Q3 2024 Amcor plc Earnings Call

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Jayle: Thank you for standing by. My name is Jayle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amcor third quarter 2024 results call. All lines have been placed on mute to prevent any background noise.

Joe: Thank you for standing by my name is Joe and I'll be your conference operator today at this time I would like to welcome everyone to the <unk> third quarter 2024 results call.

Joe: 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'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad if.

If you would like to withdraw your question Press Star one again.

Jayle: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Tracey Whitehead, Head of Investor Relations. You may begin.

Thank you I would now like to turn the conference over to Tracey Whitehead head of Investor Relations you may begin.

Tracey Whitehead: Thank you, Operator, and thank you, everyone, for joining Amcor's Fiscal 2023 Third Quarter Earnings Call. Joining us today is Peter Konieczny, Interim Chief Executive Officer, and Michael Casamento, Chief Financial Officer.

Tracey Whitehead: Thank you operator, and thank you everyone for joining <unk> fiscal 2023 third quarter earnings call. Joining today is Peter Konieczny interim Chief Executive Officer, and Michael Casamento, Chief Financial Officer.

Tracey Whitehead: Before I hand over, there are a few items to note. 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 presentation. 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 than current estimates.

Speaker Change: Before I hand, I thought a few items Tonight.

Tracey Whitehead: 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 well.

Speaker Change: <unk> will also include forward looking statements that are based on management's current views and assumption.

Speaker Change: The second slide in today's presentation lists factors that could cause future results to be different than current estimate.

Tracey Whitehead: Reference can also 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 then rejoin the queue if you have any additional questions or follow-up. With that, over to you, PK.

Speaker Change: Reference can also be made to amcor is SEC filings, including our statements on Form 10-K, and 10-Q for further details.

Speaker Change: Please note that during the question and answer session. We request that you limit yourself to a single question and then rejoin the queue. If you have any additional questions or follow ups.

Speaker Change: With that over to you PK.

Peter Konieczny: Thank you, Tracey, and thank you to all who have joined us for today's call. Prior to discussing our third quarter performance, I want to spend a few moments recognizing my predecessor, Ron Delia, and his many accomplishments at Amcor. In the last few years alone, Ron led us through the transformational acquisition and integration of Bemis, the largest acquisition in the company's history, successfully and safely guided the business through a pandemic, and made the difficult and correct decision to divest our business in Russia. And most recently, Ron directed our teams in navigating a particularly challenging economic period.

PK: Thank you Tracy and thank you to all who have joined us for today's call.

PK: Prior to discussing our third quarter performance I want to spend a few moments recognizing my predecessor, Rhonda Lee and his many accomplishments at amcor.

PK: In the last few years alone run led us through the transformational acquisition and integration of Bemis the largest acquisition in the company's history successfully and safely guided the business through a pandemic and made the difficult and correct decision to divest our business in Russia.

Speaker Change: And most recently ran directly to our teams and navigating a particularly challenging economic period.

Peter Konieczny: I know I speak for the board, our global management team, and our employees around the world in thanking Ron for his leadership, guidance, and dedication during his 18 years with Amcor and nine years at CU. I've worked closely with Ron, our board, and the other members of our executive team over many years to help shape and execute our strategy, and I'm honored to take the leadership reins in an interim capacity at this time.

Speaker Change: I know I speak for the board or global management team and our employees around the world and thanking Ron for his leadership guidance and dedication during his 18 years with oncor and nine years as CEO.

Speaker Change: I've worked closely with Ron our board and the other members of our executive team over many years to help shape and execute our strategy.

Speaker Change: I'm honored to take the leadership ranks in an interim capacity at this time.

Peter Konieczny: Today, Amcor is an established industry leader in our key markets and geographies, has world-class talent, and clearly differentiated commercial innovation capabilities, all providing us with multiple opportunities to capture high-value. Importantly, the business is also well positioned to continue benefiting from the proactive steps taken by our leaders across the company to align the cost base with recent challenging market conditions. The results of those decisive actions were again evident in our third-quarter financial performance as we showed strong earnings leverage across the business.

Speaker Change: Today I'm curious the established industry leader in our key markets and geographies as world class talent, and clearly differentiated commercial innovation capabilities, while providing us with multiple opportunities to capture high value growth.

Speaker Change: Importantly, the business is also well positioned to continue benefiting from the proactive steps taken by our leaders across the company to align the cost base with recent challenging market conditions. The.

Speaker Change: The results of those decisive actions were again evident in our third quarter financial performance as we showed strong earnings leverage across the business.

Peter Konieczny: Third-quarter year-over-year volume performance also improved on a sequential basis, and we expect this trend to continue, driving stronger earnings growth as we close fiscal year 24. My role right now is to ensure we stay focused and on track and that we capitalize on the strong position we're in to maintain momentum and further accelerate earnings growth. It is a team effort and will drive success, and I'm surrounded and supported by credible leaders and talented team players throughout our organization.

Speaker Change: Third quarter year over year volume performance also improved on a sequential basis and we expect this trend to continue driving stronger earnings growth as we close fiscal year 'twenty four.

Speaker Change: My role right now is to ensure we stay focused and on track and that we capitalize on the strong position we're in to maintain momentum and further accelerate earnings growth. It is a team effort and we will drive success.

Speaker Change: And I'm surrounded and supported by credible leaders and talented team players throughout our organization.

Peter Konieczny: As seen on slide three, my near-term priorities are simple. First, ensure that Amcor continues to provide a safe and healthy work environment for our global workforce. Second, stay close to our key stakeholders, including our employees and customers, and finish our 2024 fiscal year strongly. After an improved third quarter performance, we are well positioned to do so, and we've raised our full-year guidance today. Third, build on the momentum we have worked hard to deliver across the business.

Speaker Change: As seen on slide three my near term priorities are simple first ensure umber continues to provide a safe and healthy work environment for our global workforce.

Speaker Change: Stay close to our key stakeholders, including our employees and customers and finish our 2020 for fiscal year strongly.

Speaker Change: After an improved third quarter performance, we are well positioned to do so and we've raised our full year guidance today.

Speaker Change: Third and built on the momentum we have worked hard to deliver it.

Speaker Change: Excuse me to deliver across the business and as we work through our planning cycle for fiscal 'twenty five set clear priorities to ensure our momentum continues.

Peter Konieczny: And as we work through our planning cycle for fiscal 25, set clear priorities to ensure our momentum continues. And fourth, provide stability for the business and keep our teams focused on delivering for all our stakeholders by reinforcing that our strategy has not changed. Our agenda has not changed, and our priorities have not changed.

Speaker Change: <unk> provides stability for the business and keep our teams focused on delivering for all of our stakeholders by reinforcing that our strategy has not changed our agenda has not changed and our priorities have not changed.

Peter Konieczny: Moving to Amcor's Q3 performance, starting with safety on slide four. Our commitment to health and safety of our teams remains our number one priority, and we continue to focus on providing a safe and healthy work environment. 72% of our sites have been injury-free for the past 12 months or longer, and we've experienced a 19% reduction in injuries compared to the first nine months of fiscal 23. Safety is deeply embedded in Amcor's culture and is a critical cornerstone of our success.

Speaker Change: Moving to <unk> Q3 performance, starting with safety on slide four.

Speaker Change: Our commitment to health and safety.

Speaker Change: Of our teams remains our number one priority and we continue to focus on providing a safe and healthy work environment, 72% of our sites up and injury free for the past 12 months or longer and we've experienced a 19% reduction in injuries compared to the first nine months of fiscal 'twenty. Three safety is deeply embedded in <unk> culture and is a critical cornerstone of ours.

Speaker Change: Success too.

Peter Konieczny: Turning to our key messages for today, on slide five. First, outperformance in the underlying business resulted in adjusted earnings per share for the third quarter that exceeded the expectations we set out in February. Our flexibles and rigid packaging segments each delivered adjusted EBIT growth, leading to Amcor returning to year-over-year earnings growth a quarter sooner than we anticipated. Improved working capital performance through the year also resulted in a year-to-date increase in adjusted free cash.

Speaker Change: Turning to our key messages for today on slide five.

Peter Konieczny: Second, as I mentioned earlier, our third quarter volume trajectory improved significantly on a sequential basis, as de-stocking abated across most end markets, and we experienced higher customer demand in several of our businesses. While this is clearly an encouraging and positive trend, our teams remained highly focused on continuing to control cost, and this helped us deliver a third consecutive quarter of improved earnings leverage and a return to earnings growth. Third, our March quarter financial performance and expected further momentum in our fourth quarter gives us the confidence to increase our full year adjusted EPS guidance range to 68.5 to 71 cents per share and reaffirm our guidance for adjusted free cash flow between 850 and 950 million dollars for the fiscal year.

Speaker Change: First outperformance from the underlying business resulted in adjusted earnings per share for the third quarter that exceeded the expectations, we set out in February.

Speaker Change: Our flexible and rigid packaging segment, each delivered adjusted EBIT growth, leading to Umpqua returning to year over year earnings growth a quarter sooner than we anticipated.

Speaker Change: Improved working capital performance through the year also resulted in a year to date increase in adjusted free cash flow.

Speaker Change: Second as I mentioned earlier, our third quarter volume trajectory improved significantly on a sequential basis as destocking abated across most end markets and we experienced higher customer demand in several of our businesses. While this is clearly an encouraging and positive trend. Our teams remain highly focused on continuing to control costs.

Speaker Change: And this helped us deliver a third consecutive quarter of improved earnings leverage and a return to earnings growth.

Speaker Change: Third our March quarter financial performance and expected further momentum and our fourth quarter gives us the confidence to increase our full year adjusted EPS guidance range to 68, 5% to 71 per share and reaffirm our guidance for adjusted free cash flow between $8 50, and $950 million for the fiscal year.

Peter Konieczny: We believe we have turned the corner after a challenging calendar 2023, and we expect our sequential volume and earnings growth trajectories will continue to improve, which is supported by the demand trends experienced across the business in the first weeks of April. Finally, we remain confident in our capital allocation framework and strategy for long-term growth. We believe the strength of our market positions, our opportunities for investment, and our execution capabilities, along with our commitment to a compelling and growing dividend, make a convincing investment case for Amcor. Moving to slide six, for a summary of our financial results. The first nine months of Fiscal 24 continue to reflect significant benefits from our proactive cost actions.

Speaker Change: We believe we have turned the corner after a challenging calendar 2023, and we expect our sequential volume and earnings growth trajectories will continue to improve which was supported by the demand trends experienced across the business in the first weeks of April.

Speaker Change: Finally, we remain confident in our capital allocation framework and strategy for long term growth, we believe the strength of our market positions our opportunities for investment in our execution capabilities, along with our commitment to a compelling and growing dividend make a convincing investment case for encore.

Speaker Change: Moving to slide six for a summary of our financial results.

