Ardagh Metal Packaging S.A. - Second Quarter 2023 Results

LUXEMBOURG, July 27, 2023 /PRNewswire/ -- Ardagh Metal Packaging S.A. (NYSE: AMBP) today announced results for the second quarter ended June 30, 2023.

		Three months ended
		June 30, 2023		June 30, 2022		Change		Constant Currency
		($'m except per share data)
Revenue		1,255		1,303		(4 %)		(4 %)
(Loss)/profit for the period		(10)		100
Adjusted EBITDA (1)		151		181		(17 %)		(17 %)
(Loss)/earnings per share		(0.03)		0.17
Adjusted earnings per share (1)		0.04		0.11
Dividend per ordinary share		0.10		0.10

Oliver Graham, CEO of Ardagh Metal Packaging, said:

"We experienced a challenging quarter against a global backdrop of sustained inflationary and household financial pressures, impacting on consumer demand. This was particularly the case in Brazil, where we expect market pressures to persist in the near-term. Our performance in Europe proved resilient, supported by improved input cost recovery, and was modestly ahead of expectations. In North America we recorded strong shipment growth and forward momentum, driven by the ramp-up of our contracted new capacity. However, our North America profitability was negatively impacted by action to right-size our inventory position that helped underpin a strong cashflow performance. We continue to prudently manage our capacity ahead of a demand recovery and look forward to strong second half 2023 earnings growth resumption. With our growth investment program completing in 2023, we are strongly positioned to capture future growth and to demonstrate the long-term earnings power and cash-generation of our business".

• Global beverage can shipments grew by 5% in the quarter, driven by growth of 8% in the Americas and 2% in Europe. North America grew by 18%, as new contracted volumes came onstream, more than offsetting weaker than expected shipments in Brazil.
• Adjusted EBITDA of $151 million for the quarter represented a 17% decrease on the same quarter last year.
• In the Americas, Adjusted EBITDA declined by 28% to $87 million, despite higher shipments in the region, due to higher operating costs, a temporarily less favorable mix of cans/ends, weaker Brazil shipments as well as managed inventory reduction in North America. We continue to expect a gradual recovery in demand and, having largely completed our investment program, continue to focus on opportunities to enhance our network efficiency.
• In Europe Adjusted EBITDA increased by 5% to $64 million as the contribution from increased shipments and good progress on cost pass-throughs more than offset higher costs. Network cost structure and efficiency to be improved through the planned closure of remaining steel lines in Germany later this year.
• Ongoing curtailment action to balance network capacity ahead of a recovery in demand conditions.
• Total liquidity of $519 million at June 30, 2023 reflecting initiatives which yielded a working capital inflow of $171m for the quarter (Q2 2022: $70 million outflow). Full year 2023 working capital net inflow guidance raised to $150 million.
• Reiterate expectation for positive Adjusted Free Cash Flow generation in 2023, supported by a sharp reduction in growth capex cashflow to below $0.3bn in 2023 (2022: $0.5bn), with a further reduction to c. $0.1bn in 2024 and beyond.
• Regular quarterly ordinary dividend of 10c announced, in line with guidance for an annual dividend of 40c per share.
• Progress on sustainability initiatives, including certification by the Aluminium Stewardship Institute (ASI) of the Manaus facility and the regional central office in Sao Paulo in Brazil, as well as the publication of the second Green Bond report, highlighting the bond's contribution to eligible green projects.
• 2023 outlook: shipment growth of mid-single digits and full year 2023 Adjusted EBITDA of $630-640 million. Third quarter Adjusted EBITDA expected to be between $170-175 million (Q3 2022: $140 million reported; $143 million at constant currency).

