Q2 2024 Amcor plc Earnings Call

Operator: Thank you for watching. Ladies and gentlemen, this is the operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold. Thank you for your patience.

Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will be placed on music hold thank you for your patience.

[music].

Operator: My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to Amcor's first half and second quarter 2024 results conference call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press the star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Tracey Whitehead, head of investor relations. Tracey, you may begin your presentation. Thank you, operator, and thank you everyone for joining Amcor's Fiscal 2024 first half and second quarter earnings report. Joining us today is Ron Delia, our Chief Executive Officer, and Michael Casamento, our Chief Financial Officer. Before I hand over, let me note a few things.

Krista: Good afternoon, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the Amcor is first half and second quarter 'twenty 'twenty four results conference call.

Krista: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you would like to withdraw your question again press Star one. Thank you I would now like to turn.

Tracey Whitehead: On our website, Amcor.com, under the Investor section, you'll find today's press release and presentation, which we will discuss on this call. Please be aware that we'll also discuss non-GAAP financial measures, and related reconciliations can be found in that press release and the accompanying financial statements. Remarks will also include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause future results to be different from those currently expected. Reference can be made to Amcor's SEC filings, including our statements on Form 10-K and 10-Q for further details. Please note that during the question and answer session, we request that you limit yourself to a single question and one follow-up and then rejoin the queue if you have any further questions. With that, over to you. Thanks, Tracey.

Krista: The conference over to Tracey Whitehead head of Investor Relations Tracy you May begin your conference.

Tracey Whitehead: Thank you operator, and thank you everyone for joining M cause fiscal 'twenty 'twenty four first half and second quarter earnings call. Joining today is Ron Delia Chief Executive Officer, and Mark looks like the Manto chief financial potential.

Tracey Whitehead: So before I hand over let me note a few items on our website <unk> com under the investors section you'll find today's press release and presentation, which we will discuss on this call. Please be aware that we will also discuss non-GAAP financial measures and related reconciliations can be found in that press release and the presentation.

Tracey Whitehead: Patient <unk>.

Tracey Whitehead: Mark will also include forward looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause future results to be different than current estimates and reference can be made to amcor SEC filings, including our statements on Form 10-K and 10-Q for further.

Ronald Stephen Delia: And thanks, everyone, for joining Michael and myself today to discuss Amcor's second quarter and first half results for Fiscal 24. We'll begin with some prepared remarks before opening the floor to Q&A. As seen on slide three, our focus on safety remains unwavering, and our significant commitment to providing a safe and healthy work environment continues to be rewarded. 70% of our sites have been injury-free for the past 12 months or longer, and we've experienced a 17% reduction in injuries when compared to the first half of fiscal 2023. Safety is deeply embedded in Amcor's culture and is the number one priority for our global team.

Tracey Whitehead: Please note that during the question and answer session. We request that you limit yourself to a single question and one follow up and then rejoin the queue. If you have any additional questions with that over to you Ron.

Ronald Stephen Delia: Thanks, Tracy and thanks, everyone for joining Michael and myself today to discuss <unk> second quarter and first half results for fiscal 'twenty four will begin with some prepared remarks before opening for Q&A.

Ronald Stephen Delia: As seen on slide three our focus on safety remains unwavering and our significant commitment to providing a safe and healthy work environment continues to be rewarded.

Ronald Stephen Delia: 70% of our sites have been injury free for the past 12 months or longer and we've experienced a 17% reduction in injuries when compared to the first half of fiscal 2023.

Ronald Stephen Delia: Turning to our key messages on slide four, first, our reported earnings per share for the second quarter and first half were modestly better than the expectations we set out in October, and improved working capital performance helped drive a year-over-year increase of more than $100 million in adjusted free cash flow. Second, our financial performance through the half was supported by a strong and proactive focus on controlling costs. This helped us offset second quarter volumes that were a couple of percentage points lower than we anticipated. Our teams around the world continue to respond, doing an excellent job proactively taking further cost action.

Ronald Stephen Delia: Safety is deeply embedded in <unk> culture and is the number one priority for our global teams.

Ronald Stephen Delia: Turning to our key messages on slide four.

Ronald Stephen Delia: First our reported earnings per share for the second quarter and first half were modestly better than the expectations. We set out in October and improved working capital performance helped drive a year over year increase of more than $100 million and adjusted free cash flow.

Ronald Stephen Delia: Second our financial performance through the half was supported by strong and practice focus on controlling costs.

Ronald Stephen Delia: This helped us offset second quarter volumes, there were a couple of percentage points lower than we anticipated.

Ronald Stephen Delia: Our teams around the world continue to respond doing an excellent job proactively taking further cost actions.

Ronald Stephen Delia: Third, our first half financial performance puts us on track to deliver against our full year guidance, which we are again reaffirming today. Relative to the first half, we believe Q2 was the low point for earnings growth, and we continue to expect the trajectory of adjusted EPS growth to improve through the second half of fiscal 24, including delivering mid-single-digit adjusted earnings growth in the fourth quarter. Our confidence is supported by our improved earnings leverage, as well as a number of known factors we'll cover in more detail later that will benefit earnings through the second half of the fiscal year. Additionally, our volume trajectory has improved generally through January, and this underpins our confidence that Q2 marked a low point for volume.

Ronald Stephen Delia: Third our first half financial performance puts us on track to deliver against our full year guidance, which we are again reaffirming today.

Ronald Stephen Delia: Relative to the first half we believe Q2 was the low point for earnings growth and we continue to expect that trajectory of adjusted EPS growth to improve through the second half of fiscal 'twenty, four including delivering mid single digit adjusted earnings growth in the fourth quarter.

Ronald Stephen Delia: Our confidence is supported by our improved earnings leverage as well as a number of known factors will cover in more detail later that will benefit earnings to the second half of the fiscal year.

Ronald Stephen Delia: Additionally, our volume trajectory has improved generally through January and this underpins our confidence that Q2 marked the low point for volumes.

Ronald Stephen Delia: Finally, we remain confident in our long-term growth and value creation strategy and in our ability to deliver a combination of strong earnings growth and a compelling and growing dividend. The strength of our market positions, execution capabilities, and consistent capital allocation framework collectively continue to make a compelling investment case for Amcor. Moving to slide five for a summary of our financial results, organic sales on a comparable cost and currency basis were down 8% for the half and 10% for the quarter.

Ronald Stephen Delia: Finally, we remain confident in our long term growth and value creation strategy and in our ability to deliver a combination of strong earnings growth and a compelling and growing dividend.

Ronald Stephen Delia: The strength of our market positions execution capabilities and consistent capital allocation framework collectively continue to make it a compelling investment case for amcor.

Ronald Stephen Delia: Moving to slide five for a summary of our financial results.

Ronald Stephen Delia: Organic sales on a comparable constant currency basis were down 8% for the half and 10% for the quarter.

Ronald Stephen Delia: Price mixed benefits were around 1% for the first half and flat in the second quarter, reflecting moderating inflation, which resulted in reduced pricing actions by our team. Volumes were down 9% for the first half and down 10% for the December quarter. Second quarter volumes were modestly lower than our October expectations, with the main difference being an acceleration of destocking, especially in the month of December. First half and December quarter adjusted EBIT was $709 and $352 million, respectively, modestly above our expectations. On a comparable constant currency basis, declines of approximately 6% in both periods reflect lower volumes, partly offset by benefits related to decisive and proactive cost actions taken across our businesses in response to evolving market dynamics. In total, our actions reduced costs by more than $200 million in the first half compared to last year, with a reduction of more than $130 million achieved in the second quarter. Adjusted EPS was $31.3 and $15.7 cents per share, respectively, also modestly above our earlier expectations.

Ronald Stephen Delia: Price mix benefits were around 1% for the first half and flat in the second quarter, reflecting moderating and moderating inflation, which resulted in reduced pricing actions by our teams.

Ronald Stephen Delia: Volumes were down 9% for the first half and down 10% for the December quarter.

Ronald Stephen Delia: Second quarter volumes were modestly lower than our October expectations with the main difference being an acceleration of destocking, especially in the month of December.

Ronald Stephen Delia: First half in December quarter adjusted EBIT.

Ronald Stephen Delia: 709, and $352 million, respectively modestly above our expectations on.

Ronald Stephen Delia: On a comparable constant currency basis declines of approximately 6% in both periods reflect lower volumes, partly offset by benefits related to decisive and proactive cost actions taken across our businesses in response to evolving market dynamics.

Ronald Stephen Delia: In total our actions reduced costs by more than $200 million in the first half compared to last year with a reduction of more than $130 million achieved in the second quarter.

Ronald Stephen Delia: Adjusted EPS was 31, 3% and $15.07 per share respectively also modestly above our earlier expectations.

Ronald Stephen Delia: For both periods, this was down 10% on a comparable basis, reflecting lower adjusted EBIT and the unfavorable impact of higher interest costs. Working capital improvement remains a focus and helped drive free cash flow for the first half well ahead of the same period last year and in line with our expectations. And we returned approximately $390 million of cash to shareholders in the first half through a combination of share repurchases and a growing dividend, which has increased to $0.125 per share. I'll turn it over now to Michael to provide some further color on the financials and our outlook. Thanks, Ron. Hello, everyone.

Ronald Stephen Delia: For both periods. This was down 10% on a comparable basis, reflecting lower adjusted EBIT and the unfavorable impact of higher interest costs.

Ronald Stephen Delia: Working capital improvement remains a focus and helped drive free cash flow for the first half well ahead of the same period last year and in line with our expectations.

Ronald Stephen Delia: And we returned approximately $390 million of cash to shareholders in the first half through a combination of share repurchases and a growing dividend, which has increased to $12 five per share.

Ronald Stephen Delia: I'll turn it over now to Michael to provide some further color on the financials and our outlook.

Michael: Thanks, Ron and Hello, everyone.

Michael John Casamento: Beginning with the flexible segment on slide six, year-to-date net sales on a comparable constant currency basis were 8% lower, which largely reflects weaker volumes. Volumes were down 9%, mainly due to lower market and customer demand and accelerated de-stocking. In North America, first half net sales declined at high single-digit rates, driven by low volumes in categories including meat. Liquid Beverage and Healthcare, which more than offset growth in the condiments, snacks, and confectionery categories. In Europe, net sales declined at low double-digit rates, driven by lower volumes, partly offset by price-mixed benefits. Volumes were lower in snacks, coffee, healthcare, and unconverted film and foil.

Michael: Beginning with the flexible segment on slide six year to date net sales on a comparable constant currency basis were 8% lower which largely reflects weaker volumes.

Michael: <unk> were down 9%, mainly due to lower marketing customer demand and accelerated destocking.

Michael: In North America first half net sales declined at high single digit rates driven by lower volumes in categories, including mate.

Michael: Liquid beverage and healthcare, which more than offset growth in the condiments snacks and confectionery and categories.

Michael: In Europe net sales declined at low double digit rates driven by lower volumes, partly offset by price mix benefits.

Michael: Volumes were lower in snacks coffee healthcare, adding unconverted film in foil.

Michael John Casamento: This was partly offset by higher confectionary... Across the Asian region, net sales were modestly higher than the prior year. Volume growth in Thailand, India, and China helped offset lower volumes in Southeast Asian healthcare. In Latin America, net sales declined at high single-digit rates, driven by lower volumes mainly in Chile and Mexico.

Michael: This was partly offset by higher confection volumes.

Michael: Across the Asian region, net sales were modestly higher than the prior year.

Michael: Growth in Thailand, India, and China helped offset lower volumes in the southeast Asian Health care business.

Michael: In Latin America net sales declined at high single digit rates, driven by lower volumes, mainly in Chile and Mexico.

Michael John Casamento: Although partly offset by growth in Brazil, first half adjusted EBIT was 5% lower than last year on a comparable constant currency basis. As a result of lower volumes, partly offset by favourable price mix benefits and ongoing actions taken to lower costs, increase productivity, and strengthen operating cost performance, EBIT margin of 12.6% was comparable to the prior year despite a 50 basis point unfavourable comparison related to the sale of our Russian business last year. For the December quarter, reported sales were down 9% on a comparable constant currency basis, and price mix was relatively neutral compared with last month. Volumes were down 10% in the quarter, reflecting continued soft market and customer demand.

Michael: Partly offset by growth in Brazil.

Michael: First half adjusted EBIT was 5% lower than last year on a comparable constant currency basis.

Michael: As a result of lower volumes, partly offset by favorable price mix benefits and ongoing actions taken to lower costs increase productivity and strengthen operating cost performance.

EBIT margin of 12, 6% was comparable to prior year. Despite a 50 basis point unfavorable comparison related to the sale of our Russian business last year.

Michael: For the December quarter reported sales were down 9% on a comparable constant currency basis and price mix was relatively neutral compared with last year.

Michael: Volumes were down 10% in the quarter, reflecting.

Michael: Continued soft marketing customer demand Destocking also continued through the quarter accelerating in the month of December and was particularly impactful in health care, where volumes will allow the last year by double digits.