Speaker Change: The first nine months of fiscal 2004 continued to reflect significant benefits from our proactive cost actions three consecutive quarters of strong operating leverage helped to offset the unfavorable impact of 7% lower sales.

Peter Konieczny: Three consecutive quarters of strong operating leverage helped offset the unfavorable impact of 7% lower sales and lower year-to-date sales, leading to a decline in adjusted EBIT of 3%. We believe we've reached an inflection point in the trajectory of earnings and volumes with our Q3 results, and we are pleased with our financial results in the March quarter. Better-than-anticipated demand trends and continued strong cost performance resulted in EBIT and earnings per share ahead of our expectations entering the quarter.

Speaker Change: Lower year to date sales, leading to a decline in adjusted EBIT of 3%.

Speaker Change: We believe we've reached an inflection point in the trajectory of earnings and volumes with our Q3 results and we are pleased with our financial results in the March quarter.

Speaker Change: Better than anticipated demand trends and continued strong cost performance resulted in EBIT and earnings per share ahead of our expectations entering the quarter.

Speaker Change: The underlying business saw a return to profit growth in the third quarter with adjusted EBIT up 3% compared with last year volume trends improved as the broad based destocking experienced in the December quarter, abated and customer demand strengthened.

Peter Konieczny: The underlying business saw a return to profit growth in the third quarter, with adjusted EBIT of 3% compared with last year. Volume trends improved as the broad-based de-stocking experienced in the December quarter abated, and customer demand strength. Our teams also continued to focus on cost reduction and productivity initiatives and delivered another quarter of outstanding results with approximately $130 million in total cost savings, including approximately $15 million of benefits from structural cost initiatives.

Speaker Change: Our teams also continued to focus on cost reduction and productivity initiatives and delivered another quarter of outstanding results with approximately $130 million in total cost savings, including approximately $15 million of benefits from structural cost initiatives.

Peter Konieczny: These benefits, combined with improving volume trends, resulted in another quarter of improved earnings leverage. Interest and tax expense were modestly higher than the prior year, in line with our expectations, and adjusted earnings per share of 17.8 cents grew by 1%.

Speaker Change: These benefits combined with improving volume trends resulted in another quarter of improved earnings leverage interest and tax expense were modestly higher than the prior year in line with our expectations and adjusted earnings per share of $17 eight <unk> grew by 1%.

Speaker Change: Q3, net sales were down 6% on a comparable constant currency basis, which primarily reflects overall volumes, 4% lower than the prior year.

Michael Casamento: Q3 net sales were down 6% on a comparable constant currency basis, which primarily reflects overall volumes 4% lower than the price. This is predominantly related to expected ongoing weakness, including further destocking in healthcare categories and in the North American beverage business, which collectively represent approximately 30% of Amcor's total. Across the remaining 70% of our business, overall net volumes were relatively flat with last year, a significant improvement compared with the December quarter, and the business delivered volume growth across several categories in geography.

Speaker Change: This was predominantly related to expected ongoing weakness, including further destocking and health care categories and in the North American beverage business, which collectively represent approximately 30% of <unk> total sales across the remaining 70% of our business overall net volumes were relatively flat with last year a significant improvement.

Speaker Change: Compared with the December quarter, and the business delivered volume growth across several categories and geographies.

Michael Casamento: Outside of healthcare, we believe de-stocking is now largely behind us. Price mix for Q3 had an unfavorable impact on sales of approximately 3%, which is the result of greater volume declines in high-margin healthcare categories, which we anticipated and called out last quarter. We continue to return significant cash to shareholders through a compelling and growing dividend and share repurchases, which totaled approximately $570 million through the first nine months of the year. I'll turn it over to Michael now to provide some further color on the financials and our outlook. Thanks, PK.

Speaker Change: Beside of healthcare, we believe Destocking is now largely behind us the price mix for Q3 had an unfavorable impact on sales of approximately 3%, which is a result of greater volume declines in high margin health care categories, which we anticipated and called out last quarter.

Speaker Change: We continue to return significant cash to shareholders through a compelling and growing dividend and share repurchases, which totaled approximately $570 million through the first nine months of the year.

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

Michael Casamento: Thanks, P.K., and hello everyone.

Michael Casamento: Thanks, PK and Hello, everyone.

Michael Casamento: Beginning with the flexible segment on slide seven, and focusing on our Q3 performance, net sales for Q3 were down 6%, reflecting an unfavourable price-mix impact of 4% and a 2% decline in overall volumes, which was a significant improvement of 8 percentage points compared with the December quarter. As we anticipated and called out last quarter, volumes for healthcare products remained weak, and de-stocking continued, particularly in North America and Europe. In total, healthcare volumes were down double digits, and this had an unfavourable impact of approximately 3% on overall segment volumes and was the primary driver of the 4% unfavourable mix in the quarter across the balance of our flexibles portfolio.

Michael Casamento: Beginning with the flexible segment on slide seven.

Michael Casamento: And focusing on our Q3 performance.

Michael Casamento: Net sales for Q3 were down 6%, reflecting an unfavorable price mix impact of 4%.

Michael Casamento: And a 2% decline in overall volumes, which was a significant improvement of eight percentage points compared with the December quarter.

Michael Casamento: As we anticipated and call out last quarter volumes for health care products remained weak and Destocking continued, particularly in North America and Europe.

Michael Casamento: In total health care volumes were down double digits and this had an unfavorable impact of approximately 3% on overall segment volumes and was the primary driver of the 4% unfavorable mix in the quarter.

Michael Casamento: Across the balance of our flexible portfolio.

Michael Casamento: Net volumes grew approximately 1% in the quarter, with growth in several end markets, including meat, pet food, cheese, and unconverted film and foil, and we also saw growth across a number of emerging markets. Across North America and Europe, third-quarter net sales declined at high single-digit rates, unfavorably impacted by mid-single-digit lower volumes and an unfavorable price mix related to declines in healthcare categories Excluding healthcare, across these two regions, we saw mid-single-digit volume growth in cheese and a strong sequential improvement in meat and pet care volumes, which were flat and up low single digits for the quarter, respectively.

Michael Casamento: Net volumes grew approximately 1% in the quarter with growth in several end markets, including mate.

Michael Casamento: Food chain and unconverted film foil.

Michael Casamento: And we also saw growth across a number of emerging markets.

Michael Casamento: Across North America, and Europe third quarter net sales declined at high single digit rights and favorably impacted by a.

Michael Casamento: Mid single digit level volumes and.

Michael Casamento: An unfavorable price mix related to declines in healthcare categories.

Michael Casamento: Excluding health care across these two regions, we saw mid single digit volume growth in cheese, and a strong sequential improvement in may and pet care volumes, which were flat and up low single digits for the quarter respectively.

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

Michael Casamento: Across the Asian region, net sales were modestly higher than the prior year. China grew volumes for the third consecutive quarter, and volume growth in Thailand, India, and the Philippines also helped offset lower volumes in Southeast Asian healthcare. In Latin America, the business delivered good volume growth in Brazil, Mexico, and Peru.

Michael Casamento: China grew volumes for the third consecutive quarter and volume growth in Thailand, India and the Philippines also helped offset lower volumes in southeast Asia and healthcare business.

Michael Casamento: In Latin America, the business delivered good volume growth in Brazil, Mexico and Peru.

Michael Casamento: Q3, adjusted EBIT of 308, $358 million was 5% higher than last year on a comparable constant currency basis.

Michael Casamento: Q3 adjusted EBIT of $358 million was 5% higher than last year on a comparable constant currency basis. Strong cost performance through the quarter, including from restructuring initiatives, combined with broadly improving demand trends, led to another quarter of strong earnings leverage, and EBIT margins increased by 170 basis points to 13.8%. Turning to rigid packaging on slide 8.

Michael Casamento: Strong cost performance during the quarter, including from restructuring initiatives.

Michael Casamento: And bond with broadly improving demand trends led to another quarter of strong earnings leverage and EBIT margins increased by 170 basis points to 13, 9%.

Michael Casamento: Turning to rigid packaging on slide eight.

Michael Casamento: Q3 net sales were 8% lower on a comparable constant currency basis, mainly reflecting lower volume. However, while overall volumes were down 8% for the quarter, this represents a meaningful improvement over the December quarter. In North America, overall beverage volumes continue to be impacted by soft consumer and custom demand in Amcor's key end markets, along with some lingering de-stocking. Total beverage volumes were down 11%, improving sequentially from the 19% decline we experienced in December. The December quarter, which was impacted by significantly more de-stocking. Latin American volumes were in line with last year, with growth in Brazil and Colombia offset by weaker demand in Argentina.

Michael Casamento: Q3, net sales were 8% lower on a comparable constant currency basis, mainly reflecting lower volumes.

Michael Casamento: While overall volumes were down 8% for the quarter. This represents a meaningful improvement over the December quarter.

Michael Casamento: North America overall beverage volumes continued to be impacted by soft consumer and customer demand and AMCOL as key end markets along with some lingering destocking.

Michael Casamento: Total beverage volumes were down 11% improving sequentially from the 19% decline we experienced in December.

Michael Casamento: December quarter.

Michael Casamento: Which was impacted by significantly more destocking.

Michael Casamento: Latin American volumes were in line with last year with growth in Brazil, and Colombia offset by weaker demand in Argentina.

Michael Casamento: We are pleased to say the rigid packaging business return to earnings growth.

Michael Casamento: We are pleased to see the rigid packaging business return to earnings growth, with adjusted third-quarter EBIT up modestly over last year. Strong earnings leverage resulting from a continued focus on cost reduction and productivity measures and the realisation of benefits from restructuring initiatives more than offset lower volumes, leading to an 80 basis point increase in EBIT margins to 8.7% for the quarter. Moving to Cash and the Balance Sheet on slide 9, Adjusted free cash flow for the first nine months was approximately $100 million ahead of last year, mainly driven by improved working capital performance and successfully reducing inventory levels for the fifth consecutive quarter.

Michael Casamento: With adjusted third quarter, EBIT up modestly over last year.

Michael Casamento: Strong earnings leverage, resulting from our continued focus on cost reduction and productivity measures and the realization of benefits from restructuring initiatives more than offset lower volumes, leading to an 80 basis point increase in EBIT margin to eight 7% for the quarter.

Michael Casamento: Moving to cash in the balance sheet on slide nine.

Michael Casamento: Adjusted free cash flow for the first nine months was approximately 100 million ahead of last year.

Michael Casamento: Mainly driven by improved working capital performance and successfully reducing inventory levels for the fifth consecutive quarter.

Michael Casamento: Leverage at three four times is broadly in line with the first half and within the range of expected outcomes for the third quarter.

Michael Casamento: Leverage at 3.4 times was broadly in line with the first half and within the range of expected outcomes for the third quarter. As a reminder, the business is cycling through temporary increases in working capital, and trailing 12-month MDA remains at lower than historic levels reflecting the divestiture of our Russian business in December 2022. Looking ahead, we continue to expect leverage will decrease to approximately three times at the end of our fiscal year, supported by seasonally higher earnings and cash flow in our fiscal fourth quarter. This brings me to our outlook on slide 10.

