Prepared remarks
Good day, and welcome to the Ardagh Metal Packaging Q2 2026 Investor Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Stephen Lyons. Please go ahead.
Thank you, operator. Welcome, everybody. Thank you for joining us today for Ardagh Metal Packaging's second quarter 2026 earnings call, which follows the earlier publication of AMP's earnings release for the second quarter. I am 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 second quarter can be found on AMP's website at ir.ardaghmetalpackaging.com. Remarks today will include certain forward-looking statements and include the 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. So before taking you through our quarterly results, I want to recognize that at the beginning of this month, we celebrated AMP's 10-year anniversary — a significant milestone in the history of the company. AMP was formed from three separate regional businesses, and over a 10-year journey we have developed them into one strong, integrated global business. We have also transformed the company over this time, investing well over $2 billion of growth capital, transforming our network. Our capacity is more than 30% higher, supporting our customers' growth with specialty cans now representing over 50% of our volumes. Our business mix is strongly diversified across both global and regional customers, and across a variety of new and growing categories. We have invested in our people and our processes, enhancing the capabilities and resilience of our business. Adjusted EBITDA this year is expected to have approximately doubled compared to our starting position. This has been a great achievement and I would like to extend my sincere thanks to our employees, our customers, suppliers, and to all stakeholders who have made this journey possible. AMP is in a strong position and we look forward to continued success ahead. Our performance year-to-date is a testament to the resilience of our business. In an uncertain macroeconomic environment, AMP has delivered strong second quarter adjusted EBITDA growth of 14% versus the prior year, significantly ahead of expectations. Beverage can sales declined by 1% versus the prior year quarter as we cycled strong prior year growth of 5%. Shipments were impacted by contract resets in North America and lower shipments in Brazil, partly offset by strong volume growth in Europe following relative outperformance in the first quarter. Overall volumes are in line with our expectations, and we expect to return to modest global volume growth in the second half, supported by the strength in global beverage can demand, our attractive customer portfolio, and our high exposure to fast-growing beverage categories. Our adjusted EBITDA outperformance in the quarter was primarily driven by Europe, which benefited from favorable input cost recovery and strong volume growth. Americas performance was broadly in line with expectations despite softness in Brazil and metal supply constraints impacting operations in North America at the beginning of the quarter. Metal supply availability in North America significantly improved over the course of the quarter, and we anticipate operating under normal supply conditions during the second half of the year. Now looking at Q2 results by segment. In Europe, Q2 revenue increased by 13% to $698 million, or by 10% on a constant currency basis, compared with the same period in 2025. This was due to favorable volume mix effects and the pass-through of higher input costs, including higher aluminum prices. Shipments increased by 5% for the quarter, which reflected strong underlying demand as well as the ramp-up of newly contracted volumes. We experienced good growth in carbonated soft drinks and in the energy category, as well as across our diverse range of smaller growing categories. We also saw an improvement in underlying beer performance in the quarter, with our reduction in reported year-over-year beer can shipments reflecting specific contract losses, while underlying performance demonstrated greater stability. Second quarter adjusted EBITDA in Europe increased by 36% versus the prior year to $105 million, strongly ahead of expectations. On a constant currency basis, adjusted EBITDA increased by 33%, primarily due to stronger input cost recovery including a favorable metal pricing timing impact and volume growth, partly offset by higher operations and overhead costs. Regarding our direct energy exposure, AMP is well covered for its energy needs in 2026 and beyond through its energy hedging program. For 2026, we are over 85% covered for energy requirements. For 2027, we have approximately 80% covered, and we are nearly 70% covered for 2028. For 2026, we reaffirm our expectation for volume growth of around 3% in Europe. We do not yet have full beverage packaging industry scanner data for the second quarter, but from the available data, we see very positive overall beverage can consumption trends. Capacity remains tight in the region, and our production volumes in the quarter benefited from the network optimization actions we undertook to allow us to better serve our customers with higher-demand can sizes in some growing categories. We also previously outlined our intention to invest in the growing markets of the UK and Spain. We are pleased to announce we are taking the decision to upsize these projects following constructive commercial engagement with our customers. This will lead to higher CapEx of $40 million in 2026 compared to our previous guidance and allow us to capitalize on strong industry demand. We are also reviewing the timing of these projects given the strength of demand; we will update on this topic