Michael John Casamento: De-stocking also continued through the quarter, accelerating in the month of December, and was particularly impactful in healthcare, where volumes were lower than last year by double. In response to market dynamics, the business continued to take decisive cost actions, focusing on operating efficiencies, delivering procurement benefits, limiting discretionary spend, and advancing structural cost reduction initiatives. This resulted in another quarter of strong performance, partly offsetting weaker volumes, with adjusted EBIT declining 5% on a comparable constant currency basis. Turning to rigid packaging on slide 7.

Michael: In response to market dynamics, the business continued to take decisive cost actions.

Michael: Focusing on operating efficiencies delivering procurement benefits limiting discretionary spend and advancing structural cost reduction initiatives.

Michael: This resulted in another quarter of strong performance, partly offsetting weaker volumes with adjusted EBIT declining 5% on a comparable constant currency basis.

Michael: Turning to rigid packaging on slide seven.

Michael John Casamento: Year-to-date net sales on a comparable constant currency basis were 8% lower, with price mixed contributing around 1%; volumes were down 9% for the first half, with lower volumes in North America, partly offset by growth in Latin America. In North America, overall beverage volumes for the first half were 14% lower than last year, including a 13% reduction in hot filled beverage container volumes, due to lower consumer and customer demand and elevated levels of destocking through the first half. In Latin America, volumes grew at mid-single-digit rates.

Michael: Year to date net sales on a comparable constant currency basis were 8% lower with price mix contributing around 1%.

Michael: Volumes were down 9% for the first half.

Michael: With lower volumes in North America, partly offset by growth in Latin America.

Michael: In North America overall beverage volumes for the first half of 14% lower than last year.

Michael: Including a 13% reduction in hot fill beverage container volumes due to lower consumer and customer demand and elevated levels of de stocking through the first half.

Michael: In Latin America volumes grew at mid single digit rates with new business wins in Brazil, Peru, and Colombia, partly offsetting lower volumes in Mexico.

Michael John Casamento: With new business wins in Brazil, Peru, and Colombia partly offsetting lower volumes in Mexico, adjusted EBIT was 9% lower than last year on a comparable basis, reflecting lower volumes partly offset by price mixed benefits and favourable cost performance. For the December quarter, net sales were also down 10% on a comparable constant currency basis.

Michael: Adjusted EBIT was 9% lower than last year on a comparable basis, reflecting lower volumes, partly offset by price mix benefits and favorable cost performance.

Michael: For the December quarter net sales were also down 10% on a comparable constant currency basis.

Michael John Casamento: Price mix contributed around 2% and volumes were down 12% for the quarter, reflecting lower volumes in North America, partly offset by new business winds driving mid-single-digit growth in Latin America. Overall, North American beverage volumes were 19% lower for the quarter, reflecting a high single-digit decline from destocking, and some of our customers took action to significantly reduce inventories in both hot fill and cold fill categories. Volumes were also impacted in the high single-digit range by incrementally softer consumer and customer demand in Amcor's key end markets. In addition, we had net new business wins in the Hotfield category, which partly offset a loss in Coldfield as we elected not to retain volumes that fell short of our profitability. Second quarter adjusted EBIT declined by 12%, reflecting lower volumes, partly offset by benefits from continuing to proactively manage costs, including realizing labor savings by taking more plant shutdown days to better align capacity with market dynamics, as well as driving procurement down.

Michael: Mix contributed around 2% and volumes were down 12% for the quarter, reflecting lower volumes in North America, partly offset by new business wins.

Michael: Giving mid single digit growth in Latin America.

Michael: Overall, North American beverage volumes were 19% lower for the quarter, reflecting a high single digit decline from Destocking and some of our customers took action to significantly reduce inventories in both heart failing coldfield categories.

Michael: Volumes were also impacted in the high single digit range by incrementally softer consumer and customer demand customer demand and <unk> key end markets.

Michael: In addition, we had net new business wins in the wholesale category, which partly offset our loss in color Phil as we elected not to retain volumes that fell short of our profitability thresholds.

Michael: Second quarter, adjusted EBIT declined by 12%, reflecting lower volumes, partly offset by benefits from continuing to proactively manage costs.

Michael: Including realizing labor savings by taking more plant shutdown days to better align capacity with the market dynamics as well as driving scale and benefits.

Michael John Casamento: Moving to cash and the balance sheet on slide eight, as Ron covered earlier, adjusted free cash flow for the half came in more than $100 million ahead of last year, with our teams continuing to make progress against our priority to reduce inventories and drive working capital improvements across the board. Our financial profile remains solid with leverage at 3.4x, broadly in line with the first quarter and where we expected it to be as we cycle through temporary increases in working capital and given trailing 12-month EBITDA now fully reflects the divestiture of our Russian business. Looking ahead, we continue to expect leverage will decrease to approximately three times at the end of our fiscal year, supported by seasonally stronger earnings and cash flow in the second half. This brings me to Outlook on slide nine.

Michael: Moving to cash and the bounce rate balance sheet on slide eight as Ron covered earlier adjusted free cash flow for the half came in more than $100 million ahead of last year.

With our teams continuing to make progress against our priority to reduce inventories and drive working capital improvements across the board.

Michael: Our financial profile remains solid with leverage of 334 times broadly in line with the first quarter and where we expected it to be as we cycled through temporary increases in working capital and given trailing 12 months EBITDA now fully reflects the divestiture of our restaurant business.

Michael: Looking ahead, we continue to expect leverage will decrease to approximately three times at the end of our fiscal year supported by seasonally stronger earnings and cash flow in the second half.

Michael: This brings me to our outlook on slide nine.

Michael John Casamento: As Ron mentioned earlier, we are reaffirming our 4-year guidance for adjusted EPS of $0.67 to $0.71 per share. We continue to expect the underlying business to contribute organic earnings growth in the plus or minus low single-digit range, with share repurchases adding a benefit of approximately 2% and favorable currency translation contributing a benefit of up to $1. This is offset by a negative impact of approximately 3% related to the sale of our Russian business in December 2022, the impact of which was all in the first half. We also expect a negative impact of approximately 6% from higher interest and tax expense, which takes into account our estimate for full-year net interest expense of between $315 million and $330 million, which is modestly lower than where we were forecasting last quarter. Our four-year tax rate expectations are unchanged in the range of 18...

Michael: As Ron mentioned earlier, we are reaffirming our full year guidance for adjusted EPS of <unk> 67 to 71 per share.

Michael: We continue to expect the underlying business to contribute organic earnings growth in the plus or minus low single digit range with.

Michael: With share repurchases, adding a benefit of approximately 2% and favorable currency translation contributing a benefit of up to 2%.

Michael: This is offset by a negative impact of approximately 3% related to the sale of our Russian business in December 'twenty, two the impact of which was sold in the first half.

Michael: We also expect a negative impact of approximately six 6% from higher interest and tax expense.

Michael: Which takes into account our estimate for full year net interest expense of between $315 million to $330 million, which is modestly lower than where we were forecasting last quarter.

Michael: Our full year tax rate expectations expectations are unchanged in the range of 18% to 20%.

Michael John Casamento: In relation to phasing, we believe that the December quarter marks the low point in terms of Amcor's earnings growth and volume decline. January volumes have improved following heavy customers' e-stocking in December, and while we expect market dynamics to remain volatile in the near term, our volume trajectory is expected to continue to improve through the balance of the year. We anticipate Q3 volumes will be down in the mid-single-digit range and expect fourth-quarter volume declines in the low-single-digit range. Taking into account offsetting benefits from cost reduction initiatives and a reduced headwind from higher interest costs compared with last year, we expect third-quarter adjusted EPS to be down in the mid-single-digits on a comparable constant currency basis.

Michael: In relation to phasing, we believe that December quarter marks the low point in terms of AMCOL is earnings growth and volume declines.

Michael: January volumes have improved following heavy customer destocking in December and while we expect market dynamics to remain volatile in the near term.

Michael: <unk> trajectory is expected to continue to improve through the balance of the year we.

Michael: We anticipate Q3 volumes, we did will be down in the mid single digit range and expected fourth quarter volume declines in the low single digit range.

Michael: Taking into account offsetting benefits from cost reduction initiatives and a reduced headwind from higher interest cost compared with last year, we expect third quarter adjusted EPS to be down mid single digits on a comparable constant currency basis and for the fourth quarter, we expect adjusted EPS to increase by mid single digits over the prior year.

Ronald Stephen Delia: And for the fourth quarter, we expect adjusted EPS to increase by mid-single digits over the prior year. And Ron will talk through the factors that support this return to growth shortly. Adjusted pre-cash flow continues to trend better than last year, as we expected, and we are again reaffirming our guidance range of $850 million to $950 million for our fiscal 24 year, which will be up to $100 million higher compared with last year. Our plan to repurchase at least 70 million of Amcor's shares in 2024 is unchanged, and we continue to pursue value-creating M&A opportunities. With that, I'll hand it back to Ron.

Michael: And Ron will talk through the factors that support this return to growth shortly.

Michael: Adjusted free cash flow continues to trend better than last year as we expected and we are again reaffirming reaffirming our guidance range of $850 million to $950 million for our fiscal 'twenty full year.

Michael: Which will be up which will be up to 100 million higher compared with last year.

Michael: Our plan to repurchase at least $70 million of ample shares in 'twenty four is unchanged and we continue to pursue value, creating M&A opportunities.

Michael: With that I'll hand back to Ross.

Ronald Stephen Delia: Thanks, Michael. Prior to opening the call to questions, I want to provide additional insights into our outlook for the balance of the year, as well as a reminder of the key components comprising our longer-term model for driving shareholder value. Looking first at the balance of fiscal 24, as I referenced earlier and as highlighted on slide 10, there are a number of key factors already known to us that give us confidence our earnings trajectory will improve through the second half of the fiscal year. First, the earnings headwind related to the sale of our business in Russia is now fully behind us, eliminating an unfavorable comparison that impacted reported earnings throughout calendar 23. Second, while second-half interest expense is expected to be higher than last year, the magnitude of the headwind from the rapid rate increases over the past 18 months begins to abate as we move through the balance of the year.

Ross: Thanks, Michael prior to opening the call to questions I want to provide additional insights into our outlook for the balance of the year as well as a reminder of the key components comprising our longer term model for driving shareholder value.

Ross: Looking first at the balance of fiscal 'twenty, four as I referenced earlier and as highlighted on slide 10. There are a number of key factors already known to us that gives us confidence our earnings trajectory will improve through the second half of the fiscal year.

First the earnings headwind related to the sale of our business in Russia is now fully behind us eliminating an unfavorable comparative that impacted reported earnings throughout calendar 'twenty three.

Ross: Second while second half interest expense is expected to be higher than last year. The magnitude of the headwind from the rapid rate increases over the past 18 months begins to abate as we move through the balance of the year.

Ronald Stephen Delia: Third, we benefit from structural cost savings of $35 million in the second half, with an additional $15 million to benefit fiscal 25. These savings are primarily related to plant closures as we optimize our global footprint. And fourth, earnings leverage has improved due to our commitment to take proactive actions to align our cost structure with evolving market dynamics. This includes eliminating shifts to take out labor, reducing overtime, driving procurement, and maintaining tight control of discretionary spend. In total, over the last 12 months, we've reduced headcount by more than 2,000 full-time employees, or approximately 5% of our workforce, with more than 1,000 of these reductions taken out in the first half of fiscal 24. From an earnings perspective, operating costs were lower by more than $200 million in the first half of fiscal 24 compared with the prior period.

Ross: Third we have benefits from structural cost savings of $35 million in the second half with an additional $15 million to benefit fiscal 'twenty five.

Ross: These savings are primarily related to plant closures as we optimize our global footprint.

Ross: And fourth earnings leverage has improved due to our commitment to take proactive actions to align our cost structure with evolving market dynamics.

Ross: This includes eliminating shifts to take out labor, reducing overtime, driving procurement and maintaining tight control of discretionary spend.

Ross: In total over the last 12 months, we reduced head count by more than 2000 full time employees or approximately 5% of our workforce with more than 1000 of these reductions taken out in the first half of fiscal 'twenty four.

Ross: From an earnings perspective operating costs were lower by more than $200 million in the first half of fiscal 'twenty four compared with the prior period.

Ronald Stephen Delia: And more than $100 million of this cost reduction was delivered in the second quarter, which is almost double the approximately $70 million delivered in the first quarter. The result has been, and will continue to be, improved earnings leverage, which we've achieved this financial year to date despite significantly lower volume. As Michael mentioned, we were off to a better start in January, and we're confident Q2 marks the low point for earnings growth and volume declines, with our overall trajectory expected to improve as we move through the balance of the year. To sum up, we're confident the positive earnings impact from multiple known factors will drive improved momentum in the second half of Fiscal 24, including delivering mid-single-digit earnings growth in our fiscal fourth quarter.

Ross: And more than $100 million of this cost reduction was delivered in the second quarter, which is almost double the approximately $70 million delivered in the first quarter.

Ross: The result has been and will continue to be improved earnings leverage, which we've achieved this financial year to date, despite significantly lower volumes.