Michael Casamento: As a reminder, the business is cycling through temporary increases in working capital and trailing 12 month EBITDA remains at lower than historic levels, reflecting the divestiture of our Russian business in December 2022.

Michael Casamento: Looking ahead, we continue to expect leverage will decrease to approximately three times at the end of our fiscal year <unk>.

Michael Casamento: Supported by seasonally stronger earnings and cash flowing out fiscal fourth quarter.

Michael Casamento: This brings me to our outlook on slide 10.

Michael Casamento: As PK noted earlier, we are raising our full-year guidance for adjusted EPS to 68.5 to 71 cents per share to reflect our performance in the underlying business in the third quarter and our expectation that volumes will continue to improve through the balance of the year. We also remain focused on controlling costs and expect to deliver further savings in Q4, including from our structural initiative. For fiscal 2024, 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 favourable currency translation contributing a benefit of up to.

Michael Casamento: As <unk> noted earlier, we are raising our full year guidance for adjusted EPS to <unk> 68, 5% to 71 per share.

Michael Casamento: 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 up to 6% from higher interest and tax expense, which takes into account our updated estimate for the four-year net interest expense of between $310 million and $320 million. We are confident we will build on our third quarter performance, and adjusted earnings per share for the fourth quarter is expected to grow over last year by mid-single digits on a comparable constant currency basis.

Michael Casamento: <unk> outperformance in the underlying business in the third quarter and our expectation that volumes will continue to improve through the balance of the year.

Michael Casamento: We also remain focused on controlling costs and expect to deliver further savings in Q4, including from our structural initiatives.

Michael Casamento: For fiscal 2024, we continue to expect the underlying business to contribute organic earnings growth and.

Michael Casamento: 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 about 2%.

Michael Casamento: This was offset by a negative impact of approximately 3% related to the sale of our Russian business in December 2020 to the.

Michael Casamento: The impact of which was all in the first half.

Michael Casamento: We also expect a negative impact of up to 6% from higher interest and tax expense.

Michael Casamento: Tight which takes into account our updated estimate for the full year net interest expense of between $310 million to $320 million.

Michael Casamento: Okay.

Michael Casamento: We are confident we will build on our third quarter performance and adjusted earnings per share for the fourth quarter is expected to grow over last year by mid single digits on a comparable constant currency basis.

Michael Casamento: And overall volumes in the fourth quarter are expected to be down in the low single-digit range, primarily due to ongoing de-stocking in healthcare categories and continued weak consumer and customer demand for North American beverages. We expect the volume improvement we experienced in the third quarter to continue as we progress through the fourth quarter, which will position us well as we enter fiscal 2020. We have also reaffirmed our guidance range for adjusted pre-cash flow of $850 million to $950 million. So with that, I'll hand it back to PK.

Michael Casamento: Overall volumes in the fourth quarter are expected to be down in the low single digit range, primarily due to ongoing destocking and healthcare categories and continued weak consumer and customer demand in north American beverage.

Michael Casamento: We expect the volume improvement we experienced in the third quarter to continue as we progress through the fourth quarter.

Michael Casamento: Which will position us well as we enter fiscal 2025.

Michael Casamento: We have also reaffirmed our guidance range for adjusted free cash flow of $850 million to $950 million for the year.

Michael Casamento: So with that I'll hand back to PK.

Peter Konieczny: Thank you, Michael. In closing, on slide 11.

PK: Thank you Michael in closing on slide 11.

Peter Konieczny: Our Q3 financial results, guidance for the balance of the fiscal year, and our expectation that we will continue to build earnings momentum in fiscal 25 all highlight that Amcor is a very well-positioned business. Amcor's industry leadership across the globe is well-established. Our differentiated innovation capabilities are assisting the world's best-known brands and smaller companies in achieving their objectives to protect, preserve, and promote their products, while enabling them to meet the sustainability commitments they have made to their stakeholders.

PK: Our Q3 financial results guidance for the balance of the fiscal year and our expectation that we will continue to build earnings momentum in fiscal 'twenty five all highlight that <unk> is a very well position business.

PK: <unk> industry leadership across the globe as well established our differentiated innovation capabilities are assisting the world's best known brands in smaller companies in achieving their objectives to protect preserve and promote their products, while enabling them to meet their sustainability commitments they've made to their stakeholders.

Peter Konieczny: And Amcor's talented employees around the world are capitalizing on growth opportunities in priority categories, emerging markets, and through sustainable offerings, while also continuing to closely focus on cost control. We're confident we will continue to see positive momentum, given the actions we have taken and continue to take across our operations to invest in growth, reduce costs, and improve productivity. As I mentioned at the beginning of the call, my role right now is to ensure we stay focused and on track and that we capitalize on the strong position we are in to maintain momentum and further accelerate earnings growth. The continued safety of our people will always be at the top of Amcor's agenda.

PK: <unk> Telemundo employees around the world are capitalizing on growth opportunities and priority categories emerging markets and through sustainable offerings. While also continuing to closely focus on cost controls.

Michael Casamento: We're confident we will continue to see positive momentum given the actions we have taken and continue to take across our operations to invest in growth reduce cost and improve productivity.

Speaker Change: As I mentioned at the beginning of the call My role right now is to ensure we stay focused and on track and that we capitalize on the strong position we are in to maintain momentum and further accelerate earnings growth the.

Michael Casamento: The continued safety of our people will always be at the top.

Michael Casamento: <unk> agenda, but a very close second for me right now is to keep our teams focused on delivering for all of our stakeholders by reinforcing that our strategy our agenda and our priorities have not changed our Q3 volume trajectory and financial performance underscores our confidence in stronger earnings growth momentum as the challenges we face.

Operator: But a very close second for me right now is to keep our teams focused on delivering for all our stakeholders by reinforcing that our strategy, our agenda, and our priorities have not changed. Our Q3 volume trajectory and financial performance underscore our confidence in stronger earnings growth momentum as the challenges we faced in calendar 23 are put further behind us. We have raised our full-year EPS guidance, and we anticipate delivering mid-single-digit earnings growth in Q4.

Michael Casamento: In calendar 'twenty three are put further behind us.

Michael Casamento: We have raised our full year EPS guidance, and we anticipate delivering mid single digit earnings growth in Q4.

Operator: Our performance in the first few weeks of April supports this expectation, and our commitment to our longer-term growth and value creation strategy gives us a line of sight to return to growth in line with our shareholder value creation model. Operator, we're now ready to turn the line over to questions. Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1.

Michael Casamento: Our performance in the first few weeks of April supports this expectation that our commitments to our longer term growth and value creation strategy gives us line of sight to have returned to growth in line with our shareholder value creation model.

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

Speaker Change: Thank you the floor is now open for questions.

Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask a question and are listening via the loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Speaker Change: Hello, Dan and I would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Speaker Change: If you would like to withdraw your question simply press Star one again.

Dan: If you are called upon to asking the question and are listening via loud speakers on your device. Please pick up your handset to ensure that your phone is not on mute when asking your question.

Operator: In the interest of time, we would like to remind participants to limit their questions to one and to rejoin the queue for any follow-up. Your first question comes from the line of Ghansham Panjabi of Baird. Your line is open.

Michael Casamento: In the interest of time, we would like to remind participants to limit their questions to one and to rejoin the queue for any follow ups.

Michael Casamento: Your first question comes from the line of Ghansham Panjabi of Baird. Your line is open.

Ghansham Panjabi: Hey, guys how are you.

Ghansham Panjabi: I guess first off it sounds like volume surprised you to the upside during the third quarter.

Ghansham Panjabi: Do you think Thats, just a function of <unk> coming in lower than forecast just given aggressive year end inventory destocking by your customers or do you think this is more of a sustainable improvement that you're going to build upon as you look out to your fiscal year 'twenty five.

Ghansham Panjabi: Okay.

Ghansham Panjabi: Yeah, thanks. It's a great question.

Speaker Change: Yes. Thanks, it's.

Speaker Change: It's a great question I mean, there is there is a couple of things to take away here from a from the discussion of the quarter. The first one really is that the volumes improve the second one is that we had great great cost performance in the third one really is that we believe the momentum carries over into Q4, but let me get back to the volume question. So.

Peter Konieczny: I mean, there are a couple of things to take away from the discussion of the quarter. The first one is that volumes improved. The second one is that we had great cost performance. And the third one really is that we believe the momentum carries over into Q4. But let me get back to the volume question. So, significant improvement sequentially on volumes from the second to the third quarter. To remind ourselves, second quarter we were down 10%, and third quarter we were coming in 4% down versus the prior year.

Speaker Change: The significant improvement sequentially on the volumes from the second to the third quarter to remind ourselves second quarter, we were down 10% third quarter, where we're coming in.

Speaker Change: 4% down versus prior year.

Peter Konieczny: And when you look at the 4% that we were down, it's pretty much equally split between two drivers. That's the market impact. And by that, I mean consumer demand and our exposure to categories and customers. And then there is the stock. So that made up the 4% decline. And another way to look at that is the 4% decline was pretty much all driven by the stocking in healthcare and North American beverage.

Speaker Change: And when you look at it.

Speaker Change: Is the 4% that we were down at pretty much.

Speaker Change: Equally split between two drivers.

Speaker Change: That's the market impacts and by that I mean, consumer demand and our exposure to categories and customers.

Speaker Change: And then the second one is destocking.

Speaker Change: So that made up the 4% decline and when you.

Speaker Change: Another way to look at that is before us at the 4% decline was pretty much all driven by Destocking in healthcare in North American beverage.

Peter Konieczny: That also means that the balance of the portfolio ended up being pretty flat, and we were pretty pleased with this outcome because, when you think about it, healthcare and North American beverage are about 30% of our business. That means the balance of the portfolio, 70% came in flat.

Speaker Change: That also means that the balance of the portfolio ended up being pretty flat and we were pretty much pleased with this outcome because when you think about healthcare in North American beverage is about 30% of our business that means the balance of the portfolio, 70% came in flat.

Speaker Change: Now when I take a step back and we look at the third quarter volume performance No Theres a few things that we take away. The first one is we saw a bit of unwind of a very strong destocking in the December month.

Peter Konieczny: Now, when I take a step back and we look at the third quarter volume performance, you know, there are a few things that we can take away. The first one is that we saw a bit of an unwind of a very strong stocking in the December month. And when, you know, we discussed the second quarter, we talked about a pretty strong January, and there was a bit of a question mark around how much of that performance was driven by the unwind of the December month.

Speaker Change: And when.

Speaker Change: We discussed the second quarter we.

Speaker Change: <unk> talked about a pretty strong January and there was a bit of a question mark around how much of that performance was driven by unwind.