in due course. In the Americas, revenue in the second quarter increased by 21% to just above $1 billion, principally reflecting the pass-through of higher input costs to customers, including the impact of higher metal costs and freight cost pass-throughs, partly offset by lower shipments. Americas adjusted EBITDA for the quarter was broadly in line with expectations with a 2% increase versus the prior year to $135 million, resulting from lower operations and overhead costs compared to the prior year quarter, partly offset by lower input cost recovery and lower shipments. In North America, shipments decreased by 5% for the quarter. This was in line with our expectations and reflected lower volumes after expected contract resets, the impact on operations from metal supply chain challenges at the beginning of the quarter, and the cycling of a strong prior year comparable of 8%. Underlying demand dynamics in the industry remain robust, with strong industry scanner data year-to-date apart from the beer category, to which AMP has only a low single-digit exposure. In particular, the energy category continues to show strong growth supported by broader distribution and successful innovation. We also continue to experience ongoing strong demand for specialty can formats, with further gains year-to-date in our overall specialty mix. We retain our expectation for industry growth in North America in 2026 of a low single-digit percentage. As previously indicated, we anticipate 2026 being a transition year for AMP with a small full-year volume decline following some contract resets, but with a more favorable second half volume performance expected versus the first half. We also expect to return to growth in 2027, at least in line with the industry, on the back of having secured additional customer filling locations. In relation to the lawsuit filed against Boston Beer in 2022 for breach of contract in respect to minimum volume purchase requirements: on May 26, 2026, the court amended the final judgment to include $15.5 million in prejudgment interest, taking the total expected award value to approximately $190 million on a pre-tax basis. Subsequently, Boston Beer posted a bond with the court to cover the award value and has also filed notice of appeal. In Brazil, second quarter beverage can shipments decreased by 15%, reflecting customer mix effects following strong relative outperformance in the first quarter when AMP volumes grew by 14%. In the quarter, we observed increased World Cup–related activity in the market from the leading player, which negatively impacted our customers' performance, as did some downtime taken by one of our customers for maintenance activity. Our overall performance for the first half is broadly in line with industry performance. Industry data indicates that demand remains soft through the second quarter. The industry outlook for the third quarter is also looking soft. As we look to the remainder of 2026, we now expect an industry growth rate of a low single-digit percentage and for AMP's volumes to broadly track the market. I will hand over now to Stefan to talk you through our financial position for the quarter before finishing with some concluding remarks.
Thanks, Ollie, and good morning, good afternoon, everyone. We ended the quarter with a robust liquidity position of $647 million. Net leverage was 5.2x (net debt divided by the last 12 months adjusted EBITDA), reflecting AMP's strong adjusted EBITDA growth. This compares with 5.3x at the end of June 2025, or 5.7x on a like-for-like basis if you pro forma for last year's Q4 refinancing where AMP's preference shares were treated as debt. In terms of guidance on the various free cash flow components for full-year 2026, we approximately expect the following: total CapEx of $240 million including gross investment, an increase of $40 million compared to our prior guidance driven by the previously mentioned upsizing of our investments in new capacity in Spain and the UK; cash interest of $220 million; lease principal repayments of approximately $215 million; cash tax of approximately $30 million; and a small outflow in working capital. Overall, our expectation regarding our full-year adjusted free cash flow generation remains unchanged. Finally, today, we have announced our unchanged quarterly ordinary dividend of $0.10 per share. And with that, I will hand it back to Ollie.
Thanks, Stefan. And before moving to take questions, I will just recap on AMP's performance and key messages. Adjusted EBITDA of $240 million in the second quarter exceeded our guidance range of $210 million to $220 million, primarily driven by strong performance in Europe with Americas performance broadly in line with expectations. Global volumes declined by 1% in line with expectations, and we expect to return to modest global volume growth in the second half. Reflecting on our strong first half performance and confidence in our outlook for the remainder of the year, we are upgrading our guidance for 2026 full-year adjusted EBITDA to be between $775 million and $790 million. Our guidance assumes some reversal of the favorable metal price timing effect and the Q1 revaluation gains related to freight cost hedging. In addition, the business faces some inflationary headwinds related to freight costs and other direct materials impacted by the oil price, as a result of the conflict in the Middle East. In terms of guidance for the third quarter, adjusted EBITDA is expected to be in the range of $200 million to $210 million versus the prior year quarter of $208 million on a constant currency basis. So having made these opening remarks, we will now proceed to take any questions.