Ross: As Michael mentioned, we are off to a better start in January and are confident Q2 marks the low point for earnings growth and volume declines in with our overall trajectory expected to improve as we move through the balance of the year.

Ross: To sum up we're confident the positive earnings impact from multiple known factors will drive improved momentum in the second half of fiscal 'twenty, four including delivering mid single digit earnings growth in our fiscal fourth quarter.

Ronald Stephen Delia: Importantly, we're not assuming an improving consumer demand environment, and we'll continue to be proactive in taking actions to ensure our cost-based and pricing strategies reflect market conditions. Moving to slide 11, as we look beyond the second half of this fiscal year, these known factors will serve as important building blocks supporting a return to delivering against our shareholder value creation model through a combination of strong earnings growth and a compelling and growing dividend currently yielding five percent. The starting point for creating value will always be growing the business, and over the last 10 years, we've averaged 8% growth in adjusted earnings per share.

Ross: Importantly, we're not assuming an improving consumer demand environment, and we will continue to be proactive in taking actions to ensure our cost base and pricing strategies to reflect market conditions.

Ross: Moving to slide 11, as we look beyond the second half of this fiscal year. These known factors will serve as important building blocks supporting our return to delivering against our shareholder value creation model through a combination of strong earnings growth and a compelling and growing dividend currently yielding 5%.

Ross: The starting point and creating value will always be growing the business and over the last 10 years, we've averaged 8% growth in adjusted earnings per share.

Ronald Stephen Delia: As you can see on this slide, we have multiple drivers of margin accretive growth, each with significant upside opportunity over the longer term. We will also continue to enhance our ability to grow in these areas through stepping up CapEx over a multi-year period and executing on strategic M&A. As volumes normalize and improve, these generally faster-growing and higher-value growth areas will represent a larger proportion of sales, becoming increasingly stronger contributors to earnings. And when we return to a more normalized volume growth environment, this combination of improved mix and the steps we've taken to optimize our cost base positions Amcor well to again deliver strong earnings growth in line with our long track record. To close on slide 12, we're executing well to deliver against the earnings and cash flow expectations we set coming into Fiscal 24.

Ross: As you can see on this slide we have multiple drivers of margin accretive growth each with significant upside opportunity over the longer term.

Ross: We will also continue to enhance our ability to grow in these areas through stepping up capex over multi year period and executing on strategic M&A.

Ross: As volumes normalize and improve these generally faster growing and higher value growth areas will represent a larger proportion of sales becoming increasingly stronger contributors to earnings.

Ross: And when we returned to a more normalized volume growth environment. This combination of improved mix and the practice steps, we've taken to optimize our cost base physicians amcor well to again deliver strong earnings growth in line with our long track record.

Ross: To close on slide 12, we're executing well to deliver against the earnings and cash flow expectations, we set coming into fiscal 'twenty four or.

Ghansham Panjabi: Our teams are being proactive as market dynamics evolve and focusing on the controllables to take additional cost out where appropriate. We have line of sight to mid-single-digit earnings growth in Q4, and our commitment to our longer-term growth and value-creation strategy positions us well to deliver on our shareholder value-creation model when the volume environment normalizes. Operator, with those opening remarks, we're now ready to turn the line over to questions. As a reminder, if you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press star one. We also ask that you limit yourself to one question and one follow-up and then re-queue. Your first question comes from the line of Ghansham Panjabi from Baird. Please go ahead.

Ross: Our teams are being proactive as market dynamics evolve and focusing on the controllable to take additional cost out where appropriate.

Ross: We have line of sight to mid single digit earnings growth in Q4, and our commitment to our longer term growth and value creation strategy positions us well to deliver on our shareholder value creation model when the volume environment normalizes.

Speaker Change: Operator with those opening remarks, we're now ready to turn the line over to questions.

Speaker Change: As a reminder, if you would like to ask a question. Please press star followed by the number one on your telephone keypad to withdraw your question. Please press Star. One we also ask that you limit yourself to one question and one follow up and then re queue.

Speaker Change: First question comes from the line of Ghansham Panjabi from Baird. Please go ahead.

Ronald Stephen Delia: Hey guys, good day. I guess first off on the volume declines across the portfolio, which looks like it's about six quarters of negative European volumes at this point. Obviously, you're not the only ones. But there's been quite a bit of chatter from your customer set all the way down to retailers about... increased promotional spending. I'm just curious as to whether you're starting to see direct signs of that at this point, and if so, which categories, food, and beverage? Yeah, look, Ghansham, thanks for the question.

Ghansham Panjabi: Hey, guys good day.

Ghansham Panjabi: I guess first off on the volume declines across the portfolio, which looks like it's about six quarters of negative youll be a volumes at this point, obviously youre not the only ones, but there's been quite a bit of chatter from your customers said, all the way down to retailers about increasing increased promotional spending and just curious as to whether you are starting to see direct.

Ghansham Panjabi: Signs of that at this point, and if so which categories food beverage consumer staples et cetera.

Speaker Change: Yes look again and thanks for the question maybe.

Ronald Stephen Delia: Maybe I'll just mention the volume declines at a high level first and then come back to your question about signs of promotions or more aggressive commercial activity on behalf of the customers. First, you know, I think where there's overlap, we're not really seeing any differences compared to others. So that would be the first thing I would say.

Speaker Change: I will just dimension the volume declines at a high level first and then come back to your question about signs of promotions or more aggressive commercial activity.

Speaker Change: Perhaps the customers firstly.

Speaker Change: I think where there is overlap we're not really seeing any differences compared to others. So that would be the first thing I would say I think our 10% total decline in the quarter is about 2% worse than we expected going into the quarter. So we werent actually expecting a much different outcome things did.

Ronald Stephen Delia: I think our 10% total decline in the quarter was about 2% worse than we expected going into the quarter. So we weren't actually expecting a much different outcome. Things did track according to those original expectations in October and November, where we were kind of declining in high single digits. In December, we saw really accelerated destocking, which accounted for the incremental softness, and which we more than offset to deliver the profits. So that's kind of the starting point. Now January, as we've alluded to, was much better.

Speaker Change: Track. According to those original expectations in October and November where we were kind of declining high single digits December we saw really accelerated destocking, which accounted for the incremental softness.

Speaker Change: And which were more than offset to deliver to deliver the profit. So that's kind of the starting point now January as we've alluded to is was much better than.

Ronald Stephen Delia: We've seen improvement in most of our businesses versus H1. And it really underpins our view that Q2 was the low point, and it really underpins our Q3 and Q4 expectations, and maybe just to continue and round it out a bit in terms of unpacking the decline, roughly half of our 10% decline, sort of mid single digits, was related to market impacts. This is a combination of consumer demand, customer, and segment mix. And roughly half, or another mid-single-digit contribution, was from destocking. And that's pretty much the same in both the flexibles and rigid packaging segments. By geography, emerging markets are broadly flat, Asia up modestly, and Latin America down modestly.

We've seen improvement in most of our businesses versus H one.

Speaker Change: And it really underpins our view that Q2 was the low point in it and it really underpins our Q3 and Q4.

Speaker Change: Expectations, and maybe just to just to continue and rounded out a bit in terms of unpacking the decline.

Speaker Change: <unk> by driver roughly half of our 10% decline in sort of mid single digits was related to market impacts. This is a combination of consumer demand customer and segment mix.

Speaker Change: Roughly half were another mid single digit contribution was from Destocking and Thats pretty much the same in both the flexible and Richard rigid packaging segments.

Speaker Change: By geography emerging markets broadly flat.

Speaker Change: Asia up modestly Latin America down modestly.

Ronald Stephen Delia: But developed markets are where we've been especially soft, with Europe a little bit weaker versus North America. And another way to think about it, just to sort of close off here, is that of the 10% decline in the quarter, more than 50% of that decline comes from our global health care business and our North American beverage business, both of which have experienced the most significant destocking. So, you know, we've had a concentration of impact from those two parts of the business. On the other hand, there are categories growing in some regions, confectionery in North America and Europe, in condiments and cheese and coffee, and, in North America and Latin America, Beverage in Latin America.

Speaker Change: Developed markets is where we've been especially soft with Europe, a little bit weaker.

Speaker Change: Versus North America.

Speaker Change: And another way to think about it just to sort of close off years of the 10% decline in the quarter.

Speaker Change: More than 50% of that decline comes from our global health care.

Speaker Change: <unk> in our North American beverage business, both of which have experienced the most significant destocking. So we've had a concentration of impact from those two parts of the business on the other hand.

Speaker Change: There are categories growing in some regions confectionery in.

Speaker Change: North America, and Europe, and condiments in cheese and coffee in.

Speaker Change: North America, and Latin America beverage in Latin America. So there are places where the business is growing now to your point, specifically about signs of promotional activity or changing pricing strategies. There is a lot of talk about that as you as you rightly pointed out we hear that from a lot of customers.

Ronald Stephen Delia: So there are places where business is growing. Now, to your point specifically about signs of promotional activity or changing pricing strategies, there is a lot of talk about that. As you rightly pointed out, we hear that from a lot of customers, both publicly and privately, and we're seeing a little bit of that start to take place in the marketplace. But to be honest, we haven't seen that as any kind of a tailwind yet for our volume performance.

Speaker Change: Both publicly and privately.

Speaker Change: And we're seeing a little bit of that start to take place in the marketplace, but to be honest, we haven't seen that as any kind of a tailwind yet for our volume performance.

Ronald Stephen Delia: And our outlook doesn't infer, doesn't imply, or doesn't assume that we're gonna see any benefit from the market in the second half either. And so, you know, we'll sort of wait and see on whether or not the pendulum swings a bit between price and volume. Terrific, and just for my follow-up on that, you know, in the health care de-stalking, is that just the function of having stocks, you know, you're seeing it now versus a little bit later than the other categories or is it something unique to Timeline. Yeah, look, I think it is a bit unique.

Speaker Change: And our outlook doesn't doesn't infer it doesn't imply or it doesn't assume.

Speaker Change: That we're going to see any benefit from the market.

In the second half either and so we'll sort of wait and see on whether or not the.

Speaker Change: Pendulum swings a bit between pricing.

Speaker Change: And volume.

Speaker Change: Okay terrific and just for my follow up on that on the health care Destocking is that just a function of having been destock.

Speaker Change: We're seeing it now versus a little bit later than the other categories or is there something unique to.

Speaker Change: The timeline associated with the health care Destocking.

Speaker Change: Look I think it is a bit unique it's really the markets have been soft, but the health care weakness is really a story of destocking and it's been significant in both medical.

Ronald Stephen Delia: It's really, the markets have been soft, but the healthcare weakness is really a story of destocking. And it's been significant in both medical device packaging and pharmaceutical packaging. And it's been pervasive and consistent around the world.

Speaker Change: Device packaging and pharmaceutical packaging and it's been pervasive and consistent around the world.

Ronald Stephen Delia: This stocking in healthcare, it's... It's really a multi-year story. It's been a multi-year journey here for healthcare, which is ironic because it's been one of the most consistent businesses we've had for a long period of time. And we would expect that it returns to that level of consistency. But over the last several years, we are going back to COVID, where we had really constrained demand, then very strong demand on reopening, but severe supply constraints, severe supply constraints, and raw material shortages on things ranging from specialty foils and resins and papers. So coming out of what would have been our fiscal 22, which led really to customers building stocks to ensure supply during our fiscal 23, and we had extraordinary volume in fiscal 23 as a result of customers really buttressing their supply chains and de-risking their supply chains by building up stock.

Speaker Change: The stocking in healthcare.

Speaker Change: It's really a multi year story, it's been a multi year journey here for healthcare, which is ironic because it's been one of the most consistent businesses. We've had for a long period of time and we would expect the returns to the level of consistency, but over the last several years, we going.

Speaker Change: Going back to even Covid, where we had really constrained demand.

Speaker Change: Then very strong demand on reopening, but severe supply constraints severe.

Speaker Change: Supply constraints and raw material shortages on things.

Speaker Change: Ranging from specialty oils, and resins and papers.

Speaker Change: So coming out of what would have been our fiscal 'twenty, two which led really to customers building stocks.

Speaker Change: To ensure supply during during our fiscal 'twenty, three and we had extraordinary volume in fiscal 'twenty three.

Speaker Change: As a result of customers really buttressing there.

Speaker Change: Supply chains and derisking their supply chains by by building up stock now.

Ronald Stephen Delia: Now we have customers sitting on substantial inventories of a range of products, from medical gloves to device packaging and pharmaceutical packaging, et cetera. And we started to see destocking, which actually really started in Q1. We flagged it last quarter, but it accelerated significantly in Q2, and we would expect that it's likely to continue through Q3 and possibly into Q4. So it is a bit later stage.

Speaker Change: Now we have customers sitting on substantial inventories of a range of products from medical gloves to device packaging and pharmaceutical packaging et cetera.

Speaker Change: And we started to see Destocking, which actually really started in Q1.

Speaker Change: We flagged last quarter, but accelerated significantly in Q2, and we would expect that it's likely to continue.