Speaker Change: Of the December month, and as we sort of lift Q3 behind us we can confirm that the volumes in January and also February to a certain extent benefited from a bit of an unwind in an unusual low December month. So that was the first one but the second thing that we've seen is that our customers perform better.

Peter Konieczny: And as we sort of left two, three behind us, we can confirm that the volumes in January and also February, to a certain extent, benefited from a bit of an unwind in an unusually low December month. So that was the first one.

Peter Konieczny: But the second thing that we've seen is that our customers perform better. And we talked about that also in the last quarter. The background here is that customers, particularly large customers, are talking more and more and responding more and more to turning the dial a bit towards a better sort of balance between volumes and margins. So we've seen that come through.

Speaker Change: And we talked about that also in the last quarter.

Speaker Change: The background here is that customers are particularly large customers are talking more and more and responding more and more.

Speaker Change: Towards turning the dial a bit towards a better balance between volumes and margins.

Speaker Change: So we've seen that come through and then the third one is pretty much what we expected to a certain extent that the destocking.

Peter Konieczny: And then the third one is pretty much what we expected to a certain extent that the de-stocking would abate. And that pretty much happened with the exception of healthcare and some lingering de-stocking in North American beverages. So, look, that's pretty much the discussion of the third quarter. But as I have the floor and volumes, let me just make two more comments and break it down into the segments here, because I think color is important.

Speaker Change: Would abate.

Speaker Change: And that pretty much happened with the exception of healthcare and some lingering destocking in North American beverage.

Speaker Change: So.

Speaker Change: Look that's pretty much the discussion of the third quarter, but as I have the floor and volumes. Let me, let me just make two more comments and breaking it down into the segments here because I think the color is important.

Peter Konieczny: In flexibles, we went from being 10% down in the second quarter to being 2% down in the third quarter. And again, you know, the customer performance sort of drove improved market impact performance. And then the stocking significantly abated. And when you look at the flexible segment, it was all made up by the health care impact in terms of the decline; the balance of the portfolio is flat to even slightly up. And then just one more comment on RIDGID, and then I'll stop.

Speaker Change: And flexible <unk>.

Speaker Change: We came from being 10% down in the second quarter, two being 2% down in the third quarter.

Speaker Change: And again.

Speaker Change: The.

Speaker Change: The customer performance sort of drove improved market impact performance and then and then the destocking significantly abated and when you look at the flexible segment that was all made up by the healthcare or the healthcare impact in terms of the decline the balance of the portfolio is flat to even slightly up.

Peter Konieczny: RIDGID went from 12% down in the second quarter to 8% down in the third quarter, so it was also an improvement. We continue to see a soft market, but the de-stocking has significantly abated in RIDGID also. So across the board, really, really good improvement. And when you think back to what I discussed, there are components in there that we believe to be sustainable. No question. And that relates to one further abatement of the de-stocking and, second, to good customer performance that we continue to see and that we believe we will continue to see also.

Speaker Change: And then just one more comment on Richardson, then then I'll stop that originally went from 12% down in the second quarter to 8% down in the third quarter. So also also an improvement we continue to see.

Speaker Change: <unk> market, but the destocking.

Speaker Change: Significantly abated in Richard's also so across the board.

Speaker Change: Really really good improvement and when you think back to what I discussed that there was there is components and we're there.

Speaker Change: Believe to be sustainable.

Speaker Change: No question.

Speaker Change: That relates to one further abatement of the Destocking and second to good customer performance that we continue but we believe we will continue to see also in Q4.

Speaker Change: Thank you your next question.

Daniel Kang: Your next question comes from the line of Daniel Kang of CLSA. Your line is open.

Speaker Change: Your next question comes from the line of Daniel Kang of CLSA. Your line is open.

Daniel Kang: Good morning.

Peter Konieczny: Good morning Peter, good morning Michael. I just have a question about healthcare. You mentioned healthcare continues to fall double digits in 3Q, which from memory sounds quite similar to the December quarter. Can you comment on whether there was any sequential improvement in 3Q? And just from the visibility of customers' stock levels and given the low comps that we should be working with going forward, is it reasonable to expect that the first half of fiscal year 25 will show some improvement in healthcare volumes?

Daniel Kang: Michael.

Daniel Kang: Just a quick question on healthcare.

Daniel Kang: You mentioned healthcare continued to grow double digits double digits in three key.

Daniel Kang: Which fundamentally sound.

Daniel Kang: Quite similar to that.

Daniel Kang: For the quarter.

Daniel Kang: Can you comment on whether there was the only sequential improvement in <unk>.

Daniel Kang: Just wondering if visibility.

Daniel Kang: For our customers.

Daniel Kang: <unk>.

Daniel Kang: And given that a lot of costs that we should be working with block encore is it reasonable to think that through.

Daniel Kang: Half fiscal year 'twenty five to show some improvement in healthcare policy.

Daniel Kang: Yeah.

Peter Konieczny: Let me let me help you with health care a bit. So, the main driver of the health care performance really has been the stocking and the stocking sort of abating from Q2 to Q3. I would say, overall, the demand situation has not really changed much in health care. So you would see overall health care is marginally better between the second and the third quarter. We do expect further improvement in health care, though, because the de-stocking will further sort of reduce in the fourth quarter.

Speaker Change: Let me let me let me help you with health care of itself. So the main driver of the healthcare performance really has been the destocking in the.

Speaker Change: The destocking sort of abating.

From Q2 to Q3.

Speaker Change: Ed.

Speaker Change: I would say overall.

The demand situation.

Speaker Change: Has has not really changed much in healthcare.

Speaker Change: So you would see overall health care is marginally better between the second and the third quarter.

Speaker Change: We do expect further improvement in healthcare that would be.

Speaker Change: Because the Destocking will further.

Speaker Change: Sort of reduce in the fourth quarter.

Peter Konieczny: As a matter of fact, when we guide to a low single-digit volume decline in the fourth quarter, we would believe that most of that is driven by health care. In fact, all of that is driven by health care.

Speaker Change: As a matter of fact, when we guide to low single digits volume decline in the fourth quarter. We would believe that most of that is driven by healthcare all of that is driven by healthcare.

Peter Konieczny: And, you know, we don't really know exactly when the de-stocking will come to an end. It will certainly sort of stretch into the fourth quarter. Maybe we'll see a bit of an impact also in the first quarter of fiscal 25. But that would be as far as I would go with everything that I know at this point in time. Maybe one more thing that I would want to add too is that, you know, again, we're talking about a low single-digit decline in volumes in the fourth quarter, but with a further improving trajectory, and we're expecting to exit the fourth quarter flat on volumes.

Speaker Change: And.

Speaker Change: We don't really know exactly when the Destocking will come to an end it will certainly sort of stretch into the fourth quarter.

Speaker Change: Maybe we'll see a bit of.

Speaker Change: We see a bit of an impact also in the first quarter of fiscal 'twenty, five but that would be as far as I would go with everything that I know at this point in time.

Maybe one more thing that I would want to add too is that.

Again, we're talking about low single digit decline in volumes in the fourth quarter, but with the with the further improving trajectory.

Speaker Change: And we're expecting to exit the fourth quarter flat.

Speaker Change: On volumes.

Speaker Change: Your next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is open.

Adam Samuelson: Your next question comes from the line of Adam Samuelson of Goldman Sachs. Your line is open.

Adam Samuelson: Yes, thank you. Good afternoon, everyone. I was hoping to maybe talk a little bit about the operating leverage in the business or the lack thereof on the de-leverage side, just given the profit performance, especially in flexibles relative to the volume and mixed declines you still saw in the period. And I'm hoping to maybe disaggregate a little bit the amount of fixed cost reductions actually realized in the period versus the variable cost kind of efficiencies and productivity gains in the quarter and how kind of Durable you think those variable costs and productivity improvements will prove to be if volumes start to normalize, or how much costs would have to leak into the system to serve incremental volume.

Adam Samuelson: Yes. Thank you good afternoon, everyone.

Adam Samuelson: I was hoping to maybe talk a little about the operating leverage.

Adam Samuelson: And the business or lack thereof on the on the deleverage side just given.

Adam Samuelson: The profit performance, especially in flexible as relative to the volume and mix declines you still soft.

In the period, and hoping to maybe disaggregate a little bit.

Adam Samuelson: The amount of fixed cost reduction is actually realized in the period versus the variable cost.

Adam Samuelson: Efficiencies and productivity gains.

Adam Samuelson: In the quarter and how.

Speaker Change: Got it.

Speaker Change: <unk> do you think those variable cost and productivity and prevents proved to be.

Speaker Change: If volumes start to start to normalize or how much cost would have to leak into the system to serve incremental volumes from here.

Michael Casamento: Yeah, no, thanks for the question, Adam. I'll take that. It's Michael here.

Thanks for the question Adam I'll take that it's Michael here.

Michael Casamento: Yeah, look, on the cost side, we're really pleased with the cost performance of the business in Q3. You know, we took another $130 million out of costs, which included some benefit from the restructuring program that we've got in place. So we are now starting to see that come through. So that was about $15 million as expected.

Michael Casamento: Yes look on the cost side, we were really pleased with the cost performance of the business in Q3.

Michael Casamento: We took another kind of $130 million out of costs, which included.

Michael Casamento: Some some benefit from the restructuring program that we put in place that we know are now starting to say that commentary so that was about $58 million as expected.

Michael Casamento: And if you just take a step back and think about the cost work we've been doing, what are we actually doing? There are two things that we're focused on. Firstly, you know, the operational side of the business, so cost productivity and cost flexing in a lower volume environment. And then the second is that structural program that we've talked about, you know, in response to try and offset some of the some of the divested Russian earnings. So, you know, in the quarter, we saw benefits from both, and we saw that in both the flexibles and rigid segments as well. So that was pleasing.

Michael Casamento: If you just take a step back and think about the cost work. We've been doing what are we actually doing is two things that we're focused on firstly, the operational side of the business cost productivity and cost flexing.

Michael Casamento: In a lower volume environment and then the second is that structural program that we've talked about.

Michael Casamento: In response to try and offset some of the some of the deaths divested Russia, adding so.

Michael Casamento: During the quarter, we saw benefits from both and we saw that in both.

Michael Casamento: Our flexible and rigid segment as well so that was pleasing.

Michael Casamento: And look, on the operational side, what have we been doing? We've been really both proactive and aggressive in flexing the cost base, and you know that's taking into account the lower demand environment, so we've been, You know, certainly eliminating shifts to take labor out where we can. You know, reducing the overtime to take that labor cost out, you know, taking extended shots, you know, when we're aligning with some of our customers.

Michael Casamento: And look on the operational side, what have we been doing with they really both proactive and aggressive in flexing the cost base.

And that's taking into account the lower demand environment. So we think.

Michael Casamento: Yes, certainly eliminating shifts to take labor out where we can.

Michael Casamento: <unk>.

Reducing the over time to take that labor cost out.