Questions and answers
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Hey, Stephen and Ollie. Good morning. Thank you for the time. North America was down 5% in Q2. Did you see any benefit from the World Cup there? If so, how much? Or was it more of a non-event given tight metal supply earlier in the quarter? And maybe I'm getting ahead of myself, but looking out to 2027, you said you reiterated at least market growth. But given that you cycled supplier constraints in the first half and contract resets, how much above-market growth do you think would be possible in 2027?
Hi, Matthew. On the first question, I think it is fair to say we did not see a particular effect from the World Cup. Obviously, beverage can manufacturers have different customers, different mixes, different filling locations, and different bottlers. We probably all experienced it differently, but we did not see anything particular in our numbers. It may be fair also to call out that we were still a little bit constrained at the start of the quarter on metal, though that normalized pretty rapidly through the quarter. So we did not see anything particular attributable to the World Cup. We are obviously not in mass beer, and there may have been more promotional activity in the beer category that other players saw. On 2027, we obviously had above-industry growth rates for most of the last few years, and this year is a bit of a transition. We are not calling 2027 today, but we do see that we have some gains from the same contract resets that impacted us this year negatively. We have some positive gains next year in terms of a couple of additional filling locations, and we still like the look of our portfolio with its weighting towards soft drinks and energy categories, which are outperforming overall industry averages because of weakness in mass beer. So we are not calling an exact outperformance, but we certainly feel good about saying that we should grow at least in line with the industry next year.
Excellent. Thanks, Ollie. And you described continued inflation pressures. Compared to when we saw it earlier in the year, certain indicators have come down, but since July some have picked up again. How does the second-half inflation compare to what you previously anticipated? And if there are any changes, what specifically were the drivers of that? Thanks again for taking the questions.
Sure. I guess we can think about inflation a couple of different ways. One is inflation in our input costs, which is linked to the Middle East situation and mainly in direct materials and freight, as we called out in the remarks. That has not really changed very much from our guidance back in Q1. We are talking mid single-digit percent in those areas — a few million dollars actually in those areas — so that is reasonably stable. Obviously, the geopolitical situation is not stabilizing, but we look forward with some confidence in terms of the resilience of our supply chain, so we think that is a reasonably safe number for the second half. Then, in terms of inflationary pressures for the consumer, that is clearly worsening again, and there is reason for some appropriate caution in the second half on volumes. Again, we think that is embedded in our guidance, and we still think we should return to some volume growth in North America in the second half.
Our next question comes from Joshua Spector with UBS.
Hi, good morning. In your prepared remarks, you talked about some timing benefits within Europe helping margins. Are you able to size that at all?
Sure. So if you look at the beat overall for the company — around $25 million versus the midpoint of consensus, and a bit more than that in Europe — we think a little bit over half of that is linked to metal timing. Then we think about a third of that reverses in the second half. So, up to $25 million, a little over half being the positive timing effect in Europe, and about a third of that reverses on the metal side in the second half.
Reversing as if it's going to be a negative impact year-over-year, or just lacking the benefit?
Yes, negative — it is a headwind in the second half. So I called out freight and other input inflation — mid single-digit headwind in the second half — then there is the metal timing mid single-digit headwind. We also have a little bit of an FX headwind. That underlies the guide being a little bit less positive for the second half after a strong first half.
Okay, that's helpful. One follow-up on the Americas volume side: thinking about the resets this year and the gains next year, when you look at your circuit for next year in North America, is there any slack left on a year-over-year basis? Do you regain everything, or is there something where you would say you still need to grow into it? Or is it a very tight circuit at this point later next year?
On certain can sizes there is definitely still capacity to grow into given the investments we made over the last five years. It is certainly getting pretty tight on specialty sizes — sleek and some seasonals are pretty tight. We do see that, but we also have some projects to do, some incremental speed-ups and things. So we see room to grow over the next few years in North America still.
We will go next to Arun Viswanathan with RBC Capital Markets.
Great, thanks for taking my question. I wanted to drill down into the European volumes. You've seen continued strength there and you're making more investments. Do you expect this kind of mid single-digit growth to persist? And how would you rate the profitability there versus some of your other regions? Do you think there are opportunities for improved returns and margins in Europe as you move forward, aside from metal pass-through effects? Curious about the overall returns profile. Thanks.