Speaker Change: Certainly through Q3, and possibly into Q4. So it is a bit later stage I think in some other categories, we've seen signs that there might be.

Ronald Stephen Delia: I think in some other categories, we've seen signs that there might be some signs that destocking has abated, and we're closest to the end of the beginning. I think on healthcare, it's been a later stage story. Your next question comes from the line of Anthony Longo from JP Morgan. Please go ahead. Good day, Ryan, good day Michael.

Speaker Change: The Destocking has abated and we're closer to the end than the beginning I think in healthcare it's been a later stage story.

Speaker Change: Your next question comes from the line of Anthony Longo from Jpmorgan. Please go ahead.

Anthony Pettinari: Good day, Ron Good day, Michael just a quick one on the cost savings in the prices.

Anthony Pettinari: Just a quick one on cost savings, so in the face of the volume declines that you did see throughout the first half and particularly that last quarter, and I do take your comments on January thereafter, but I just want to get a sense as to what the outlook looks like for cost savings going forward and how you're still going to manage that declining volume environment with margin growth. I know what you have tabled thus far, but is there anything over and above that that you can achieve? Yeah, sure, I'll take that one, Anthony.

Anthony Pettinari: Volume declines that you did say throughout the first half and particularly that last quarter.

Anthony Pettinari: Take your comments on January thereafter, a bit.

Anthony Pettinari: Wanted to get a sense as to what the what the outlook looks like surgical savings going forward and how you're still going to manage that.

Anthony Pettinari: According volume environment with margin growth.

Anthony Pettinari: What you have tabled, thus far but Tom is there anything over and above that that you can achieve.

Tom: Yes sure.

Michael John Casamento: So, look, on the cost out, there are two things that we're really doing here. So, the first is in response to the soft and underlying volume demand. So, on that front, we've clearly taken proactive and aggressive approaches to cost flexing and really focused down on productivity gains and discretionary spend. So, for the first half, we took out more than $200 million in costs in relation to that, and it accelerated through the second half. In the first quarter, it earned about $70 million.

Tom: I'll take that one.

Tom: Look on the cost out there's two things that we're that we're really doing here. So.

Tom: The first is in response to the soft in <unk>.

Tom: Underlying volume demand so on that front, we've clearly taken.

Tom: Proactive and aggressive approaches to the cost flex flexing and really focusing down on on productivity gains and discretionary spend so.

Tom: For the first half.

Tom: We took out more than $200 million in cost.

Tom: In relation to that.

Tom: And it accelerated through the half and the first in the first quarter is about $70 million in the second quarter kind of a $130 million.

Michael John Casamento: In the second quarter, kind of $130 million. And, you know, we're achieving that by taking out, you know, really flexing the cost base in relation to the volume and demand environment. You know, so we're able to take out entire shifts, we're able to take out labour, reduce overtime, we're driving the procurement benefits, particularly in this low demand environment, and really tightening up on the discretionary spend, you know there's that that will continue as as as we continue to flex through the volumes but obviously as as volumes improve some of that cost and it's difficult to say but some of that cost will go back in as we as we build the shift shift patterns up but we wouldn't expect that to be linear I think you'll see us have better leverage there as we work through the second half because of the way we've we've learned to operate with some of that lower cost and improve the efficiencies there so that's really on the operating cost side and then secondly we are taking costs out structurally so in in parallel we're advancing the the structural cost reduction initiatives that we've that we've talked about you know on the back of the the divested rush earnings that's mainly plant closures and it's it's around up to up to 10 across the globe and in both segments to date we've announced seven closures and and two two restructures and and recently actually two to three of those plants have closed so we we did start to see a little bit of benefit from that program as we as we exited the first half but we're right on track to deliver the 35 million benefit in the second half from that from that program and then a further 15 in FY25 so really that's the the approach we've taken to the cost out agenda and you know part of its structural and part of its ongoing. Thanks Michael. Your next question comes from the line of George Staphos from Bank of America, please go ahead. Yeah, this is actually Cash and Keillor sitting in for George.

Tom: And.

Tom: We are achieving that by taking out.

Tom: Really.

Tom: Flexing the cost base in relation to two the volume and demand environment.

Tom: So we were able to take out.

Tom: <unk> shifts, we're able to take out labor reduce over time.

Tom: Driving the procurement benefits, particularly in this low and low demand environment and really tightening up on the discretionary spend so.

Tom: That will continue as as as we continue to flex to the volumes.

Tom: But obviously as volumes improve.

Tom: Some of that cost and it's difficult to say, but some of that cost will go back in as we as we built the shift chief patents up but we wouldn't expect that to be linear I think youll see us have better leverage there as we work through the second half because of the way. We've we've learned to operate with some of that lower cost and improve the efficiencies. There. So that's really on the operating cost side and then secondly.

Tom: We are taking costs out structurally selling them in parallel we are advancing the.

Tom: The structural cost reduction initiatives that we've that we've talked about in the back of that.

Tom: The divested restaurant earnings.

Tom: That's mainly plant closures.

Tom: It's a ground up to up to 10 across the globe and in both segments to date, we've announced seven closures and then to two restructures.

Tom: And recently actually two to three of those plants have closed. So we did start to see a little bit of benefit from that program.

Tom: As we as we exited the first half but.

Tom: But we're right on track to deliver the $35 million benefit in the second half from that from that program and then a further 50 million in FY 'twenty five.

Tom: So really that's the approach we've taken to the cost out agenda.

Tom: Part of it's structural and part of its ongoing.

Speaker Change: Thanks, Michael.

Speaker Change: Your next question comes from the line of George Staphos from Bank of America. Please go ahead.

Hi, This is actually Catherine keeler sitting in for George.

Michael John Casamento: He had a conflict this evening. So just going off that, are you able to comment at all on how much of that temporary cost saving might ultimately end up being, you know, permanent and structural costs that are taken out of the business? Look, it's difficult to say, as I just mentioned, what I can tell you is that things like procurement there, they'll be permanent savings. The operating cost out that we've taken out of the fixed base will be permanent. And the structural program is obviously permanent, you know, cost savings that come out of the business.

Catherine Keeler: <unk> this evening.

Catherine Keeler: So just going off of that are you able to comment at all how much of that temporary cost saving might ultimately end up being permanent and structural costs are taken out of the business.

Speaker Change: Look it's difficult to size as I just mentioned.

Speaker Change: What I can tell you is that things like procurement, there that'll be that'll be permanent savings.

Speaker Change: The operating cost out that we've taken out of the fixed base will be permanent.

Speaker Change: And the structural program is obviously permanent.

Speaker Change: Cost savings that come out of the business.

Michael John Casamento: On the flexing of the cost base, you know, again, it's really dependent on the volume. We think we're much more efficient today; we've been able to proactively act, to take labor out of the business overall. Compared with the prior year, we've taken nearly 2,000 heads out of the business and about 1,000 since June. So in total, that's about 5% of the workforce.

Speaker Change: On the on the flexing of the cost base.

Speaker Change: Again, it's really dependent on the volume.

Speaker Change: We think we're much more efficient today, we've been able to proactively act to.

Speaker Change: To take labor out of the business overall.

Speaker Change: Versus prior year, we've taken nearly 2000 heads out of the business and about 1000 since June so in total that's about 5% of the workforce.

Michael John Casamento: You know, as volumes come back online, you know, as I mentioned, we will have to increase some of that, but it's not going to be linear. And, you know, we will manage that really tightly. And I, you know, we feel we've got good leverage out of that today, and we are more efficient. And so you'll see us continue to get leverage as we move forward in that. And really, that's going to contribute to the long-term margin benefits that we've typically gained of 20 to 30 basis points a year in our business. So, you know, you should see that continue to contribute to that in the long run. Okay, I got it. And I appreciate all the color on that.

Speaker Change: As the volumes come back online.

Speaker Change: As I mentioned, we will have to increase some of that but it's not going to be linear.

Speaker Change: And we will manage that really tightly and we feel we've got.

Speaker Change: Good leverage out of that to date, and we are more efficient and so youll see us continue to get leverage as we move forward in that and really that's going to contribute to the long term.

Speaker Change: Margin benefits that we've typically guide of 20 to 30 basis points a year in our business.

Speaker Change: You should see that continue to contribute to that on the longer term.

Speaker Change: Okay got it and I appreciate all the color on that and.

Michael John Casamento: And on volumes, but you know, I guess you said volumes kind of came in lower than you were anticipating. So what ultimately gives you, you know, comfort in the guidance for the year? Is it really that cost out component and some of the factors you talked to? Yeah, look, it's a couple of things.

Speaker Change: And on the volumes, but.

Speaker Change: You said volumes kind of came in lower than you were anticipating.

Speaker Change: So what ultimately gives you comfort in the guidance for the year is it really that cost out component.

Speaker Change: Below the factors you've talked to.

Speaker Change: Yeah look it's a couple of things firstly on volumes, we're not anticipating any.

Michael John Casamento: Firstly, on volumes, you know, we're not anticipating any rebound in the consumer or any big improvements in the market. But we do expect that destocking will abate as we work our way through the half. I mean, certainly a portion of the destocking that we saw in December was certainly year-end optimization. That's not going to repeat, right?

Speaker Change: <unk> in the consumer and or any big improvements in the market, but we do expect that Destocking will abate.

Speaker Change: As we work our way through the App I mean, certainly a portion of the Destocking that we saw in December was certainly year end.

Speaker Change: <unk> was certainly year end.

Speaker Change: Optimization.

Michael John Casamento: We do believe we're going to see continued destocking in healthcare and North American beverage. But for the other categories, we're starting to see some evidence that the destocking is abating. So, you know, that's one thing. January also was much better.

Speaker Change: It's not going to repeat right. We do believe we're going to see continued destocking in healthcare in North American beverage, but for the other categories and we're starting to see some evidence that the destocking is abating. So.

Speaker Change: That's one thing January also.

Speaker Change: Was much better so we had much better January relative to the first half from a volume perspective.

Michael John Casamento: So we had a much better January relative to the first half from a volume perspective. And so we feel like, you know, we feel pretty confident in underwriting the volume assumptions for the rest of the year. And then in terms of the profit, you know, as Michael alluded to, we're going to continue that. We've got a number of known benefits, which I mentioned in the opening remarks.

Speaker Change: And so we feel like we feel pretty confident in.

Speaker Change: In underwriting the growth the volume assumptions for the rest of the year and then in terms of the profit.

Speaker Change: As Michael alluded to we are going to continue that we've got a number of known known benefits, which I rattled through in the opening remarks, but it starts with better operating leverage because we've gotten a lot of cost out of the business and as volume comes back we're not going to add that cost.

Michael John Casamento: But, you know, it starts with better operating leverage because we've gotten a lot of costs out of the business. And as volume comes back, we're not going to add that cost back one for one, plus the buildup and the momentum on the structural cost side, which, again, will build through the second half with the benefits from plant closures and the like. So, you know, several things that give us confidence in the improving trajectory of earnings through the second half, but none of them have to do with a real dramatic improvement at the consumer level. Your next question comes from the line of Sam Seo from Citi; please go ahead. Morning guys, thanks for taking the question. If you talked about some of your volumes coming in modestly below expectations and just thinking about your balance sheet, and not saying it's going to happen, but just trying to get a feel for what kind of fourth-quarter volumes would leave you outside of your range for the full year, assuming all other things equal. Sam, are you still there?

Speaker Change: Back one for one.

Speaker Change: The buildup in the momentum on the structural cost side.

Speaker Change: Again, we'll build through the second half with the benefits from plant closures.

Speaker Change: And the like so.

Speaker Change: Several things.

Speaker Change: That gives us confidence in the improving trajectory of earnings through the second half, but none of them have to do with a real dramatic improvement.

Speaker Change: At the consumer level.

Speaker Change: Your next question comes from the line of Sam <unk> from Citi. Please go ahead.

Sam: Good morning, guys. Thanks for taking the question.

Sam: Could you talk about some of your volumes coming in modestly below expectations and just thinking about your balance sheet and they'll tell you it's going to happen, but just trying to get a feel of what kind of fourth quarter volumes with Adi side of your range at the four seasons of all other things equal.

Sam: Sam are you still there.

Sam Seo: Yeah, can you hear me? Yes, you broke up there for a second. You broke up right at the important part of your question, which is about fourth-quarter volumes. Yeah, just trying to get a feel for what kind of fourth-quarter volumes there would leave you outside your brain for the full year, assuming, you know, all other things equal. You mean the guidance range is 67 to 71, is that right? No, no, that's three times it.

Sam: Yes can you hear me.

Sam: So you broke up there for a second you you broke up right at <unk>.

Sam: Important part of your question, which is about fourth quarter volumes.

Sam: Yes, just trying to get a feel of what kind of fourth quarter volumes with maybe outside of your range.

Sam: At the full year, assuming all other things equal.

Sam: You may need the guidance the guidance range of 67 to 71 is that right.

Sam: That three times leverage.