Michael Casamento: Taking extended shots.

Michael Casamento: When we are aligning with some of our customers. So we can take extended shops, iva iva long weekends, and all those things to get the plants fully closed and get the cost out that way.

Michael Casamento: So we're going to take extended shots over long weekends and other things to get the plants fully closed and get the cost out that way. You know, we're driving procurement, obviously, in a low-volume environment, that's also an opportunity for us to drive procurement savings, and we've been really focused on that, and the team does really good work there. And we've been, you know, tightly controlling our discretionary spend, so that's kind of on the operating side. And then on the structural side, you know, that's more about plant closures.

Michael Casamento: We're driving procurement.

Michael Casamento: Honestly.

Michael Casamento: The volume environment. That's also an opportunity for us to drive procurement savings and we've been really focused on that and the team's done done really good work there.

Speaker Change: And what are they.

Speaker Change: Tightly controlling our discretionary spend so.

Speaker Change: That's kind of on the operating side and then on the structural side.

Speaker Change: More about plant closures.

Michael Casamento: So we've announced seven plant closures and two restructurings, and more recently, we've actually completed the closure of around three or four of those. You know, so we've now started to see that benefit flow through as we anticipated, and that program was going to deliver about a 50 million EBIT benefit over the program, 35 million predominantly in the second half of FY24 and then another 15 million into FY25. And you know, we're pleased to report that we are now seeing those benefits come through, and in Q3, that contributed 15 million.

Speaker Change: Announced seven seven plant closures into two restructures and more recently, we've actually completed the closure around three or four of those.

Speaker Change: So we've now started to see that benefit flow through as we anticipated and that program was going to deliver about a $50 million EBIT.

Speaker Change: Benefit over the program.

Speaker Change: $35 million predominantly in the second half of FY 'twenty, four and then another $58 million into FY 'twenty five.

Speaker Change: We're pleased to report that we now seeing those benefits come through in Q3 that contributed $58 million.

Michael Casamento: The majority of that was in flexibles, but also a few million in rigid, so again, good cost control in both of those areas. And, you know, it's difficult to determine how much of that is going to stick with the business long term. But I guess what we would say is that, you know, we've taken a pretty significant headcount out of the business.

Speaker Change: A majority of that was in flexible, but also a few million dollars in rigid. So again good good cost control in both of those areas.

Speaker Change: And it's difficult to determine how much of that is going to it's going to stick with the business long term, but I guess, what we would say is that yes, we've taken a pretty significant head count out of the business.

Michael Casamento: You know, if you think about the structural costs out, I mean, those structural costs that come out, and they're permanent, so the $50 million over time that comes through will be permanent. I mean, on the procurement benefits, they'll be sustained. The productivity we'd anticipate, you know, over the last several quarters, we've improved productivity, improved efficiency, and been able to do more with less. So again, we'd expect that to continue. But as volumes come back, we will have to put, you know, labor back into the business, and rebuild ships, but it's not going to be linear.

Speaker Change: If you think about the structural cost out.

Does structural costs that come out of their permanent so the $50 million at the time that comes through will be permanent.

Speaker Change: On the procurement benefits that will be sustained.

Speaker Change: The productivity, we would anticipate over the last several quarters, we've improved productivity improved efficiency being able to do more with less.

Speaker Change: So again, we would expect that to continue.

Speaker Change: But as as the volumes come back we will have to put our lives are back into the business rebuild shifts, but it's not going to be linear. So we would expect that we will continue to see margin improvement and this will just contributes to amcor is.

Michael Casamento: So we expect that, you know, we will continue to see margin improvement and ongoing margin enhancement. We typically have added 20 to 30 basis points in margin a year over a long period of time. And this program, we'd expect to continue it through the cost measures that we've taken here. And you saw that in the quarter. I mean, we delivered a 120 basis point increase on the back of volumes improving, but cost takeout was really strong. [inaudible]

Speaker Change: Ongoing margin.

Enhancement, we typically over a long period of time have added 20 to 30 basis points in margin a year and this program.

Speaker Change: We expect to continue that through the cost measures that we've taken here.

Speaker Change: And you saw that in the in the quarter, we delivered 120 basis point increase in the back of volumes, improving but our cost takeout, we had a strong and the performance there across the business was great. So.

Speaker Change: We feel pretty good about where we're at there is still more cost to come out you will see further benefits from the structural programs in Q4 as well as some ongoing efficiency benefits from the actions we've already taken.

Michael Casamento: And Michael, I would add that, you know, we're particularly pleased with the work that's been done in the rigid segments here because, you know, we, we acknowledge that the business returned to profit growth in the third quarter on the back of a pretty soft environment still. So, that speaks to good leverage in that business.

Speaker Change: Well I would add that.

Speaker Change: We're particularly pleased with the work that's been done in the rigid segments here because.

Speaker Change: We acknowledge that the business returned back from profit growth in.

Speaker Change: In the third quarter on the back of a pretty soft environment still so that speaks to good leverage in that business.

Speaker Change: Your next question comes from the line of Jon <unk> of Macquarie. Your line is open.

John Purtell: Your next question comes from the line of John Purtell of Macquarie. Your line is open.

John Purtell: Your next question comes from the line of John Purtell of Macquarie. Your line is open. Good afternoon, Peter and Michael. I'll just ask one question.

Speaker Change: Yeah.

Good afternoon, Pedro and Michael just I'll just ask one.

Speaker Change: Yes.

Speaker Change: Sequential.

Paul you can pick up and flexible just from the.

Speaker Change: The commentary.

Speaker Change: In the release.

Speaker Change: Pete to mainly come from emerging markets rather than developed markets.

Speaker Change: Was there much sequential volume improvement in North America, and Europe for example.

Paul: Yes. That's also a great question. So in terms of in terms of our country.

Peter Konieczny: Yeah, that's also a great question. So in terms of our country's sort of performance or the different regions, you're right, we saw low single-digit growth in emerging markets in the third quarter, which was obviously pleasing and positive. On the developed markets, we saw bigger sequential improvement while we were still negative in terms of our volume performance versus the prior year. Now, you know, you got to keep in mind that the bigger markets were the ones that were more heavily hit with inventory bills and, now, with the normalization, therefore, destocking. And that would also make sense, particularly with our exposure to healthcare in those markets.

Speaker Change: So the performance or the different regions Youre right.

Speaker Change: We saw a low single digit growth in emerging markets.

Speaker Change: In the third quarter, which was.

Which was obviously.

Speaker Change: Pleasing and positive.

Speaker Change: On the on the developed markets.

Speaker Change: We saw it.

Speaker Change: Bigger sequential improvement, while we're still while we're still negative in terms of our volume performance versus prior year now.

Speaker Change: Got to keep in mind that the bigger markets were the ones that were that were more heavily hit with inventory builds and now with the normalization of therefore the destocking.

And that would also make sense, particularly with our exposure to health care in those markets.

Speaker Change: Your next question comes from the line of Richard Johnson of Jefferies. Your line is open.

Richard Johnson: Your next question comes from the line of Richard Johnson of Jeffries. Your line is open. Thanks very much. P.K., I think I'm right in saying you've pretty much worked in every part of the business except RIDGID.

Richard Johnson: Your next question comes from the line of Richard Johnson of Jeffreys. Your line is open.

Richard Johnson: Thanks, very much <unk> I think I'm right in saying you've pretty much works in every part of the business except Richards.

Richard Johnson: Really interested just to get a sense of how you feel about the strategic positioning of the group has a role at the moment.

Richard Johnson: Also particularly focusing on on rigid plastics, which is perhaps in a slightly different position and with a backdrop of.

Richard Johnson: In the beverage market anyway, other substrates appear appearing to be recovering a lot quicker than plastics.

Richard Johnson: So Richard Thanks for the question.

Peter Konieczny: Yeah, Richard, thanks for the question. I mean, there's, you know, we're in a particular situation right now with a business. We've had a couple of tough quarters behind us with volume weakness, and we've worked really hard to position the business as well as possible to take advantage of volumes improving again. And we believe that's exactly the situation we're in right now. So, you know, we said after discussing the second quarter, we said we felt like the second quarter for the business was a low point. And, you know, particularly now as we're having the third quarter an hour back, I think we can confirm that.

I mean, there is some.

Richard Johnson: We're in a particular situation right now with the business we've had a couple.

Richard Johnson: A couple of tough quarters behind us with volume weakness.

Richard Johnson: We've worked really hard to position the business as well as possible to take advantage of the volumes improving again and we believe that's exactly the situation. We're in right now so we said in discussing after discussing the second quarter, we said we.

Richard Johnson: We feel like the second quarter for the business was the low point.

Richard Johnson: <unk> and <unk>.

Richard Johnson: Particularly now as we're as we're having the third quarter and are back I think we can confirm that that's.

Peter Konieczny: That's where we stand, and we believe that we will see a better volume performance in Q4. So, that's the starting point. In that environment, you know, we felt we wanted to get, first of all, back to the earnings capacity of the businesses that we have without asking strategic questions about the businesses, and we believe, particularly in rigid plastics, you're right.

Richard Johnson: That's where we stand and we believe that we will see a better volume performance in Q4.

Richard Johnson: So.

Richard Johnson: That's the starting point in that environment.

Richard Johnson: We felt.

Richard Johnson: We want to get first of all back to the to the earnings capacity of the businesses that we have without asking strategic questions.

Richard Johnson: The businesses, and we believe particularly to rigid plastics youre right.

I've been around and amcor a bit rigid plastics.

Peter Konieczny: I've been around Amcor a bit. Rigid plastics, I haven't managed myself. But when we look at rigid plastics, you know, we think it's a good business strategically. And I'll give you a couple of views here from my side. First of all, it's a big business. It's an important business for Amcor. There's no question about it.

Richard Johnson: <unk>.

Richard Johnson: Managed myself, but when we look at rigid plastics, we think it is.

Richard Johnson: It's a good business strategically.

Speaker Change: I'll give you I'll give you a couple of us here from my side.

First of all it's a scale business. So it's an important business for encore as there is no question about it and secondly, when you look at the portfolio of the business. It's actually it's actually a number of different businesses under one roof. We often we focus very strong in discussing north American beverage.

Peter Konieczny: And secondly, when you look at the portfolio of the business, it's actually a number of different businesses under one roof. Often, we focus very strongly on discussing North American beverages, but it's more than that. We have a specialty containers business, so we've started to diversify. We have a Latin American business, and we have a closures business with our BC&A business. So it's a portfolio of businesses. We have really good industry positions, and across regions where we participate, we like the customer relationships that we have with good, solid customers.

Speaker Change: But it's but it's more than that we have a specialty containers business. So where we started to diversify we have we have a Latin American business.

Speaker Change: <unk> and <unk>.

Speaker Change: And we have a.

Speaker Change: And we have a controller business with.

Speaker Change: With.

Speaker Change: Our <unk> business, so it's a portfolio of businesses.

