disclose. But just with regard to this potential closer in North America, you're able to talk about it all, you know, how this plants cost position sits relative to the rest of your network. And then, I guess, as an overall industry, how would you, you know, characterize operating rates, you know, for the bad to get market at the moment in North America?
David Bourne: I'll pick up the answers to that.
David Bourne: So obviously we are limited work in what we're able to say while the White House negotiations kicked out and we'll see where that gets to. But White House is one of the highest cost plants in our network in North America and an older plant with it from there for, you know, has some fixed cost attached to it, which would be helpful for takeouts, typically with a plant with that magnitude, you can model something in the load of the digits in terms of the actual cost takeout for that plant. And over the top of that, obviously, by spreading warnings through to other plants, you get some potential fixed cost overhead absorbed and benefits sitting over the top of that.
Erin Vasinathan: And we'll move to our next question from Erin Vasinathan with RBC Capital Marketing. Please go ahead.
David Bourne: Hi. Sorry about that. Thanks for taking my question. Just real quickly, the leverage is relatively high 5.7 times. Maybe you can just discuss if the 100 million of free cash will be used. How would that be used towards the leveraging and maybe where you end up plan to end up in maybe fiscal 24 and thanks. Yeah, David, do you want to take up? Yeah, thank you for the question. I wouldn't say as set out in our opening remarks, really, we have a very clear capital allocation policy.
David Bourne: So we regard the dividends as sustainable and we'll continue to adopt our 10 cents. So of course, apart from that, you know, as backed up by the strong cash generation, you've seen it in the last quarter, we developed half term during this course from 6.2 times, which we said will be a peak down to 5.7. And we anticipate further delivering through together. Thank you.
Gabe Hajde: Our next question will come from Gabe Hajde with Wells Fargo. Please go ahead.
Gabe Hajde: Hi, this is Alex from Gabe. I just want to first, I guess, ask about the stocking in North America. I guess that it's now complete. Is that, you know, is that based on, you know, your conversation with customers or is that based on what other works can just help us understand, you know, the stocking term that you seem to keep through them. Maybe they are looking to keep going next year. Yes, I guess, to be clear, we mean are these stocking that so we've been reducing in mintries, you know, in Q2 and Q3.
Gabe Hajde: And that's why we, you know, that's the explanation for why we don't have the level of EBITDA growth that you might expect with this level of volume growth, because we've been prioritizing reducing those inventories, which is what's driven the cash flow. I mean, if we turn to the customer, I think, you know, pretty much all these stocking is complete in in the North American customer base in our part of the market.
Gabe Hajde: Obviously, we're not sitting with a mass beer position and we've not been impacted directly by the, by the issues with, you know, one particular brand in North America this year. So, you know, there may be stocks sitting in supply chain in those parts of the market. But if you look across soft drinks, energy and the market, you know, sparking waters, the markets, the we're playing in, we don't see customers having elevated levels of stocks any longer.
Gabe Hajde: And we also, and this has been very important this year, don't see them having elevated levels of expensive imports sitting in their stocks, which they needed to run out. So, from our point of view, that's all cleared out. And what we've been doing this year is also right sizing our inventories to drive our cash flow. Okay, that's something.
Oliver Graham: And maybe just in Europe, you guys talk about stocking and conditions. Is this, can you maybe just help us understand this is the time that has been getting worse from Q2 and Q3 and what your view is into what, what it looks like for next year. Yeah, I think visibility into next year is not strong right now. And, you know, I think one of the major beer players came out and said they also needed a bit more time on their business planning.
Oliver Graham: And I think we're seeing that with all our customers in Europe that they're going through their business planning cycle. I think that what my guess is that leads to is an increased focus on volume relative to price because I think, you know, when you see. What's happened over the summer is clear the price lever I think is pretty much done. And also I think input costs are moderating. And so I think we'll see we'll see a prioritization of volume relative to price into 2024, but they've not gone through that cycle in full yet.
Oliver Graham: And so we don't have the detail and obviously we'll be able to update much more on that in February. I think, I mean, what we saw during the quarter was a deterioration from essentially the first part of August. So we had a strong June 9% growth, a pretty strong July 5%, and then we ended up at minus 6, minus 6 in August and September. And, you know, when we then got the Nielsen data and other market data, what was clear is that from July through August fails, you know, retail deteriorated.
Oliver Graham: And it looks like the combination of a very poor summer across northern Europe together with the weakness and consumer spending, you know, added up to an overall weakness that our customers had not anticipated at all. So they therefore built stock into the summer. And when they realized that they weren't getting the fell through, obviously they stopped buying from us and we saw that then come through in the second part of August and September.
Oliver Graham: It has stabilized now in October and that guidance has also been given by the customers that have come to come out with their remarks though. It's still, you know, fragile, I'd say, but it's definitely stabilized in October. We have last year a pretty strong end of Q4 and the members of the members who have been cautious about our guidance through the remainder of the year. And as I say, I think there's lots of reasons to believe they're, you know, positive outlook in 24 despite the fact that consumer remain under pressure.
Oliver Graham: But I think that, you know, wage growth will catch up with inflation cost pressures will mitigate. I think the brands will look more to volume having played a strong game on price in their revenue growth for the last 12 months. And so, you know, it would be positive about growth in 24 in Europe, but at the moment we can't call the exact numbers because we haven't got the details from our customers.
Thomas: Thomas. Thank you. That's your help. I'll turn it over.
Unknown Attendee: Thanks.
David Bourne: Our next question will come from Diego Silva with Squared Asset Management. Please go ahead. And your line is open. Again, color your line is open. Hi, apologies. I just have a quick question, which is, I've seen the growth of those capex guidance for this year. But could you give us a guidance on total capex spent for this year? An equally on the restructuring costs. Is there any kind of indication on what will be the total restructuring costs of the facility closures and the timing of those? Thank you very much.
David Bourne: David Joanna, take those two. Well, I think I'm sorry. So, yeah, full capex will be of the order of 0.4 billion in terms of cash capex. That includes maintenance and IP and sustainability spend of approximately 130 is, which is around about our usual number of credit consistent year to year aside from the business growth investment capex in terms of closure costs. If our financial statements will give you the numbers, if you look at the exceptional section there for both of them in terms of our current estimate around that. And clearly White House is at two earlier stage of negotiation to comment on at this point. Thank you very much.
Operator: And with that, that is all the time we, and if you like to ask a question, please signal by pressing star 1 on your telephone keypad. Again, it is star 1 if you like to ask a question.
Oliver Graham: And with that, I would like to turn the call back over to all over for any additional closure remarks. Thanks, Ellie. And so, thank you, everybody. Just to summarize, we achieved Q3 guidance as our performance in North America back by strong volume growth was slightly ahead of expectations. And that offset some weakening demand in Europe. We delivered very strong operating cash performance again in the quarter, which reflected the success of our ongoing working capital initiatives.
Oliver Graham: And as a result of that, we now expect stronger projected year end liquidity at around $700 million. And we continue to merge our network in a discipline manner to balance with demand. So with that, we look forward to talking to you again at our Q4 results. Thanks very much.
Operator: With that, that does conclude today's call. Thank you for your participation. You may now disconnect.