Michael John Casamento: Ah, okay. So look, we're confident in the cash flow trajectory of the business in the second half. So we're going to be, you know, delevering from here by approximately three times at the end of June. You know, we're pretty comfortable that that's the path we're on here.

Speaker Change: Ah Okay. So look we're confident in the cash flow trajectory of the business in the second half. So we're going to be delevering from here will be at approximately three times at the end of.

Speaker Change: At the end of June.

We're pretty comfortable that that side.

That's the path we're on here in terms of volumes the expectation for volumes that underwrites the EBIT growth in the second half of the EBITDA delivery in the second half is for <unk>.

Michael John Casamento: In terms of volumes, the expectation for volumes that underwrites the EBIT growth in the second half for the EBITDA delivery in the second half is for a mid-single-digit decline in the third quarter and a low single-digit decline in the fourth quarter. There's a range around that, and the impact on EBITDA and, therefore, on leverage is pretty broad. So we don't anticipate volumes being a major driver of us not getting to approximately three turns at the end of June. OK, thanks for that. And I guess just following on, I've been looking forward... Generally, you have lower cash flow in the first half due to seasonality. I think if you do finish at that three turns, as you guidance, would you expect to be outside of your range again in the first half of 25?

Speaker Change: Mid single digit decline in the third quarter and a low single digit decline.

Speaker Change: In the fourth quarter.

Speaker Change: There is a bit of there's a range around that.

Speaker Change: The impact on EBITDA and then therefore on leverage.

Speaker Change: Is pretty broad so we don't anticipate volume as being a major driver of.

Speaker Change: Not getting too approximately three turns at the end of June.

Speaker Change: Okay. Thanks for that and I guess, just following on I think looking forward Jim.

Annually, you have lower cash flow in the first half due to seasonality.

<unk> finished at that three times Lockheed.

Speaker Change: Rocky guidance would you expect to be at Saudi arrange again in first half 'twenty five is that the new norm now going forward.

Michael John Casamento: Is that the new norm now going forward? Look, I think, just to answer your question on that front. If you take where we are right now at this particular point in time, it's a pretty unique point in time because there are two factors that are really impacting leverage right now. You know, we're at 3.4 times, which is right where we expect it to be at this time of the year in this situation, and it's really driven by the divestment of the Russian business, so we're now fully lapping 12 months' earnings out of the business from that. So from here on, we don't lap that anymore. We head more into a more normal earnings trajectory and growth, and that's about 2.2 turns off the leverage.

Jim: Look I think just to answer your question on that front and if you take where we are right now at this particular point in time, it's a pretty unique point in time, because there's two factors that are really impacting our leverage right now.

Speaker Change: We're at three four times, which is right, where we expected debate.

Speaker Change: At this time of the year in this situation and it's really driven by.

Speaker Change: The divestment of the Russia business. So we're now fully lapping 12 months earnings.

Speaker Change: Out of the business from that so from here, we don't we don't.

Speaker Change: Less debt anymore.

Speaker Change: We had more into more and more normal earnings trajectory and growth.

Speaker Change: And that's about that's about 222 turns of leverage.

Michael John Casamento: And then the second point is really around elevated working capital levels. So, you know, we have been carrying elevated working capital levels over the last kind of 12 to 18 months. And we've started to work our way through that.

Speaker Change: And then the second point is really around elevated working capital levels. So.

Speaker Change: We have been carrying elevated working capital levels over the last kind of 12 to 18 months, we've started to work our way through that and the teams have done a good job in the last 12 months of inventory, where we've taken inventory.

Michael John Casamento: And you know, the teams have done a good job in the last 12 months of inventory, where we've taken inventory out of the system for about $500 million. And that's certainly contributed to the cash flow improvement in the first half of this year, where we're $100 million ahead of the prior year already. But we are still being impacted; we're not getting the full benefit of that inventory reduction because our payables are much lower. So in this environment where, you know, we've seen demand softness and destocking, clearly, our purchases are well down, and, in turn, our payables are down. So, you know, we probably, we've still got another sort of $200 million to work through from a cash flow improvement on the back of working capital. And we're really targeting a working capital to sales range of between 8% to 9% working capital to sales. And right now, we're at 9.8% on a trailing 12 month basis. So, you know, when you put those two items together, leverage at this time of year would normally be in the three times range.

Speaker Change: Out of the system about $500 million.

Speaker Change: And that certainly contributed to the cash flow improvement in the first half initiate with over $100 million ahead of them.

Speaker Change: Prior year already.

Speaker Change: But we are still being impact when you're not getting the full benefit of that inventory reduction because our payables are much lower so in this environment.

Speaker Change: Where we've seen demand softness and destocking.

Speaker Change: Clearly our purchases are well down.

And in turn our payables are down so.

Speaker Change: It probably we've still got another soda $200 million to work through from a from a cash flow improvement on the back of working capital and we're really targeting a working capital to sales range of between that 8% to 9% working capital to sales and right now we're at nine 8% on a trailing 12 month basis. So when you put those two items together.

Speaker Change: Yes.

Speaker Change: Leverage at this Tommy would normally being the more of the three times range.

Michael John Casamento: And typically, in the second half, seasonality would take kind of a quarter turn off the leverage. So it would get us back into that two and a half to three times range. So, you know, as we look forward, that's where we would expect to be in a more normal base. But as I said, we're in a little bit of a unique period of time.

Speaker Change: And typically in the second half the seasonality would take kind of a quarter turn off the leverage that would get us back into that two five to three times range. So as we look forward.

Speaker Change: That's the way, we would expect to be in a more normal basis, but as I've said, we're in a little bit of a unique period of time and from here we.

Michael John Casamento: And from here, we do expect things to improve. Your next question comes from the line of Adam Samuelson from Goldman Sachs; please go ahead. Yes, thank you. Good morning everyone, or evening, I should say.

Speaker Change: Do expect improvement.

Speaker Change: Your next question comes from the line of Adam Samuelson from Goldman Sachs. Please go ahead.

Adam Samuelson: Yes. Thank you good morning, everyone or evening I should say Adam.

Adam Samuelson: Hi Adam, hi. So I guess the first question is just going on the volume side and just thinking about some of the end markets, and Ron, you gave some good color in the prepared remarks. One of the areas where Amcor has been investing more aggressively has been in the protein space. Can you talk about kind of incremental business wins that you're actually achieving there relative to markets that are still pretty challenged on the red meat side, certainly, in North America and how much you can kind of grow in spite of that and take market share in that opportunity? Well, yeah, it's a good question, and I mean, you're right, the market's been challenged. And so if we think about meat across the flexibles businesses, you know, it's been a mixed story. We've had, you know, meat declining in North America through the first half.

Adam Samuelson: Hi, So I guess the first question just going on on the volume side and just thinking about some of the end markets and Ron you gave some good color in the prepared remarks, one of the areas where <unk> been investing more aggressively has been in the protein space can you talk about kind of incremental business wins that youre actually.

Adam Samuelson: Achieving there relative to maybe some end markets that are still pretty challenged on the revenue side certainly.

Adam Samuelson: In North America, and how much you can.

Adam Samuelson: Kind of grow in spite of that and take market share.

Adam Samuelson: And the opportunity.

Ronald Stephen Delia: Well, yes, it's a good question and you're right. The market has been challenged and so if we think about meat.

Ronald Stephen Delia: Across the flexible businesses.

Ronald Stephen Delia: It's been a mixed story.

Ronald Stephen Delia: We've had.

Ronald Stephen Delia: Meet declining in North America.

Ronald Stephen Delia: There's, you know, a soft market; there's destocking in the meat space as well, but we've seen that stabilize more recently. So that would be one of those categories where we're not calling an end to the destocking cycle, but we certainly see signs that it's stabilizing a bit. Similarly, in Europe, we've seen a bit of a stabilization in meat volumes in the last couple of months. And in Latin America, we started to see some growth as well. So I think meat is as a general category globally.

Ronald Stephen Delia: Through the half there is soft market there is destocking in the meat space as well.

Ronald Stephen Delia: But we've seen that stabilized more recently, so that would be one of those categories, where we're.

Ronald Stephen Delia: We're not calling an end to the destocking cycle, but we certainly see signs that it's stabilizing a bit similarly in Europe, we've seen a bit of a stabilization in <unk> volumes in the last couple of months.

Ronald Stephen Delia: And in Latin America, we started to see some growth as well. So I think meat is as a general category globally meet.

Ronald Stephen Delia: Meet is one that feels like it's coming out the other end of the packaging cycle, at least for us, or at least there are some green shoots that give us some reasons for optimism. Certainly, as we exited January as well, that would be the case. I think the second part of your question is a bigger picture question, and I think it's going to be a little bit longer, which is around our aspirations to win share in this space. You're aware that we made an equipment purchase of a machinery company less than twelve months ago, which would be a part of that total system solution that we're gonna go to market with. And we're optimistic that we've got the right consumables, the right film structures, and the right technical service staff to support the equipment offering.

Ronald Stephen Delia: Meat is one that feels like it's coming out the other end of the packaging cycle at least for us or at least there is some green shoots that give us some reasons for optimism.

Ronald Stephen Delia: It would be the first point.

Ronald Stephen Delia: Certainly as.

Ronald Stephen Delia: As we exited January as well that would be the case.

Ronald Stephen Delia: Second part of your question is a bigger picture question and I think it is going to be a little bit longer dated which is around our aspirations to win share in this space.

Ronald Stephen Delia: Youre aware that we made in equipment purchase.

Ronald Stephen Delia: Machinery company.

Ronald Stephen Delia: Less than 12 months ago, which would be a part of that.

Ronald Stephen Delia: Total system solution that we're going to go to market with.

Ronald Stephen Delia: And we're optimistic that we've got the right commodity.

Ronald Stephen Delia: The right consumables, the right film structures in the rate.

Ronald Stephen Delia: Technical service staff.

Ronald Stephen Delia: To support the equipment offering and we think over time, that's going to be a winning combination and we will take share not just in North America, but around the world.

Ronald Stephen Delia: And we think over time, that's going to be a winning combination and will take share, not just in North America but around the world. You know, there's not any evidence I can point to yet of that, Adam, because the near-term dynamics are, you know, well and truly overcompensating for any modest share pickup that we might be enjoying. Okay, I appreciate that, Keller, and if I could ask just a quick follow-up, you do have a business and presence in Argentina, both for flexibles and rigids on the beverage side, and I think you strip out all the inflation accounting for the deval, but you talk about the volume environment in Argentina and how you're thinking about that over the next couple of quarters, given what I would imagine is a pretty challenging consumer environment.

Ronald Stephen Delia: Not any evidence I can point to yet of that Adam because the near term dynamics are well and truly.

Ronald Stephen Delia: <unk>.

Ronald Stephen Delia: <unk>.

Ronald Stephen Delia: Overcompensating for any modest share pickup that we might be that we might be enjoying.

Speaker Change: I appreciate that color and our fastest a quick follow up.

Speaker Change: Do you have a business presence and Argentina, both for flexible and rigid on the beverage side to know thank you strip out all the inflation accounting for the <unk>.

Speaker Change: But can you talk about the volume environment in Argentina, and how youre thinking about that over the next.

Speaker Change: A couple of quarters, given what I would imagine as a free challenged consumer environment.

Ronald Stephen Delia: Yeah, look, Michael can talk about maybe the accounting that you referenced. But from just a business perspective, you know, the first thing I would say is we've been in Argentina since the mid-90s, so for over 30 years. It's a business that accounts for about 2% of sales and about 2% of EBIT. And we have five plants there, actually, across the two segments, as you alluded to. And having been there for 30 odd years, we've been there through multiple economic cycles and crises, I guess. And the business is relatively local.

Yes look Michael can talk about maybe the accounting that you referenced but from a just a business perspective.

Michael: First thing I would say is we've been in Argentina for since the mid Ninety's over over 30 years to a business that's about 2% of sales and about 2% of EBIT and <unk>.

Michael: We have five plants they are actually across the two segments as you alluded to.

Michael: And haven't been there for 30 odd years, we've been there through multiple economic.

Michael: Cycles and crises I guess.

Michael: And the business is relatively local and we have.

Ronald Stephen Delia: And we have maintained total control over the business. So it's still a business that's functioning, more or less normally, but in terms of how we manage it, we continue to drive localization. It's essentially a local business already. There are no exports, but to the extent there's anything imported by way of raw materials, we're continuing to drive more localization of the key inputs.

Michael: To maintain total control over the over the business. So it's.

Michael: The business Thats functioning.

Michael: More or less normally.

Michael: But in terms of how we manage it we continue to drive localization, it's essentially a local business already theres no exports, but to the extent there is anything imported.

Michael: By way of raw materials were continuing to drive.

Michael: More localization of the key inputs.

Michael John Casamento: Most importantly, probably, we continue to price ahead of inflation. It's always been a hallmark of that business in that country and continues to be. And then we continue to focus on cost because our expectations are that demand will continue to slow as consumers adjust to the new macroeconomic realities in that country. So that's a little bit about the business and how we manage it. Michael, do you want to talk a bit about the accounting, Adam? Yeah, just on the accounting there, Adam, you referred to, obviously, Argentina has been designated a hyperinflationary economy since 2018.

