Ardagh Metal Packaging S.A. Ordinary Shares

Welcome to the ARDA Metal Packaging First Quarter 2026 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Steven Lyons. Please go ahead, sir.

Thank you, operator, and welcome, everybody. Thank you for joining today for ARDA Metal Packaging's First Quarter 2020 Slapers and Earnings Call, which follows the earlier publication of AMP's earning release for the first quarter. I'm joined today by Oliver Graham, AMP's Chief Executive Officer, and Stefan Schellinger, AMP's Chief Financial Officer. Before moving to your questions, we will first provide some introductory remarks around AMP's performance and outlook. AMP's earnings release and related materials for the first quarter can be found on AMP's website at ardanmentalpackaging.com slash investors. Remarks today will include certain forward-looking statements and include use of non-IFRS financial measures. Actual results could vary materially from such statements. Please review the details of AMP's forward-looking statements disclaimer and reconciliation of non-IFRS financial measures to IFRS financial measures in AMP's earnings release. I will now turn the call over to Oliver Graham.

Thanks, Stephen. We're pleased to report strong first quarter results for AMP with adjusted EBITDA growth of 15% versus the prior year, significantly ahead of our guidance and demonstrating the resilience of our business. Beverage can sales declined by 1% versus the prior year quarter in line with our expectations as we cycled strong prior year growth of 6% and due to the impact of contract resets in North America. Our adjusted EBITDA outperformance in the quarter was driven by Europe, which benefited from strong input cost recovery, including a favorable timing impact from the revaluation of freight cost-related hedging, as well as favorable volume mix effects. Performance in the Americas was broadly in line with expectations. Brazil delivered strong results driven by above-market volume growth, which was offset by the impact of a more challenging operating environment in North America, where adverse weather conditions and aluminum supply chain disruptions drove higher operational costs. While this supply chain situation is improving, we do expect to see further impact into Q2. The conflict in the Middle East did not have any material impact on our Q1 performance. AMP has no manufacturing operations in the Middle East and no significant direct supply chain exposure. We continue to monitor the geopolitical environment and the associated volatility and input costs, in particular, energy, freight, and certain direct materials. AMP's exposure to the recent increase in energy prices is small, given our hedge positions for 2026 and beyond. However, we do anticipate some moderate input cost increases in the second half, as a result of the impact of the Middle East conflict on certain direct materials. Now looking at AMP's quarter one results by second. In Europe, first quarter revenue increased by 18% to $625 million, or by 6% on a constant currency basis, compared with the same period in 2025. This was due to favorable volume mix effects, including the impact of the RFRS 15 contract asset and the pass-through of higher input costs, including higher aluminum prices. Shipments declined by 1% for the quarter, which reflected the ramp-up of new contracts and the cycling of a strong prior year comparable of 5%. We experienced good growth in carbonated soft drinks in the energy category and across our diverse range of smaller growing categories. Through this strong underlying growth in non-alcoholic categories, as well as our commercial actions and network enhancements, our portfolio saw a favorable mix shift in the period and good growth in specialty can volumes. First quarter adjusted EBITDA in Europe increased by 53% versus the prior year to $75 million, strongly ahead of expectations. On a constant currency basis, adjusted EBITDA increased by 36%, principally due to higher input cost recovery and favorable volume mix, including the impact of the IFRS 15 contract asset, partly offset by higher operational and overhead costs. Our input cost recovery in the quarter benefited from a favorable timing impact from the revaluation of freight cost related hedging. Regarding our direct energy exposure, AMP is well covered for its energy needs in 2026 and beyond. For 2026, we're over 85% covered for our energy requirements, for 2027 over 75%, and we're more than 60% covered for 2028. In 2026, in terms of volume growth, we reaffirmed our expectation of around 3% in Europe. Capacity remains tight in the region, and we are therefore optimizing our network to better serve higher demand can sizes in faster growing categories. In our last update, we highlighted our intention to add additional capacity within existing facilities in the attractive markets of Spain and the UK on a measured basis over the coming years. We continue to progress these plans, which are underpinned by our favorable market positions and our confidence in Europe's growth outlook. In the first two months of the year, beverage packaging scanner data across our markets continue to show share gains for the beverage can versus other packaging substrates. In the Americas, revenue in the first quarter increased by 19% to $879 million, principally reflecting the pass-through of higher input costs to customers, including the impact of the higher Midwest premium and favorable volume mix effects. America's adjusted EBITDA for the quarter was broadly in line with expectations, with a 2% decrease versus the prior year to $104 million, primarily driven by higher operations and overhead costs and lower input cost recovery, partly offset by favorable volume mix effects. A strong performance in Brazil, driven by 14% shipments growth and increased fixed cost absorption, was offset by a more challenging operating environment in North America. In North America, shipments decreased by 5% for the quarter. This reflected low volumes after expected contract resets, the impact on operations from supply chain challenges, and the cycling of a strong prior year comparable of 8%. Supply chain challenges in the period included the impact of disruptions to metal supply and adverse weather at the beginning of the year. Underlying demand dynamics in the industry remain robust. with strong industry scanner data year to date, with the exception of the beer category, to which AMP has only a low single-digit exposure. In particular, the energy category continues to record strong growth, supported by broader distribution and further innovation. AMP continued to enjoy good growth in the energy category in the quarter, reflecting our broad positioning across the category. Looking into 2026, we continue to expect industry growth of a low single-digit percent. As previously indicated, we expect some softness for AMP following contract resets. We anticipate 2026 being a transition year with a small volume decline and with a more favorable second half volume versus the first half. We expect to return to growth in 2027, at least in line with the industry, on the back of additional contracted filling locations and our attractive portfolio. Of note in North America was that on April 6, 2026, a court entered a jury verdict pending any post-trial motions in connection with a lawsuit filed against Boston Beer in 2022 for breach of contract in respect of minimum volume purchase requirements. And the jury awarded damages of approximately $175 million to AMP, plus prejudgment interest, if assessed. In Brazil, first quarter beverage shipments increased by 14%, which represented a strong improvement versus the fourth quarter, and was also ahead of the industry due to our customer mix. Industry data indicates that following a strong start to the year in January and February, March activity was softer and resulted in an overall modest decline in volumes in the first quarter. Looking into the remainder of 2026, we continue to expect industry growth of a low to mid-single-digit percentage and for AMP's volumes to broadly track the market. I'll hand over now to Stefan to talk you through our financial position for the quarter before finishing with some concluding remarks.