We feel very good about the market overall. We have positive data coming through on can volumes across geographies. We see some temporary effects when deposit schemes are introduced — for example, Poland this year and The Netherlands a couple of years ago — but overall there seems to be strong momentum behind the can versus other substrates that are grappling with either input cost inflation or sustainability concerns. We see a lot more innovation going into the can, and innovation is happening earlier in the launch cycle. Customers are often launching simultaneously in can and other substrates. Across European markets, there are still very low penetration rates of cans in some categories and geographies where we are typically strong. So the European growth story looks very positive for years to come, which underpins some of the investments we are making, and our peers are also making to meet that demand. That is why we announced the upsizing on the UK and Spain investments. In terms of profitability, Europe has traditionally been a very strong profit region for us. It suffered a bit coming through Russia, Ukraine, and the energy crisis, but we are on some recovery, and we do see better margin performance this year. You should be careful looking at percentage margins given the impact of aluminum price on revenue, but at an EBITDA-per-thousand level we see improved performance. We think we can drive improved performance in Europe through ongoing focus on cost and various programs we're pursuing. The market tightness should also be positive, so we would hope for some improvements in returns and margins in Europe.
As a follow-up on the Americas: North America may maintain low single-digit growth, but South America tends to be more volatile. With the World Cup in the rearview mirror, do you expect that region to settle into a low single-digit growth trajectory, or could it be slightly lower with a negative offset coming from South America? How should we think about normalized growth rates in the Americas business?
There is no question Brazil has become more volatile post-COVID. A number of effects are at play. The economy overall and the consumer suffered more than in developed markets, and we see a longer recovery trajectory. In that backdrop, you get more competitiveness among customers chasing lower-spend dollars, and we also see increased competitive activity from brewers — an additional brewer has grown over the last five to ten years, and the leading player is more active in off-trade than before. You therefore see more quarter-to-quarter volatility depending on which brewer is chasing volume versus margin. We certainly find it harder to call and project the market than we used to. It remains a market with a positive backdrop in terms of cans displacing two-way glass, and that should continue. I think low single digits is a minimum I would hope for in terms of overall growth, but volatility will persist. That is another factor behind our H2 guide. Q4 is obviously the summer season in Brazil and we could see a wide range of volumes there in our estimates, so we are being cautious on Q4 as a result.
We will go next to the line of George Staphos with Bank of America.
Hi, this is George Staphos. I have two questions. First, what are the key factors behind the drop in EBITDA from about $240 million in Q2 to the guided range for Q3? Can you quantify the major drivers of that decline? Second, what effect did mix have on Q2 results, and why were your results ahead of guidance? Thank you.
Q3 is always below Q2 because Q2 is our high season, so there is a normal seasonal decline as we move into Q3 and the remainder of the year. In addition, we have called out inflationary pressures in the second half that we did not have in the first half, which also depress Q3 relative to Q2. Regarding mix: in North America we lost a fair amount of volume, but our overall volume mix line is flat. You can see positive mix in North America where the specialty can percentage increased, and there was also good mix in Europe driven by the categories we are seeing growth in. Brazil was less relevant for the mix impact this quarter. Overall, the beat versus guidance was primarily driven by Europe — favorable metal timing and stronger volumes — which is why we were ahead of guidance.
We will go next to Michael Roxland with Truist Securities. The line is open.
Hi, this is Nico Piccini on for Michael Roxland. Just wanted to check on an early read for July volume by region or Q3 volumes, and more specifically, how you think about Brazil in the second half going off a few questions ago. Thanks.
July volumes look largely correlated with Q2: strong Europe, North America a bit better as we discussed, and Brazil still a soft market with our volumes a bit softer. The second half should be stronger than the first half when we start to see that in July volumes, and we do have volume growth in the plan for Brazil and remain hopeful for the summer season starting around October onwards, but we are cautious because of volatility in who is pushing volume in Brazil.
Got it. And one follow-up on your corporate structure: can you give any update on what is happening at the parent company, whether there might be separation of glass and metal?
No, we do not have any update on that at this point.
At this time, we have no further questions. I would like to turn the floor back to Oliver Graham for any closing remarks.
Thanks, Melinda, and thanks to everyone on the call. To summarize, in the second quarter we reported strong adjusted EBITDA growth of 14% versus the prior year quarter, significantly ahead of guidance, primarily driven by Europe which benefited from favorable input cost recoveries and strong volume growth — testament to the resilience of AMP's business. Reflecting on our strong first half performance and confidence in our outlook, we are upgrading our guidance for full-year adjusted EBITDA to between $775 million and $790 million. With that, we look forward to talking to you again at our Q3 results. Thanks very much.
This concludes today's conference. We thank you for your participation. You may disconnect at this time.