Michael: Most importantly, probably we continue to price ahead of inflation.

Michael: Always been a hallmark of that business in that country and continues to be.

Michael: And then we continue to focus on cost because our expectations are that demand will continue to slow.

Michael: As consumers adjust to the new macroeconomic realities in that country. So that's a little bit about the business and how we manage it.

Michael: Michael do you want to talk a bit about the accounting it Adam.

On the accounting there Adam you referred to obviously, Argentina has been designated a hyperinflation economy since 2018 so.

Speaker Change: Consistently since that time, we've seen.

Michael John Casamento: So, you know, consistently since that time, we've been If there's been a devaluation, obviously, that impacts the monetary assets on hand, and, you know, that's been treated as NSI. We, this quarter, you know, there was a change of government, clearly, and in December we saw a 55% devaluation, and, you know, we, you see the chart of $34 million to the P&L in the quarter in the SI bucket, and that's really the outcome of that on our monetary assets only, you know, and that followed. Q1 where there was a 20% devaluation. So really, that treatment of the accounting has been consistent all the way through. Your next question comes from the line of Richard Johnson from Jeffries. Please go ahead. Thanks very much.

Michael: Okay. If there has been a devaluation and we see that impacts the monetary assets.

Michael: <unk> and.

Michael: Thats being treated as an aside.

Michael: This quarter.

Michael: There was a change of government clearly and in December we saw a 55% devaluation.

Michael: And.

Michael: You see the chart $34 million to the.

Michael: To the P&L in the quarter and ESI bucket and Thats really the the outcome of that on our monetary assets only that.

Michael: And that followed.

Michael: Q1, where there was a 20, 20% devaluation so.

Michael: Really that's the treatment of the accounting has been consistent all the way through since since the 2019 approach.

Michael: Your next question comes from the line of Richard Johnson from Jefferies. Please go ahead.

Thanks, very much Ron I, just wanted to ask a question about rigid rigid packaging and how youre thinking about the business now strategically I was just talking to John to remember, whether I have seen volume declines in the Haynesville quote any in the past anything like we saw in the December quarter, particularly in the hospital and Thats, even if you adjust out destocking. So just.

Richard Johnson: Ron, I just wanted to ask a question about rigid packaging and how you're thinking about the business now strategically. I was just trying to remember whether I've seen volume declines in the past, anything like we saw in the December quarter, particularly in hot fill, and that's even if you adjust out destocking. So just interested to get your view on how you think the business is placed at the moment. Well, yeah, listen, Richard, you don't remember seeing volume declines at that level because you haven't seen them at that level. I mean, that's just the reality of it.

Michael: Just to get your view on how you how you think the business is placed at the moment.

Ronald Stephen Delia: Well listen Richard you don't remember seeing volume declines at that level, because you haven't seen them at that level I mean, thats just the reality of the business that.

Ronald Stephen Delia: It's a business that's, you know, it's been a good business for a long period of time. But it's suffered really, from a volume perspective, from the same drivers as the rest of the company, right? So, you know, although with higher impacts, so we've had market impacts that we would say attributed to a high single-digit decline in volumes that's inclusive of consumer demand down kind of low to mid single digits in some segments that are important to us, maybe down some more some customers lagging the market. And that all wraps up to kind of a high single-digit impact on volumes for both North American Beverage at Large and Hot The bigger impact, actually, for us in the quarter was the de-stocking. And the de-stocking is really being driven by a couple of things here which are working in opposite directions. The first point is that traditionally, in this business, you'd have some inventory pre-billed in what is our fiscal second and fiscal third quarters in advance of the high season, the beverage season in North America. There is.

Speaker Change: It's been a good business for.

Speaker Change: For a long period of time, it's suffered really from a volume perspective from the same drivers as the rest of the company right. So.

Speaker Change: Hi, although with higher impacts so we've had market impacts.

Speaker Change: We would say attributed to a high single digit.

Decline.

Speaker Change: In volumes.

That's inclusive of costs of consumer demand down kind of low to mid single digits in some segments that are important to us.

Speaker Change: Maybe down some more some customers lagging the market.

Speaker Change: And that all wraps up to kind of a high single digit impact on volumes for both North American beverage at large and heartfelt specifically.

Speaker Change: Specifically that we would that we would attribute to market impacts than.

Speaker Change: The bigger impact actually for us in the quarter was the destocking.

Speaker Change: And the Destocking is really being driven by a couple of things here, which which are working in opposite directions first is that traditionally.

Speaker Change: In this business you would have some inventory pre build in what is our fiscal second and fiscal third quarters.

Speaker Change: In advance of the high season in the beverage season in North America.

Ronald Stephen Delia: Historically, there is a bit of inventory buildup. That's not happening this year, so there's no pre-build this year. And at the same time, we have some customers, some big customers, with very, very aggressive inventory reduction targets. So rather than building, we're shrinking. And there was a significant acceleration in that activity to reduce inventories in the month of December, which ultimately led to a high single-digit impact in North American beverage at large but a high teens impact in hot film. And while we saw some modest improvement in January, we do believe that we're going to continue to see a de-stocking impact in the third quarter. So that's really what's gone on there. That's unprecedented.

Speaker Change: Historically a bit of inventory buildup.

Speaker Change: That's not happening this year. So there is no pre build this year.

Speaker Change: And at the same time, we have some customers some big customers with very very aggressive inventory reduction targets.

Speaker Change: Rather than building we're reducing.

Speaker Change: There was a significant acceleration in that activity to reduce inventories in the month of December which ultimately led to a high single digit impacting.

Speaker Change: North American beverage at large, but a high teens impact and heartfelt.

Speaker Change: And while we saw some modest improvement in January we do believe that we're going to continue to see a destocking impact in.

Speaker Change: In the third quarter, so that's really what's going on there that's unprecedented.

Ronald Stephen Delia: We still believe in the business. The business is well-positioned in terms of its market stature. It operates in a reasonably well-structured market. It has world-leading technology. Its footprint is reasonably optimized.

Speaker Change: We still believe in the business the business is well positioned.

Speaker Change: In terms of its market.

Speaker Change: <unk> operates in a.

Speaker Change: And a reasonably well structured market it is world leading technology.

Its footprint is reasonably optimized.

Ronald Stephen Delia: We are taking a couple of small plants out as part of the restructuring program, but it's reasonably well-optimized, and it needs to just weather the storm, and that's on the beverage side. And then let's not forget that outside of beverage, we have a reasonably-sized specialty container business that looks and feels almost like a flexibles business because of its end-market exposure. And that business has room to grow. And Latin America also continues to be a very good business, including in the first half and in the second quarter, where we saw volume growth on new business wins in Latin America, too. So it's a portfolio of businesses. At its core, it's a beverage business in North America. That gets a lot of attention, but we shouldn't forget about the other parts as well.

Speaker Change: We are taking a couple of small plants out as part of the restructuring program, but it's reasonably well optimized and it needs to just weather the storm.

Speaker Change: And thats on the beverage side, and then let's not forget that outside of beverage, we have a reasonably sized specialty container business, which looks and feels.

Speaker Change: Almost like a flexible business because of its end market exposure.

Speaker Change: And that business has room to grow in Latin America also.

Speaker Change: It continues to be a very good business, including in the first half and in the second quarter, where we saw volume growth on new business wins in Latin America too. So it's a portfolio of businesses.

Speaker Change: At its core it's a beverage business in North America that gets a lot of attention, but we shouldnt forget about the other parts.

Speaker Change: Well.

Ronald Stephen Delia: Your next question comes from the line of Brook Campbell from Baron Joey. Please go ahead. Yeah, good evening. Thanks for taking my question. Confirmed what the level of volume growth or decline was in January and then, as a follow-up to that, is there not a risk here that you sort of extrapolate January volumes and for the rest of the quarter when, perhaps, The Benefit of Jam.

Speaker Change: Your next question comes from the line of Brook Campbell from Baron Joey. Please go ahead.

Brook Campbell: Yeah. Good evening. Thanks for taking my question can you just confirm.

Brook Campbell: What's the level of Vale.

Brook Campbell: <unk> growth or decline was in January.

Brook Campbell: And then as a follow up to that is there not a risk here that you sort of extrapolate January volumes and the rest of the quarter.

Speaker Change: There was a benefit of John Mcclain.

Brook Campbell: Customers effectively delayed orders from December and pushed them into January. Therefore, January might not be a good indicator for the rest of the quarter. That's the question, thanks.

Speaker Change: Effectively delayed orders in December pushed into January therefore, Jackson might not be a good indicator for the rest of the quarter and ask your question. Thanks.

Ronald Stephen Delia: Yeah, look, we won't give a number for January other than to say it was an improvement over December. And an improvement not everywhere, but in most parts of our business. We did have some parts of the business even that grew modestly, so that's probably as much as I would say in terms of trying to dimension January. I understand the nature of your question, particularly the second part, as to whether or not we're being overly optimistic on the back of one month. It is only one month.

Speaker Change: Yeah look we won't we won't give a number on January <unk>.

Speaker Change: Other than to say it was it was there was an improvement over December.

Speaker Change: And an improvement not everywhere, but in most parts of our business. We did have some parts of the business, even though it grew modestly so.

Speaker Change: That's probably as much as I would say in terms of trying to dimension January I understand the nature of your question is particularly the second part.

Speaker Change: As to whether or not we're being overly.

Speaker Change: <unk> optimistic on the back of one month. It is one month and we're well aware that it's one month.

Ronald Stephen Delia: And, you know, we're well aware that it's one month. We are flagging that we will see continued destocking impacts in healthcare globally and in North America beverage that, no matter what happened in January, we know will be the case, certainly in Q3 and potentially into Q4. And we're also not banking on any improvement in the consumer.

Speaker Change: We are flagging that we will see continued destocking impacts in health care globally and in North America beverage that.

Speaker Change: No matter what happened in January we know will be the case.

Speaker Change: Certainly in Q3 and potentially into Q4.

Speaker Change: And we're also not banking on any improvement in the consumer.

Ronald Stephen Delia: So, you know, I think that we're being relatively conservative and not reading too much into one month, but it is a month. And, you know, it does suggest, as we sort of expected, that the low point for us from a volume point of view and earnings growth as well was the second quarter. Your next question comes from the line of Jakob Cakarnis from Jarden, Australia. Please go ahead. Hi, Ron. Hi,

Speaker Change: I think that where we're being relatively conservative.

Speaker Change: And not reading too much into one month, but it is a month then it does suggest as we.

Speaker Change: Sort of expected that the low point for us from a volume point of view and earnings growth as well was the second quarter.

Speaker Change: Your next question comes from the line of Jacob Tech Partners from Jarden, Australia. Please go ahead.

Speaker Change: Hi, Ron Hi, Michael I, just wanted to build on Brooks question. There, though obviously December was significantly weak so January.

Jakob Cakarnis: I just want to build on Brook's question there, though. Obviously, December was significantly weak, so January improvement might not necessarily move you guys back to increases. I just want to square some of the commentary still where you're saying that you'll see a mid-single-digit volume decline in the third quarter and then a low single-digit decline in the fourth quarter. Can you just help us?

Jacob: Improvement might not necessarily maybe if you guys back to increase so I just wanted to square some of the commentary still were you, saying that you will see mid single digit volume decline in the third quarter and then low single digit in the fourth quarter can you just help us the commentary around the January improvement is that relative to the negatives.

Ronald Stephen Delia: The commentary around the January improvement, is that relative to the negative? or the decline that you saw through the month of December specifically? Yeah, it's relative to the performance in the whole first half and in the second quarter and in December. So when we talk, we're talking about improvements in January in most parts of the business where that's relative to the first half. And that's this, that's the first part.

Jacob: Or the decline that you saw through the months of December specifically.

Jacob: Yeah.

Jacob: It's relative to the performance in the whole first half and in the second quarter and then December so when we were talking about improvements in January.

Jacob: In most parts of the business, where that's relative to the first half.

Speaker Change: That's the that's the first part I think the other thing to keep in mind is as we work our way through.

Ronald Stephen Delia: I think the other thing to keep in mind is that as we work our way through the balance of the fiscal year, a couple of things will also underpin those growth assumptions that we've outlined. One is that we do expect, outside of healthcare and North American beverage, the year-end destocking that we saw in December to not repeat, and some continued abatement or continued destocking runoff or reduction in much of the rest of the business. That's the first thing I want to say.

Speaker Change: The.

Speaker Change: Balance of the fiscal year.

Speaker Change: A couple of things.

Speaker Change: We'll also under underpin those growth assumptions that we've outlined one is that we do expect outside of healthcare in North American beverage, we do expected through the year end Destocking that we saw in December to not repeat and some.

Speaker Change: Continued abatement or continued destocking.

Speaker Change: Runoff where reduction in much of the rest of the business. That's the first thing and the second thing is particularly as we get to the fourth quarter. The prior period comp gets a little bit easier.