Speaker Change: We have really good industry positions.

Speaker Change: And across across regions, where we participate we like the customer relationships that we have good solid customer relationships.

Peter Konieczny: And on top of that, also in the overall context of plastics, we have a strong sustainability profile, particularly in that business, which is really important. And finally, I'll come back to what I said at the beginning. We've done a lot of strengthening in the business and the restructuring, for example, with the footprint optimization that we've gone through, and we've generated leverage that has enabled us to return the business to profitable growth.

Speaker Change: And on top of that also in the whole in the overall context of plastics, we have a strong sustainability profile, particularly in that business.

Speaker Change: Which which.

Speaker Change: It is.

Is really important.

Speaker Change: Sure.

Speaker Change: And finally I'll come back to what I said at the beginning we spend a lot of strengthening in the business and the restructuring.

Speaker Change: <unk>.

Speaker Change: For example, with the footprint optimization that we've gone through and we've generated a leverage has enabled us to return the business back to profit growth. So I think where we stand right. Now is we want to see the volumes come back and we wouldn't want to see what the business can deliver there's no question that we want the business to deliver more.

Peter Konieczny: So, I think, you know, where we stand right now is that we want to see volumes come back, and we want to see what the business can deliver. There's no question that we want the business to deliver more, and that's where I would leave it for now. By the way, I think, I don't know if you said it's the rigid plastics business or the rigid packaging business. Actually, we call it the rigid packaging business, and it's just a little clarification. Thank you. Your next question comes from the line of James Wilson of Darden, Australia. Your line is open. Hey guys, good morning.

Speaker Change: And that's where I would leave it for now.

Speaker Change: By the way I think.

Speaker Change: I don't know if you said it.

Speaker Change: If you said, it's the it's the rigid plastics business, where the rigid packaging business actually recall the rigid packaging business.

Speaker Change: And it's just a little clarification.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of James Wilson of Jarden, Australia. Your line is open.

James Wilson: Your next question comes from the line of James Wilson of Garden, Australia. Your line is open.

James Wilson: Hey, guys. Good morning would you be able to just talk us through the net interest guidance that you guys put out, particularly what's driving the lower net interest given that leverage looks unchanged in your guidance I understand that you've had some working capital improvements, but are there anything else.

James Wilson: Driving that.

Speaker Change: Yes. Thanks for the question you saw us.

Michael Casamento: Yeah, no, thanks for the question. You saw us; we slightly reduced the guidance. Our guidance prior to this quarter was $315 million to $330 million, and we reduced that down to $310 million to $320 million. And look, that's really just on the back of the timing of cash flows and the working capital improvements. You know, we saw a little better timing of cash coming into the business, which, you know, as we look at the forecast for the fourth quarter, we can see that phasing and say that there's a little bit of upside there on the interest costs. So, you know, we adjusted them. I just did the guidance range accordingly, but outside of that, there's not a lot.

Speaker Change: We reduced slightly the guidance our guidance prior to this quarter was 358 million to 330, and we reduced that down to 310 to 320 and looked at is really just on the back of the timing of the cash flows and the working capital improvements.

Speaker Change: Total.

Speaker Change: A little bit of timing of cash coming into the business, which as.

Speaker Change: As we look at the forecast for the fourth quarter.

We can we can see that phasing and say that there is that a little bit of upside there on the on the interest cost. So we adjusted the.

Speaker Change: Adjusted the guidance range accordingly, but outside of that there's not a lot of to it no real change in the.

George Staphos: No real change in the rate profile or, you know, the mix of debt. Your next question comes from the line of George Staphos of Bank of America. Your line is open. Good afternoon. Thanks for taking my question. PK, could you please

Speaker Change: The right profile or.

Speaker Change: The mix of debt.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of George Staphos of Bank of America. Your line is open.

George Staphos: Your next question comes from the line of George Staphos of Bank of America. Your line is open.

George Staphos: Good afternoon, Thanks for taking my question.

George Staphos: Could you give us a bit more color in terms of some of the trends youre seeing in flexible and cheese in protein and some of the other.

George Staphos: Key markets and Relatedly.

George Staphos: Are you seeing your customers, perhaps pushing back some of their <unk>.

George Staphos: Sustainability targets, although one of the larger branded companies and what are the implications for you in terms of growth as well. Thank you.

George Staphos: Yes.

Peter Konieczny: Sure. So in flexibles, again, pretty significant improvement in volumes between Q2 and Q3. I did make a comment earlier, you know, in terms of the two main drivers here, market impact and de-stocking. We pretty much were flat in the third quarter, and the de-stocking sort of went to low single digits, and it pretty much was the healthcare impact of de-stocking that drove the volume decline versus prior year, and the balance of the portfolio is pretty much flat to slightly growing.

Speaker Change: Sure. So in flexible again pretty significant improvement in volumes between Q2, and Q3 I did make a comment earlier.

Speaker Change: In terms of the two main drivers here market impacts.

Speaker Change: We are pretty much.

We're flat in the third quarter, and the Destocking sort of wind to low single digits.

Speaker Change: And it pretty much is the healthcare impact of Destocking that that drove the volume decline versus prior year.

Speaker Change: And the balance of the portfolio is pretty much flat to slightly growing now.

Peter Konieczny: Now, in terms of the category performance against that, you would remember that we're driving a couple of priority categories here in the business where we believe we have really differentiated products and a good position in the market and where we like the market dynamics. And those would be healthcare and meat. You have heard us talk about that.

Speaker Change: In terms of in terms of category performance against that.

Speaker Change: You would.

Speaker Change: You would remember that we are driving a couple of priority categories here in the business, where we believe we have really differentiated products in a good position in the market and where we like the market dynamics.

Peter Konieczny: Protein breaks out in cheese and meat. Hot filled beverage obviously would be one pet food, premium coffee, and those are really the five focus categories that we drive. And we have seen, particularly in pet care, meat, and cheese, we have seen growth in the quarter, which we're pleased with. Now, I will say these are green shoots, and don't walk away from the call believing that this is like significant growth numbers. It would be in the low single digits, so we've got to stay bolted here.

Speaker Change: And those would be healthcare meet you have heard us talk to that protein protein breaks out in cheese and meat.

Speaker Change: Hot fill beverage, obviously would be one pet food a premium coffee and both of those are really the five.

Speaker Change: Focus categories that we drive.

Speaker Change: And we have seen particularly in petcare meat and cheese, we have seen that we've seen growth in the quarter, which which we are.

Speaker Change: Pleased with.

Speaker Change: Now I will say these are green shoots and don't walk away from the call. Believing that this was like significant growth numbers. These would be low single digits. So we got to stay bolted here.

Peter Konieczny: But we like what we see, and we'd love to see a little more. Maybe a little more color here on cheese, as you specifically asked. In North America and Europe, we would also be up on the basis of less de-stocking. Meat, also less de-stocking, you know some of the regional wins that that brings.

Speaker Change: But we like what we see and we'd love to see would love to see a little more.

Speaker Change: Maybe.

Speaker Change: Little more color here on Steves as you, particularly as the North America and Europe.

Speaker Change: We would be up also on the basis of less destocking.

Speaker Change: Meet.

Speaker Change: Also less destocking.

Speaker Change: No.

Speaker Change: Some some regional wins.

That we've seen.

Peter Konieczny: Yeah, sorry, sorry, sorry, sorry. I just want to take the other part of the question, which was just to check my notes here on the sustainability side and targets being pushed out and the effect on our business. Look, we follow the discussions closely. Actually, we are part of the conversations, and, of course, we have noticed that some industry participants have started to think about resetting their targets for sustainability. Initiatives, you know, at the end of the day, we're talking about essentially putting circularity in place a circular economy for, for, plastic, which will be the critical initiative to keep plastic waste out of the environment. That requires a lot of things that have to come together. We're going to have to work together. Nobody can do that alone.

Speaker Change: Yes.

Speaker Change: Yes, sorry, sorry, sorry, sorry, I just wanted to take the other part of the question.

Speaker Change: Which was just check my notes here on the sustainable on the sustainability side in targets being pushed out.

Speaker Change: And the effect on our business.

Speaker Change: Look.

Speaker Change: We followed the discussions closely actually were part of the compensations and of course, we noticed that some industry participants have started to think about.

Speaker Change: Resetting the targets for their sustainability.

Speaker Change: Initiatives.

Speaker Change: <unk>.

Speaker Change: At the end of the day, we're talking about essentially putting circularity and place a circular economy for it.

Speaker Change: Plastic.

Speaker Change: Which will which will be the.

Speaker Change: The critical initiatives to keep plastic waste out of the environment.

Speaker Change: That requires a lot of things that have to come together and we're going to have to work together nobody can do that alone.

Peter Konieczny: And I think the understanding in the industry right now is, after having worked very closely on the topic, that it may take a little more time to get to the targets that we set years ago. I mean, I don't know if you particularly think about Unilever, who's come out with pushing the targets backwards, but they were the first ones to come out and make a commitment. And that was sort of in 2017, if I remember correctly in my mind.

Speaker Change: I think the understanding in the industry right now is after having worked.

Very closely.

Speaker Change: On the topic.

Speaker Change: It may take a little more time to get to the targets that we've said years ago.

I don't know if you, particularly.

Think about Unilever, who has come out with with pushing the targets backwards.

Speaker Change: But they were the first ones to come out to make a commitment and that was sort of in 2017, if I have that correctly in my in my mind.

Peter Konieczny: And over the years, they have learned a lot. The industry has learned a lot. So I think it's a matter of additional realism to just simply accept what they're saying.

Speaker Change: Over the years they have learned a lot in the industry has learned a lot. So I think it's a matter of additional realism.

Speaker Change: To just simply.

Speaker Change: Two seven.

Speaker Change: <unk> performance they are saying now in terms of in terms of amcor and we have made a pledge in 2018, where the first packaging company out there to pledge that will make 100% of our packaging recyclable reusable or compostable by 2025.

Peter Konieczny: Now, in terms of Amcor, we made a pledge in 2018. We're the first packaging company out there to pledge that we'll make 100% of our packaging recyclable, reusable, or compostable by 2025. And we're pretty much around the corner. We do not have the need to push our targets out at this point in time. We're making really good progress because, at this point in time, roughly 90% of our packaging portfolio is made from recycled material. We have those alternatives available, and we're ready to sell them to customers when they want them.

Speaker Change: And we're pretty much around the corner.

Speaker Change: We do not have the needs to push our targets out at this point in time, we're making really good progress.

But because we have at this point in time, roughly 90% of our packaging portfolio and recycle ready structures.

Speaker Change: We have those alternatives available and we're ready to sell them to customers when they when they want them so everybody needs to do their piece.

Brook Campbell: So everybody needs to do their piece. We're holding on to our targets right now. We don't think that it means anything to us that others are pushing their targets out. We're very committed to our sustainability targets, like the industry, particularly our big customers, particularly Unilever. So we continue to drive that with full force. Your next question comes from the line of Brook Campbell of Barron Joy. Your line is open.

