Ardagh Metal Packaging(US:AMBP)2022-07-31 15:58Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $1.3 billion, reflecting a 38% increase on a constant currency basis, primarily due to the pass-through of increased input costs [10] - Adjusted EBITDA was $181 million, which is 10% higher than the previous year on a constant currency basis [10] - Adjusted EBITDA minus maintenance capital expenditure was $152 million for the quarter, representing 84% of adjusted EBITDA, indicating strong underlying cash generation [21] Business Line Data and Key Metrics Changes - Total beverage can shipments increased by 8% compared to the prior year, driven by new investments and ramp-up of recently installed capacity in North America and Europe [11] - Specialty cans accounted for 48% of shipments, up from 46% in the prior year, with a specialty mix of 62% in Q2 [11] - In the Americas, revenue increased by 46% to $770 million, with shipments up by 11% [12] - In Europe, revenue increased by 28% to $533 million, with shipments growing by 5% [15] Market Data and Key Metrics Changes - North America saw mid-single-digit percentage growth in shipments, with some recent softness in demand attributed to significant price increases and declines in the hard seltzer category [13] - Brazil experienced strong double-digit percentage growth in shipments, significantly outperforming the market [14] - European market faced challenges with softer alcoholic beverage demand and export market weakness due to elevated ocean freight costs [15][16] Company Strategy and Development Direction - The company remains focused on customer-led expansion plans, with flexibility to adjust to changes in demand patterns [6] - AMP is committed to sustainability, as evidenced by the publication of its first green bond allocation report [8] - The company plans to phase in capacity additions based on demand, ensuring that investments align with market needs [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth of the beverage can industry, despite near-term macroeconomic challenges [6] - The company anticipates global shipment growth for 2022 to be in the high single-digit percentage range [25] - Management noted that the beverage can industry has historically proven resilient through economic cycles [6][23] Other Important Information - The company raised $600 million in senior secured green notes and ended the quarter with strong liquidity of $761 million [20] - A dividend of $0.10 was declared and paid for Q2, and a share buyback program was launched with authorization to repurchase up to $200 million of ordinary shares [21][22] Q&A Session Summary Question: Revised growth outlook and factors contributing to it - Management indicated that the revised growth outlook is due to declines in hard seltzers in North America and lower promotional activity in core categories [28] Question: Details on rephasing of capital projects - Management clarified that no projects are being canceled, but the timing of capacity ramp-up will be adjusted based on demand [32] Question: Granularity on factors contributing to the growth outlook change - Management provided a 60-40 split in the contribution to the outlook change between North America and Europe, with the majority attributed to the hard seltzer market [35] Question: Consumer behavior shifts due to inflation - Management noted a temporary shift back to returnable glass bottles in Brazil due to economic conditions, but recent trends indicate stabilization [45] Question: Recovery of energy headwind in 2023 - Management expects a material step-up in profitability for Europe in 2023 due to constructive conversations with customers regarding input cost inflation [51]