Ronald Stephen Delia: And the second thing is, particularly as we get to the fourth quarter, the prior period comp gets a little bit easier. You know, our volume challenges really started in Q4 of last fiscal year. And so, as we get to Q4 this year, we've got, you know, the benefit of a comparative period, which wasn't so. Just one more for Michael, if I can, just on the net interest guidance, obviously a little bit lower than where you were guiding to initially, how much of that is the movements in forward curves and expectations for rate or interest rate declines or cash rate declines in the US through the balance of Yeah, sure. So we, we, you saw that we brought our guidance just slightly down from kind of a range of 320 for interest 320 to 340 down to kind of 315 to 330. That's really all on the back of the forward curves, and you know the interest rate hike would appear to have I've reached its peak now and potentially, you know, you might see one rate reduction late in our fiscal year, but really that's Please go ahead.

Speaker Change: Our volume challenges.

Speaker Change: Really.

Speaker Change: Started in Q4 of last fiscal year, and so as we get to Q4. This year we've got.

Speaker Change: The benefit of a comparative period, which was so strong.

Speaker Change: Just one more for Michael if I can just on the net interest guidance, obviously, a little bit lower than where you were.

Michael: Guiding to initially how much of that the movement in forward curves and expectations.

Michael: Right or interest rate declines or cash rate declines in the U S through the balance of the place.

Michael: Yes sure.

Speaker Change: You saw that we bought out guidance just slightly down from kind of a range of 320 for interest 320 to $3 40 down to penetrate these stages right 30, that's really all on the back of the forward curves.

Speaker Change: And.

Speaker Change: The interest rate hike would appear to obtain.

Speaker Change: Ratios peak now and potentially you might say one.

Right reduction late in our fiscal year, but really that's the.

Speaker Change: The slight improvement.

Speaker Change: The improvement is really on the back of that forward curve and after tax its a pretty minimal impact on the full year guidance.

Cameron Mcdonald: Your next question comes from the line of Cameron Mcdonald from E&P. Please go ahead.

Cameron Mcdonald: Good morning guys, a question from Matt, just in terms of, you know, Thank you. Well, the tax rate and then the capital structure. So, the tax rate, you know, is sitting sort of under 19%. And where, what jurisdictions are you getting a tax benefit from, given the corporate tax rating in most of your jurisdictions is inexcessive?

Cameron Mcdonald: Hey, good morning, guys.

Cameron Mcdonald: Questions from Matt Justin Kim.

Cameron Mcdonald: Yes.

Cameron Mcdonald: Okay.

Cameron Mcdonald: Hello.

Cameron Mcdonald: Tax rate and then the capital structure.

Cameron Mcdonald: The tax rate sitting sort of grants under 19%.

Cameron Mcdonald: We were what jurisdictions are you getting a tax benefit from given the corporate tax writing most of Yohji restrictions is excessive.

Michael John Casamento: certainly of that number, but in excess of sort of 20. Yeah, look, I think, you know, we operate across a broad range of countries globally. And in addition to that, you know, the mix of earnings can be different in every geography and location, and then you know the overall underlying performance of the business can change. So, you know, when you wrap that all up for our business, you know, we're gliding to an 18 to 20% tax rate.

Cameron Mcdonald: Certainly that number a bit <unk> to 'twenty.

Speaker Change: Yes look I think we operate across a broad range of <unk>.

Speaker Change: Countries.

Speaker Change: Globally.

Speaker Change: And in addition to that the mix of earnings can be can be different.

In in every geography and location and then.

Speaker Change: The.

Speaker Change: The the overall underlying performance of the business Ken can change so when you wrap that all up for our business.

Speaker Change: We're guiding to 18 to 20, 20%.

Speaker Change: Tax rate.

Michael John Casamento: You know, we've typically been around that 20% range for a long period of time. So it's really just the combination of earnings, the country mix, and the underlying performance of the business. And the differences in deductibility of different expenses by jurisdiction, which then obviously you have to factor in in addition to the headline tax rates in those jurisdictions.

Speaker Change: We've typically been around that 20% range for a long period of time. So it's really just the culmination of the earnings the country mix.

Speaker Change: The underlying performance of the business and the differences in deductibility of different expenses by jurisdiction right, which then obviously.

Speaker Change: You have to factor in addition to the headline tax rates in.

Speaker Change: In those jurisdictions.

Michael John Casamento: Okay, thank you. Um, and then just in terms of the capital structure, and you know, the comments earlier about the balance sheet and the leverage, part of our investment thesis has been, you know, EPS growth, and a big chunk of that has been, you know, undertaken through share buybacks. What's the sort of leverage ratio that we should be expecting, you know, before we start to see a discussion around the buyback being re-implemented? Do we have to get back down to sort of the mid-twos? I think the last time you had a buyback active was sort of 2.7 times leverage? Well, listen, we've bought it back.

Speaker Change: Okay. Thank you.

Speaker Change: And then just in terms of the capital structure.

Speaker Change: You commented earlier about the balance sheet and leverage.

Speaker Change: Yes, part of our investment thesis is saying.

Speaker Change: Price is a big chunk of that is pain and <unk>.

Speaker Change: Taken to reshape buybacks.

Speaker Change: What.

What's the sort of leverage ratio that we should be expecting.

Speaker Change: The full year, we would start to see a discussion around the buyback.

Speaker Change: <unk> implemented is it do we have to get back there.

Speaker Change: I think the last time you had bought back active was two seven times leverage.

Speaker Change: Well listen.

Ronald Stephen Delia: Remember, buybacks and M&A are the way we think about the discretionary cash flow for the business. And we've bought back over the last three fiscal years and acquired to the tune of about $1.2 billion. So we will have done over $1 billion in buybacks, and we will have invested somewhere close to $200 million in investments and acquisitions. So that's essentially three years of discretionary cash that's been invested in the business. You know, it's a little bit lumpy.

Speaker Change: Bought back.

Speaker Change: Remember, it's buybacks and M&A is the way, we think about the discretionary cash flow for the business and we bought back.

Speaker Change: Over the last we will have bought back over three fiscal years and acquired to the tune of about $1 $2 billion. So we will have done over $1 billion and buybacks and we will have invested.

Speaker Change: Somewhere close to $200 million in investments.

Speaker Change: And acquisitions. So that's essentially three years of discretionary cash that's been invested.

Speaker Change: In the business.

Speaker Change: It's a little bit lumpy, it's not exactly even over.

Ronald Stephen Delia: It's not exactly even over the three-year period, but that's been what we've done. You know, I think from a leverage range perspective, more often than not, we're going to be between two and a half and three times. Obviously, you know, we're comfortable being above that, particularly when there are good reasons for it, as there is at the moment. And, you know, we'll be continuing to evaluate capital management or buyback opportunities in conjunction with M&A opportunities on a going forward basis. And that includes now.

Speaker Change: Over the three year period, but thats been the that's been where we've done.

Speaker Change: I think from a leverage range perspective, more often than not we're going to be between two five and three times, obviously, we're comfortable being above that and particularly when there's good reasons for it is there is at the moment.

Speaker Change: And we'll be continuing to evaluate capital management, and our buyback opportunities in conjunction with M&A opportunities.

Speaker Change: On a go forward basis and that includes now.

Ronald Stephen Delia: Your next question comes from the line of Mike Roxland from Truist Securities. Please go ahead. Thank you, Ron, Michael, Tracey, and Damien for taking my questions. Actually, just one question because a lot of material has already been covered here. Quickly, on this protein packaging, Ron, I know it was discussed earlier in response to a question.

Speaker Change: Your next question comes from the line of Mike Rock Flynn from <unk> Securities. Please go ahead.

Speaker Change: Thank you Ron Michael Tracy in Indiana to taking my questions.

Speaker Change: Actually just one question because a lot of material already covered here.

Speaker Change: Quickly on just protein packaging run.

Speaker Change: As discussed earlier <unk> question, and you can kind of stay in Atlanta, I think last quarter.

Michael Roxland: I know you discussed it at length, I think, last quarter. Can you just describe whether there are any nuances in your business, maybe around equipment, for instance, that would make you unable to compete with a larger player in your industry or some of your larger peers?

Can you describe whether there are any nuances in your business maybe around equipment for instance that would make you unable to compete with some albeit with a large player industry or some of the or some of your larger peers.

Ronald Stephen Delia: And are you intentionally participating in different parts of the market to avoid going head-on with some of the larger players? And just lastly, where do you think this, where would you like this business to be on a revenue basis, let's say in five years or 10 years? Yeah, look, it's a great question.

Speaker Change: I know you intentionally participating in different parts of the market to avoid going head on with some of the larger players and just lastly, where do you think this business could be on a revenue basis, let's say in five years or 10 years.

Speaker Change: Yes look it's a great question the biggest the biggest challenge we have at the moment is this the lack of installed base. So there is a massive installed base that Scott a lot of legacy behind it and in the industry.

Ronald Stephen Delia: The biggest challenge we have at the moment is the lack of an installed base. So there is a massive installed base that's got, you know, a lot of legacy behind it. And in the industry, given the way the industry has evolved over, you know, several decades, and from an equipment perspective, you know, we're, well, firstly, I would say we're more open source. We've bought Moda, obviously, so we're prioritizing Moda equipment, but we're more, you know, agnostic to the actual equipment installation. And we think we've got some great films.

Speaker Change: Given the way the industry has evolved over several decades.

Speaker Change: And from an equipment perspective, where.

Speaker Change: Well, firstly I would say we're more open source.

Speaker Change: We've bought Moda, obviously, so we're prioritizing motor equipment, but were more agnostic to the actual equipment installation and we think we've got great films.

Ronald Stephen Delia: And, you know, the primary basis of competition here, we think ultimately will be the film. And that's what we're aspiring to do, enabled and facilitated with a full service offering, which includes not only the machinery but the technical service that is so important in this industry to customers to help them optimize their operations. So it's really a total system solution that we're going to go to market with now, and we're starting to go to market with it really for the first time. And as far as how big can the business get and what are our aspirations for it, I mean, look, I'm not going to dimension it here.

Speaker Change: And the primary basis of competition here, we think ultimately will be on on the film and that's what we're that's we're aspiring to do is to grow the film business enabled.

Speaker Change: Enabled and facilitated with a full service offering which includes not only the machinery, but the technical service that is so important in this industry to the to the customers to help them optimize their operations.

Speaker Change: So it's really a total system solution that we're going to go to market with now and we're starting to go to market with really for the first time.

Speaker Change: And as far as how big can the business get and what our aspirations for it I mean look I'm not going to dimension adhere its a big important business for us already.

Ronald Stephen Delia: It's a big, important business for us already. You know, it's a tough time to be asking for a lot out of the business as it weathers, some of the destocking and some of the sort of softness in the general beef cycle, in particular, or the meat cycle, I should say. But it's a business that we have aspirations to grow at sort of mid to high single digits and at good margins for the foreseeable future. Your next question comes from the line of John Purtell from Macquarie. Please go ahead. G'day Ron and Michael, hope you're well.

Speaker Change: It's a tough time to be at.

Speaker Change: Asking for.

Speaker Change: For a lot out of the business as it weathers and some of the Destocking and some of the softness in the general beef cycle in particular or mid cycle I should say.

Speaker Change: But it's a business that we have aspirations to grow at mid to high single digits and at good margins for the foreseeable future.

Speaker Change: Your next question comes from the line of John Purtell from Macquarie. Please go ahead.

John Purtell: Hi, Ron and Michael well, just a couple of questions. Please.

John Purtell: Just a couple of questions please, your second half EPS guide previously it was up and Q3APS down. Next slide, guy this week here is that flight a low of volume. Look, overall, John, I guess we'd say we've actually held our guidance, so, and we, you know, you're quite right, we've guided to volumes mid-single digit down in Q3 and EPS down mid-single digit, and then Q4, you know, we're expecting trajectory to improve through the half on the volumes, volumes down low single digit, and, you know, just on the back of the, some of the some of the things that Ron touched on earlier and also you know the earnings trajectory of our business typically in the seasonality in Q4 is our biggest quarter you know that's why we're expecting mid single-digit EPS growth in in Q4 so really not a lot of change I guess what we have seen is that the the volume trajectory is perhaps a little softer than we previously anticipated and that was really on the back of that that de-stocking particularly in health care and North America beverage where where we're expecting that to continue through Q3 and perhaps into Q4 we are offsetting that with with continued cost out and we have confidence in the in the underlying performance of the business with the structural initiatives that we've put in place and touched on already, getting $35 million in the second half, the ongoing cost agenda and discretionary spend management. So, you know, not a lot of change really to our guidance overall. I think perhaps we did a little better in H1, but generally speaking, we're holding the range and we feel pretty good about the drivers behind it to deliver that, you know, the $0.67 to $0.71 range. Thank you.

John Purtell: In terms of your second half EPS guide privacy was up.

John Purtell: For the second half up mid single digits in constant currency. Thank you mentioned.

John Purtell: Q3, EPS down mid single digit expectation in Q4 up single digit so it looks like the Q3 guide is weaker or was that is that reflecting lower volume starting point.