Speaker Change: We're holding onto our targets right now we don't think that it means anything to us that others are pushing their targets out.

We're very committed to our sustainability targets like the industry is particularly our big customers are particularly the Unilever is so we continue to drive that with full force.

Speaker Change: Your next question comes from the line of Brook Campbell of bearing Joey Your line is open.

Brook Campbell: Yeah. Good evening, thanks for taking my questions.

Brook Campbell: Yeah, good evening. Thanks for taking my question.

Brook Campbell: With respect to trajectory in the business at this financial year has been better than expected and the third quarter. You saw some some EPS growth versus back and said the expectation was for the third quarter to be down a bit at EPS.

Michael Casamento: Just with respect to the trajectory in the business, this financial year has been better than expected. For example, the third quarter you saw some EPS growth versus back in Feb; the expectation was for the third quarter to be down a bit on EPS. Despite this, you've kept your fourth quarter EPS growth at mid-single digit, which is unchanged. So my question really is, why wouldn't the better performance for the first three quarters continue into the fourth quarter? Any reasons why you're holding yourself back from upgrading that fourth quarter expectation would be great. Thanks.

Brook Campbell: Despite this you've kept your fourth quarter EPS growth mid single digits, which is which is unchanged. So my question really is why wouldn't the better performance.

Brook Campbell: Three quarters continue into the into the fourth quarter any any reasons, what's held you back from.

Brook Campbell: Adding that fourth quarter expectation will be great. Thanks.

Brook Campbell: Yes, Thanks broke its Michael I can take that one for you.

Michael Casamento: Yeah, thanks, Brook. It's Michael here.

Michael Casamento: I can take that one for you. So, yeah, look, we finished Q3 with EPS growth, which was really pleasing. And, you know, that was on the back of a couple of things. Slightly better volumes really coming out of that December period, you know, as PK touched on earlier. When we worked our way through January, you know, clearly, we saw an improved performance, and, you know, some of that was relating to some of the unwind out of December. But we weren't 100% sure how that might translate for the rest of the quarter.

Speaker Change: So yes look we finished Q3 with with EPS growth, which was really pleasing.

Michael Casamento: That was on the back of a couple of things slightly better volumes really coming out of that December period.

Speaker Change: He touched on earlier, when we look that way through January.

Speaker Change: Clearly, we saw an improved performance in and some of that was relating to some of the one out in December we went 100% sure on how that might translate for the rest of the quarter.

Michael Casamento: And, you know, what we saw in February was some more unwind clearly from December, which helped improve the performance in the March quarter and led to us being able to deliver EPS growth, which was really pleasing. So, you've seen us increase the four-year guidance. We've taken the four-year guidance to 68.571 cents, so an increase there.

Speaker Change: What we saw a fair bit was with some more online clearly from December, which which helped improve the performance.

Speaker Change: In the March quarter, and led to us being able to deliver EPS growth, which was really pleasing so you've seen us.

Speaker Change: <unk> increased the full year guidance.

Speaker Change: We've taken our full year guidance.

Speaker Change: The $68 $5 71, so an increase there.

That's really on the back of that improved performance in Q3, and Q4, we're still expecting sequential improvement both in volumes and profit.

Michael Casamento: You know, that's really on the back of that improved performance in Q3. In Q4, we're still expecting sequential improvement, both in volumes and profit. You know, and clearly, the drivers of that, you know, we're going to see that sequential improvement in volume really held back by the continued destocking in healthcare. That's really the key point that's holding the volumes back in Q4, as P.K. touched on.

Speaker Change: And clearly the drivers of that.

We're going to see that sequential improvement in volume really held back by the continued destocking in healthcare, that's really the key point that.

Speaker Change: Holding the volumes back in Q4 as PK touched on.

That in itself has some some unfavorable mix, which we which we've talked to in the past. So that will continue into Q4 start to abate and certainly down fiber mix from healthcare well online is as volume start to normalize into the future there.

Michael Casamento: That in itself has some unfavourable mix, which we've talked about in the past. So that will continue into Q4, although it will start to abate, and certainly the unfavourable mix will continue from health care will start to unwind as volumes start to normalize into the future there. But, you know, Q4 is still expecting good cost out, good leverage through the P&L from that cost initiative, as well as the structural piece adding through there.

Speaker Change: Q4 is still expecting.

Speaker Change: Good cost out.

Speaker Change: Good leverage through the P&L from that cost initiatives as well as the structural pace, adding through there and we're also expecting.

Michael Casamento: And, you know, we're also expecting the earnings trajectory to improve for that mid single digit. You know, we get benefits from Q4. The absorption in Q4, which is seasonally our biggest quarter as well.

Speaker Change: The earnings trajectory to improve to that mid single digit.

Speaker Change: We get benefits from the Q4.

Speaker Change: And the absorption in Q4, which is seasonally our biggest quarter as well so we feel pretty good about where the where the outlook is for Q4, we have confidence in.

Michael Casamento: So, you know, we feel pretty good about where the outlook is for Q4. We have confidence in delivering within that range. And, you know, what we've seen in the early parts of April confirmed the volume outlook, so we feel confident there. And, you know, we just felt that we didn't need to get ahead of ourselves at this point in time.

Speaker Change: In delivering within that range.

Speaker Change: We have seen in the early parts of <unk>.

Speaker Change: April confirm the volume outlook, so we feel confident there.

Speaker Change: And we just felt that we didn't want to get ahead of ourselves at this point in time clearly we've given you a range.

Keith Chau: You know, clearly, we've given you a range. You know, we've given the market a range. So, you know, that's a reasonable range for Q4. And, you know, if the volumes come in, you know, a little better than what we're expecting, then clearly, you know, that's one way that the outcome for the full year could get towards the upper end of the range along with cost and, you know, let's see where raw materials impact as well. So, you know, overall, I'd say we feel pretty good about where we landed in Q3 and, you know, what's ahead of us in Q4 to deliver a good year.

Speaker Change: We've given the marketing Ryan show.

Speaker Change: <unk> in Q4 and the volumes come in.

Speaker Change: A little better than what we're expecting then clearly that's one way that the <unk>.

Speaker Change: For the full year could get towards the upper end of the range along with cost and.

Speaker Change: Let's say labor raw materials impact as well so.

Speaker Change: Overall, I'd say, we feel pretty good about where we've landed in Q3 and whats ahead of us in Q4 to deliver a good year.

Speaker Change: Okay.

Your next question comes from the line of Keith Chau of MST. Your line is open.

Keith Chau: Your next question comes from the line of Keith Chau of MST. Your line is open.

Keith Chau: Good afternoon Pedro Michael.

Peter Konieczny: Good afternoon, Peter and Michael. Peter, a question just on the PPWR that was voted into the European Parliament earlier this month. Can you give us a sense of what Amcor is planning with respect to any changes to the regulation around plastics in the European Union? I know there are some impacts that are expected to be, you know, be, I guess, a headwind for the plastics industry in Europe by 2030. But I'd just be keen to hear your views on, you know, whether there is a headwind for the Amcor Flexibles business and if there are any mitigation strategies that are being put in place or, you know, whether Amcor is planning ahead to mitigate those headwinds. Thank you.

Keith Chau: Question, just around the <unk> that was about it.

Keith Chau: And to the European Parliament.

Keith Chau: This model can you give us a sense.

Keith Chau: Yes.

Keith Chau: Planning with respect to any changes to the regulation around plastics in the European Union.

Keith Chau: Some impacts that are expected to.

Keith Chau: Against.

Keith Chau: And for the plastics initially in Europe by 2030.

Keith Chau: The came to hear your views on.

Do you think there is a headwind in <unk> export business.

And if there are any mitigation strategies that are being put in place.

Keith Chau: With the ankles planning ahead to mitigate those headwinds thank you.

Peter Konieczny: You know, it's also a great question and obviously falls into our sustainability strategy. Look, I'll start out by saying that we're very supportive of regulatory and legislative developments that sort of drive the whole industry toward this circular economy for plastic. And as such, you know, the PPWR is actually welcomed by Amcor and from Amcor because I think we're making, we're creating an environment that allows us and the whole industry to make more progress in that direction. Again, everybody has a role to play.

Keith Chau: Yes.

Also a great question, and obviously falls into to our sustainability strategy.

I'll start out by saying that we're very supportive of regulatory and legislative developments.

Speaker Change: Sort of drive the whole industry to to this.

Speaker Change: Circular economy for plastics.

Speaker Change: And as such.

Speaker Change: <unk> is actually welcomed.

Speaker Change: From <unk> and from <unk>, because I think we're making we're creating an environment that allows us and the whole industry to make more progress.

Speaker Change: Into that direction.

Peter Konieczny: We're sitting in the value chain at pretty much the start. Our job is to come up with structures for plastic packaging that are recycling ready, that can be recycled. And I said a little earlier that we're making really good progress in hitting our targets by the end of 2025. So when customers want to have these structures, we're ready to provide them to the extent that we're not doing that already today.

Speaker Change: Again, everybody has.

Speaker Change: <unk> has a role to play we are sitting in the in the value chain.

Speaker Change: Pretty much the start to our job is to come up with structures for plastic packaging that are recycled ready that can be recycled and I said, a little earlier that we're making really good progress in hitting our targets by the end of 2025. So when customers want to have these these structures were ready to provide them.

Speaker Change: To the extent, we're not doing that already today right. So so these many of the recycle rate structures are commercial.

Peter Konieczny: So, these, many of the recycled ready structures are commercial, and by creating a regulatory environment, everybody gets a level set, and we can work with certainty in certain directions in order to support the business and help the very efficient and high-performing packaging substrate find its place also in the context of sustainability. I mean, there is a place for plastic here, and we've got to remind ourselves why we have so much plastic packaging. It's because it's a very efficient and high-performing material. The challenge is the end of life. The circular economy addresses that, and regulation that gets us into that direction is what

Speaker Change: And by creating a regulatory environment.

Speaker Change: Everybody it gets level set.

Speaker Change: And we can we can work with certainty in certain directions.

Speaker Change: In order to support the business and help the very efficient and high performing packaging substrates.

Speaker Change: Find its place.

<unk> also in the context of sustainability.

Speaker Change: I mean, there is a place for plastic here and we got to remind ourselves why we have so much plastic packaging because it is a very efficient and high performing subscript. The challenges end of life the circular economy addresses that.

And regulation that gets us into that direction is welcomed.

Cameron Mcdonald: Your next question comes from the line of Cameron Mcdonald of A&P. Your line is open.

Cameron Mcdonald: Your next question comes from the line of Cameron McDonald of A&P. Your line is open.

Good morning.