John Purtell: Okay.

Speaker Change: Look overall, John I guess, we'd say, we've actually held our guidance so.

Speaker Change: And we.

Speaker Change: You are quite right, we've guided to volumes mid single digit down in Q3, and EPS down mid single digits, and then Q4, we're expecting trajectory to improve through the half on the volumes volumes down low single digit and I.

Speaker Change: Just on the back of that.

Speaker Change: With some of the some of the things that Ron touched on earlier and also the earnings trajectory of that business typically in the seasonality in Q4 is our biggest quarter.

Speaker Change: That's why we were expecting.

Speaker Change: Mid single digits.

Speaker Change: EPS growth in Q4 so.

Speaker Change: Really not a lot of change I guess, what we have seen is that the.

Speaker Change: The volume trajectory is perhaps a little softer.

Speaker Change: Than we previously anticipated and that was really on the back of that that destocking, particularly in healthcare in North America beverage with where we.

Speaker Change: We're expecting that to continue through Q3 impacts into Q4.

Speaker Change: We are offsetting that with.

Speaker Change: Continued cost out.

Speaker Change: And we have confidence in.

Speaker Change: In the underlying performance of the business with the structural initiatives that we've put in place in and touch on already getting $35 million in the second half the ongoing cost agenda and.

Speaker Change: And discretionary spend management so.

Speaker Change: Not a lot of change really to our guidance overall I think we perhaps we did a little better than in H, one, but generally speaking we're holding the range and we feel pretty good about the drivers behind it to deliver that.

Speaker Change: And the 67% to 71% range.

Speaker Change: Thank you and just the second one just be interested in what you're seeing from the consumer obviously.

Michael John Casamento: And just the second one, just be interested in what you're seeing. Humer, and I'm here to talk to you about the new technology that's coming out. So let's get started.

Speaker Change: <unk> demand has been an ongoing factor and it looks like the FMC J companies are still pushing price.

Ronald Stephen Delia: I'm going to start off with a quick introduction of the technology that's coming in. So, let me start Demand is, Thank you. Yeah, look, I mean, the best proxy is probably the scanner data that you know, we look at, and I'm sure you look at as well.

Speaker Change: Yes look I mean, the best proxy is probably the scanner data.

We look at it and I'm sure you look at it as well I mean, we still see a generally soft consumer environment and.

Ronald Stephen Delia: I mean, we still see a generally soft consumer environment. And, you know, that's, that's true across the staples that we're supplying packaging for you still see in the US, general scan data, which, you know, obviously, there's a lot of nuance that you need to unpack. But generally speaking, you know, kind of low single-digit declines in the calendar fourth quarter that's just passed. Europe may be modestly better overall, but at a sub-segment level, you still see lots of softness and lots of modest declines. You see some evidence of downtrading in some parts of the business. You see, on the margin, maybe some modest shifts, and I wouldn't make too much of this, but you see some modest shifts in some categories like pet food and maybe even in coffee, where you might see different formats doing better. We certainly see it, and we believe we see it in the beverage business. You know, in the case of carbonated soft drinks, where we know that the value pack, you know, it's historically been the can if you're going to buy 12 or 24.

Speaker Change: That's true across the staples that we're supplying packaging for you still see in the U S. Gen.

Speaker Change: General scan data, which obviously theres a lot of nuance that you need to unpack, but generally speaking kind of low single digit declines in the.

Speaker Change: Calendar fourth quarter Thats, just passed Europe, maybe modestly better overall, but at a sub segment level, you still see lots of softness and lots of modest declines.

Speaker Change: You see some evidence of.

Downgrading and some some parts of the business you see.

Speaker Change: On the margin, maybe some modest shifts in that I wouldn't I wouldn't make too much into this but you see some modest shifts in some categories like pet food and maybe even in coffee, where you might see different different formats doing better we certainly see it we believe we see it in the beverage business in the case of.

Speaker Change: Carbonated soft drinks, where we know that the value pack.

Speaker Change: Historically been Mccann, if youre going to buy 12 or 24.

John Purtell: John Purtell, Salvator Tiano, George Staphos, Michael Roxland, Kyle White, Scott Reilly, Grant Slade, Keith Chau, Cameron McDonald, Jakob Cakarnis, Brook Campbell, Amcor PLC, John Purtell, Salvator Tiano, George Staphos, Michael Roxland, Grant Slade, Keith Chau, Cameron McDonald, Jakob Cakarnis, Brook Campbell, Amcor PLC, baking that into our assumptions on volumes going forward with that we'll take as as nice to have if it happens. Your next question comes from the line of Daniel Kang from CLSA, please go ahead. Good morning everyone.

Speaker Change: Cans are units of a soft drink youre likely to buy it in a can and that is.

Has continued so I think generally John the consumer environment is pretty soft.

Speaker Change: There are some reasons.

Speaker Change: For for potential optimism, if the brand owners toggle the dial a little bit between price recovery and maximizing volume, but we are absolutely not.

Speaker Change: Baking that into our assumptions on volumes going forward without will take us.

Speaker Change: Nice to have if it happens.

Speaker Change: Your next question comes from the line of Daniel Kang from CLSA. Please go ahead.

Daniel Kang: Good morning, everyone.

Ronald Stephen Delia: So you spoke about protein turning a corner in January. Can you just elaborate on how you're seeing stock levels and the potential for an end to the stock market? product Yeah, look, I think as it relates to the trend of destocking from here, I'd sort of break it down in a couple of buckets. You know, firstly, we would say the really pronounced end of year destocking that we saw in December, we don't expect it will repeat with the exception or that we don't expect it will continue with the exception of globally in healthcare. And in North American beverage, we know that in those two segments, for different reasons, we've mostly covered, we're going to see continued destocking, certainly through Q3, and likely into Q4. So we're not expecting a big bounce back there. Other than those two segments,

Daniel Kang: So you spoke about protein turning a corner in January can.

Daniel Kang: Can you just elaborate on how youre seeing stock levels and the potential for an end and destocking in other product categories.

Daniel Kang: Yes look I think as it relates to the trend in Destocking.

So to break it down in a couple of couple of buckets.

Daniel Kang: Firstly, we would say the really pronounced end of year Destocking that we saw in December we don't expect will repeat with the exception or that we don't expect will continue with the exception of globally in healthcare.

Daniel Kang: And in North American beverage, we know that in those two segments for different reasons.

Daniel Kang: Mostly covered.

Daniel Kang: We're going to see continued destocking certainly through Q3 and likely into Q4, so we're not expecting a big bounce back there.

Daniel Kang: Other than those two segments.

Ronald Stephen Delia: You know, other places where there was really accelerated destocking in December, we're not expecting to see a repeat of, and so, on a general basis, we would expect that we're going to start to come out the other end of this inventory cycle that we've been, you know, weathering for the last several quarters. We see some signs of that already. I mentioned meat as one place that seems to stabilize. You know, premium coffee in Europe is another.

Daniel Kang: Other places where there was really accelerated destocking in December we're not expecting to see a repeat of and so therefore on a general basis, we would expect that we're going to start to come out. The other end of this inventory cycle that we've been weathering for the last several quarters, we see some some signs of that.

Daniel Kang: Already I mentioned.

Daniel Kang: I mentioned meat as one place that seems to have stabilized to a premium coffee.

Ronald Stephen Delia: And so there are some, there are some reasons for optimism, but again, we're not getting ahead of ourselves here. And we recognize we have two important parts of the business, you know, in healthcare and beverage, which are going to continue to go through some more destocking from here. Your next question comes from the line of Keith Chau from MST Marquee. Please go ahead.

And Europe is another.

Daniel Kang: And so there are some there are some reasons for optimism, but again, we're not we're not getting ahead of ourselves here and we recognize we have two important parts of the business.

In health care, and beverage, which youre going to continue to go through some more destocking from here.

Your next question comes from the line of Keith Chau from MST Marquee. Please go ahead.

Keith Chau: Hi there gents, just an extension of Daniel's question on de-stocking and part of my ignorance but... How can you actually tell what de-stocking is, what the underlying volume trend is? Can you specifically quantify that? with data that you're seeing internally, or is it based on discussions you're having with customers, a bit of an approximation internally? Can you just give me a sense of how you work out what is underlying consumer weakness, what is de-stocking, what is cyclical, and what is structural? Yeah, look, it's part art and part science.

Keith Chau: Hi, there gents.

Keith Chau: Just.

Keith Chau: An expansion of <unk>.

Daniel's question.

Keith Chau: Destocking.

Speaker Change: Pardon my ignorance.

Speaker Change: How can you actually tell one of the Destocking what is the underlying volume trend.

Speaker Change: Can you specifically quantify that.

Speaker Change: With data that Youre seeing in Kelly or is it based on discussions you're having with customers approximation intently can you just give me a sense of how you work out what is underlying consumer weakness what is destocking water cyclic yet what is structural.

Speaker Change: Yes look it's part.

Ronald Stephen Delia: So firstly, there are a lot of discussions with customers. And remember, in some parts of the business, we're even co-located with customers. So there is a high degree of customer intimacy across the business, and the starting point is the discussions and the joint planning dialogue that we have with our customers around the world. So that's arguably the most important input. But then we also try to triangulate with data. And what do we look at? We look at things like categories where there is scanner data, which is not the case across our portfolio, certainly not in healthcare, but in food and home and personal care and places where there's good retail scanner data. We take a close look at that. We also look at the scanner results for individual customers, individual companies, and try to determine if there's any difference between the overall market performance and the performance of our specific customers. And then we look at our volumes and try to triangulate between those three data points to see what the difference is, if there is, if there is sell-through or not, and whether or not we're seeing an inventory drawdown or buildup. It's an approximation, but it's a reasonably informed approximation, both with input from the customer directly, as well as data and quantitative data.

Speaker Change: Art and part science. So firstly, there is a lot of discussions with customers and you remember in some parts of the business, where even co located with customers. So there's a high degree of customer intimacy across the business and the starting point is the discussions and the joint planning dialogue that we have with our customers around the world. So that's arguably the.

Most important input.

Speaker Change: But then we also try to triangulate with data and what do we look at it we look at things like in categories, where there is scanner data, which is not the case across our portfolio.

Speaker Change: Not in health care, but in food and home and personal care in places, where there's good retail scanner data, we take a close look at that.

Speaker Change: We also look at the scanner results for individual customers individual companies and try to determine if there's any difference between the overall market performance and our specific and the performance of our specific customers and.

Speaker Change: And then we look at our volumes and try to triangulate between those three data points to see what's the differences there.

Speaker Change: If there is.

Speaker Change: If theres sell through or not.

And whether or not we're seeing.

Speaker Change: An inventory drawdown or build up so.

Speaker Change: It's an approximation, but it's a reasonably informed approximation bolt.

Speaker Change: With input from the customer directly as well as his data and quantitative.

Keith Chau: Okay, thanks Ron, that's great. And then just a quick follow-up on the point in January, and I appreciate it's only a month, but when you talked about an improvement, are you talking about positive growth comp? in January or Lisbeth in January, the last six months.

Speaker Change: Inputs.

Speaker Change: Okay. Thanks, Ron that's great color and then just a quick follow up on the point in January and I. Appreciate it's only a month, but when you talked about an improvement are you talking about a positive growth comp.

Speaker Change: In January or less bad January versus.

Speaker Change: The last six months. Thank you.

Ronald Stephen Delia: Yeah, look, we're talking about it relative to the first half. So it's a little bit of both, but generally speaking, we're talking about the comparison to the first half. And so we're not talking about, we have had some parts of the business that grew, but we're not talking about general growth across the board. What we're talking about is a general improvement relative to the first half and certainly the second quarter.

Ronald Stephen Delia: Yes look we're talking about it relative to the first half.

Ronald Stephen Delia: So it's a little bit of both but generally speaking we're talking about the comparison to the first half and.

Ronald Stephen Delia: So we're not talking about we've had we had some parts of the business that grew but were not talking about general growth across the board, where we're talking about is a.

Ronald Stephen Delia: General improvement relative to the first half and certainly the second quarter.

Operator: Ladies and gentlemen, this concludes our question and answer session. I will now turn the call back to Ron Delia for his closing remarks. Thanks, Operator, and thanks, everyone, for joining the call today. We're, as you can hopefully pick up, pretty optimistic about our second half. We believe that the second quarter was a low point for us in terms of volumes and earnings growth, and the business will build momentum from here. So, thank you for your interest in Amcor, and we'll speak to you next quarter. This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Ronald Stephen Delia: Ladies and gentlemen, this concludes our question and answer session I will now turn the call back to Ron Julia for closing remarks.

Ronald Stephen Delia: Thanks, operator, and thanks, everyone for joining the call today, we are.

Ronald Stephen Delia: As you can hopefully pick up pretty optimistic about our second half.

Ronald Stephen Delia: We believe that the second quarter was the low point for us in terms of volumes and earnings growth.

Ronald Stephen Delia: The business will build momentum from here. So thank you for your interest in EMCORE and we'll speak to you next quarter.

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.