Michael Casamento: Oh, good morning. Question for Michael, if I can, just going back to the interest rate guidance. Can you remind us of what your hedging profile actually looks like? You know, obviously last year you had some significant interest rate exposure. And my understanding is that that was mainly due to hedging and exposure to floating rates. So, as interest rate expectations have been rather volatile in the last month or so, how do we think about your hedging profile and the exposure to that changing interest rate environment into FY25, please?

Cameron Mcdonald: Question from Rockwell, but can you just kind of I think interest right.

Cameron Mcdonald: Can you remind us of what your hedging.

Cameron Mcdonald: Profile actually looks like.

Cameron Mcdonald: Yes.

Cameron Mcdonald: Let me see lost G. You had some significant interest rate exposure and my understanding you said that was mainly due to hedging and the exposure to floating rates.

Cameron Mcdonald: Interest rate expectations and.

Cameron Mcdonald: Rob are volatile in the last month or so how do we think about your hedging profile on that.

Cameron Mcdonald: And the expiry date to that changing interest rate environment into FY 'twenty five plus.

Speaker Change: Yes, sure I think look the first question Scott.

Michael Casamento: Yeah, sure. I think, look, the first place we should start is, you know, the...

Speaker Change: The.

Michael Casamento: The debt profile today is about 70% fixed, 30% floating. With that, we have no maturities coming off the balance sheet now until the middle of 2025. So, from that respect, you know, we've got a bit of flexibility in how we can manage the debt book and the interest exposure. As you look forward, you know, we haven't provided any guidance for FY25, but clearly, we've given you some guidance for 24.

Speaker Change: The debt profile today is about 70% fixed 30% flooding.

Speaker Change: With that we have no maturities coming off.

Speaker Change: Now until till the middle of 2025, so from that respect.

Speaker Change: We've got a bit of flexibility in how we can manage the debt book and the interest exposure.

Speaker Change: As you look forward.

Speaker Change: We haven't provided any guidance for FY 'twenty five but clearly we've given you some guidance for 'twenty four if you look at all our debt profile and then you look at some of the forward curves over the next 12 months or so.

Michael Casamento: If you look at our debt profile, and then you look at some of the forward curves over the next 12 months or so, you know, we're not expecting a material movement in our interest expense, just based on the... you know, the debt profile we have and the maturities that we've got coming. So we've got some flexibility to work through how we manage their book and that currency uh exposure as well, so you know when you put all that together, we don't see any material change or impact on the interest expense as we look forward.

Speaker Change: We're not expecting a material movement in our interest expense just based on.

Speaker Change: The debt profile, we have in <unk>.

Speaker Change: The maturities that we've got coming said, we've got some flexibility to work through how we manage.

Speaker Change: Is that that debt book and that currency.

Exposure as well.

Speaker Change: When you put all that together, we don't see any material change or impact on the interest expense as we look forward into 'twenty five that will provide you further guidance on that.

Michael Casamento: But we'll provide you further guidance on that in August when we provide the full year guidance for FY25 at that time. Your next question comes from the line of Anthony Longo of J.P. Morgan. Your line is open. Good evening, Pete, good evening Michael. Just a quick one on de-stalking your spoken language.

Speaker Change: In August when we provided full year guidance for FY 'twenty five at that time.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Anthony <unk> of Jpmorgan. Your line is open.

Anthony Longo: Your next question comes from the line of Anthony Longo of J.P. Morgan. Your line is open.

Speaker Change: Yes.

Good evening good evening, Michael just a quick one on de stocking was talking about let's say a bit already but how do you ultimately thinking about the rates booking cycle and a lot of.

Anthony: That said some of the early positive customer discussions that you have had to date in and ultimately what does that inform the topline growth expectations from here I appreciate that my guidance, but just how youre thinking about that and philosophies around your customers inventory management fit from here as well.

Anthony: Hello.

Peter Konieczny: Look, I'll start, and then maybe Michael wants to build on it. You know, the way that we look at this is, you know, the de-stocking that we're seeing currently is really a correction by the industry of holding too much inventory after a pretty volatile environment, which was driven partly by supply chain shocks that we've seen in the industry, sort of, you know, de-risking and protecting their top line by building inventory, and then there are other reasons.

Speaker Change: I'll start and then maybe Michael wants to build on it.

Speaker Change: The way that we look at this is.

Speaker Change: The Destocking that we're seeing currently is really a correction of the industry of holding too much inventory after after a pretty volatile environment.

Speaker Change: Which was which was driven by <unk>.

Speaker Change: The supply chain shocks that we've seen in the industry sort of.

Speaker Change: Derisking and protecting their top line.

Speaker Change: By building inventory.

There are other reasons, but anyway, what we're seeing right now is that.

Peter Konieczny: But anyway, what we're seeing right now is that the industry is normalizing across the categories. We see healthcare a little bit delayed because that's a very conservative industry, and they've probably built more because of the dynamics over the last couple of years, and now they're starting to be confident again in the environment so that they can also reduce their inventory levels again to a normal level. Now the new normal is probably different from what it was before; holding costs of inventories because of interest rates drive that down further.

Speaker Change: The industry is normalizing.

Speaker Change: Cross the categories, we see health care, a little bit delayed because that's a very conservative industry and they probably built more because of the dynamics.

Speaker Change: The last couple of years and now they are they are they have they are.

Speaker Change: Starting to be confident again in the environment.

Speaker Change: So that they can also.

Speaker Change: Reduced their inventory levels again through to a normal level now the new normal is probably different from what it was before.

Holding holding cost of inventories because of interest rates.

Speaker Change: Drive drive that down further.

Peter Konieczny: You know, the industry is looking at new efficiency levels in terms of running inventories, and that's what we're going through right now. Going forward. And, you know, we will see changes in inventory, but those will be tactical, or they will go along with the seasonality of the business. So I would not think about it as there is a trend to restocking. The industry is coming down to a new normal, and everything that we see from there is going to be tactical or following the seasonality of the different businesses.

Speaker Change: The industry is looking at new efficiency levels in terms of running inventories.

Speaker Change: And that's what we're going through right now going forward.

Speaker Change: We will see we will see changes in inventory.

Speaker Change: But those will be tactical or they will go along with the seasonality of the business. So so I wouldn't I would not think about it as there was a trend to.

Speaker Change: Restocking.

Speaker Change: The industry is coming down to a new normal and everything that we see from there is going to be tactical or following the seasonality of the different businesses. So that's how we think about it and therefore once we have this extra ordinary impacts behind us.

Peter Konieczny: So that's how I think about it, and therefore, you know, once we have this extraordinary impact behind us, and we will see, you know, with our category and customer exposure, and then, hopefully, going forward, also renewed and stronger consumer interest and demand, we will see top line growth.

Speaker Change: We will see.

Speaker Change: With our category and customer exposure and then also.

Speaker Change: Hopefully going forward also.

Speaker Change: Renewed and stronger consumer.

Speaker Change: Yeah.

Speaker Change: And demands we will we will see top line growth.

Operator: Operator, we have time for one more question, please. Thank you. Your last question comes from the line of Andrew Scott of Morgan Stanley. Your line is open. Michael, just a question for you, 40-odd million...

Operator, we have time for one more question. Please.

Speaker Change: Thank you.

Andrew Scott: Thank you. Your last question comes from the line of Andrew Scott of Morgan Stanley. Your line is open.

Speaker Change: Your last question comes from the line of Andrew Scott of Morgan Stanley. Your line is open.

Thank you Mark just a question for you.

Andrew Scott: 40 odd million dollars.

Andrew Scott: Below the line items, there I'd say the restructuring.

Andrew Scott: Charges.

Andrew Scott: Two last quarter can you talk to us just to think cash versus noncash there and when do we get line of sight maybe.

Andrew Scott: May be sitting in these below the line items.

Michael Casamento: Look, Andrew, the main items in the quarter are really around the restructuring program which we've had in place for the last 12 months or so. That program is pretty much two-thirds of the way through, and we've now started to see the benefits come through from that program. You might remember we committed to invest around $170 million in cash.

Speaker Change: Look Andrew the main items in the quarter are really around the restructuring program, which which we've had in there for the last 12 months or so.

Speaker Change: That program is pretty much two thirds of the way through and we've now started to see the benefits come through from that program.

Speaker Change: You might remember.

Speaker Change: We committed to invest around $170 million in cash.

Michael Casamento: We've spent on that program to date about $110 million, so we've still got $50 to $60 million to go. But we are starting to see the benefits come through from that, so we're pretty pleased about the progress. And really, by the end of the calendar year, we'd expect to be most of the way through that program. So that's how we see it from there. And as I said, we're pleased that we're now getting the benefits. $15 million in the quarter came through, and we'll expect to build on that in quarter four and then into 25. So I'm pretty pleased with where the program's at, and it's on track.

Speaker Change: We've spent on that program to date about $110 million. So.

Speaker Change: We've still got $50 million to $60 million to go.

Speaker Change: But we are starting to stay in the benefits come through from that so we're pretty pleased about the progress and really by the end of the calendar year, we would expect to be most of the way through that program. So.

Speaker Change: That's the way we see it from from there and as I said, where we're pleased that we've now getting the benefits of $58 million in the quarter came through.

Speaker Change: We will expect to build on that in quarter, four and then into 'twenty five so pretty pleased with the way the programs at and it's on track.

Ladies and gentlemen, this concludes our question and answer session I will now turn the call back to management for closing remarks.

Operator: Ladies and gentlemen, this concludes our question and answer session. I will now turn the call back to management for closing remarks.

Peter Konieczny: Yeah, thank you, operator. Look, thank you everybody for your interest in the company. You know, the only thing that I want to say here before we close the call is we're pretty pleased with the way Q3 turned out for us. I hope we were able to demonstrate that, you know, this was based on a broad-based volume improvement that we've seen in the business. Combined with really some good cost performance in the 3rd quarter, that also has impacted our margin performance.

Speaker Change: Yes. Thank you operator, thank you everybody for the interest in the company.

Speaker Change: The thing that I want to say here before we close the call is we're pretty pleased with the Whitehall Q3 turned out for us.

I hope.

Speaker Change: We were able to demonstrate that we this was based on a broad based volume improvements that we've seen in the business.

Peter Konieczny: And more importantly, we believe that we have some underlying momentum here that will carry into Q4. So, we're very pleased with the situation we're in. We're going to take advantage of the momentum. And with that, we're going to close the call, and we'll talk to each other again in the fiscal year. Thank you very much.

Bind with really some some good cost performance in the third quarter.

Speaker Change: Also has impacted our margin performance and more importantly, we believe that we have some underlying momentum here in order to.

Speaker Change: That will carry into Q4, so we're very pleased with the situation. We're in we're going to we're going to.

Speaker Change: To take advantage of the momentum.

Speaker Change: With that we're going to close the call and we're going to talk to each other again at the end of the fiscal year. Thank you very much.

Operator: This concludes today's conference call. You may now disconnect.

Speaker Change: This concludes today's conference call you may now disconnect.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.