Financial Performance Review
Bridge of 2022 to 2023 Revenue and Adjusted EBITDA
Three months ended June 30, 2023
Revenue		Europe		Americas		Group
		$'m		$'m		$'m
Revenue 2022		533		770		1,303
Organic		21		(69)		(48)
FX translation		1		(1)		—
Revenue 2023		555		700		1,255

 

Adjusted EBITDA		Europe		Americas		Group
		$'m		$'m		$'m
Adjusted EBITDA 2022		61		120		181
Organic		3		(33)		(30)
FX translation		—		—		—
Adjusted EBITDA 2023		64		87		151
2023 margin %		11.5 %		12.4 %		12.0 %
2022 margin %		11.4 %		15.6 %		13.9 %

 

Six months ended June 30, 2023
Revenue		Europe		Americas		Group
		$'m		$'m		$'m
Revenue 2022		1,032		1,408		2,440
Organic		38		(62)		(24)
FX translation		(29)		(1)		(30)
Revenue 2023		1,041		1,345		2,386

 

Adjusted EBITDA		Europe		Americas		Group
		$'m		$'m		$'m
Adjusted EBITDA 2022		117		209		326
Organic		(1)		(41)		(42)
FX translation		(3)		—		(3)
Adjusted EBITDA 2023		113		168		281
2023 margin %		10.9 %		12.5 %		11.8 %
2022 margin %		11.3 %		14.8 %		13.4 %

Group Performance

Group

Revenue decreased by $48 million, or 4%, to $1,255 million in the three months ended June 30, 2023, compared with $1,303 million in the same period last year, on both a reported and constant currency basis. The decrease in revenue was primarily driven by the pass through to customers of lower input costs and unfavorable volume/mix effects (lower ends volume).

Adjusted EBITDA decreased by $30 million, or 17%, to $151 million in the three months ended June 30, 2023, compared with $181 million in the same period last year, on both a reported and constant currency basis. The decrease in Adjusted EBITDA was principally due to higher operating costs and input costs headwinds, partly offset by positive volume/mix effects.

Americas

Revenue decreased by $70 million, or 9%, on both a reported and constant currency basis, to $700 million in the three months ended June 30, 2023, compared with $770 million in the three months ended June 30, 2022. The decrease in revenue principally reflected the pass through of lower input costs and unfavorable volume/mix impacts (lower ends volume).

Adjusted EBITDA decreased by $33 million, or 28%, on both a reported and constant currency basis, to $87 million in the three months ended June 30, 2023, compared with $120 million in the three months ended June 30, 2022. The decrease was primarily driven by higher operating costs, input cost headwinds and unfavorable volume/mix effects (lower ends volume).

Europe

Revenue increased by $22 million, or 4%, on both a reported and constant currency basis, to $555 million in the three months ended June 30, 2023, compared with $533 million in the three months ended June 30, 2022. The increase in revenue was principally due to the pass through of higher input costs and favorable volume/mix effects.

Adjusted EBITDA increased by $3 million, or 5%, on both a reported and constant currency basis, to $64 million in the three months ended June 30, 2023, compared with $61 million in the three months ended June 30, 2022. The increase in Adjusted EBITDA was principally due to favorable volume/mix effects, partly offset by input cost headwinds and higher operating costs.

Earnings Webcast and Conference Call Details

Ardagh Metal Packaging S.A. (NYSE: AMBP) will hold its second quarter 2023 earnings webcast and conference call for investors at 9.00 a.m. EDT (2.00 p.m. BST) on July 27, 2023. Please use the following webcast link to register for this call:

Webcast registration and access:

https://event.webcasts.com/starthere.jsp?ei=1623232&tp_key=6552d04b96

Conference call dial in:

United States/Canada: +1 800 289 0438
International: +44 330 165 4027
Participant pin code: 7626398

An investor earnings presentation to accompany this release is available at https://www.ardaghmetalpackaging.com/investors

About Ardagh Metal Packaging
Ardagh Metal Packaging (AMP) is a leading global supplier of infinitely recyclable, sustainable, metal beverage cans and ends to brand owners. A subsidiary of sustainable packaging business Ardagh Group, AMP is a leading industry player across Europe and the Americas with innovative production capabilities. AMP operates 24 production facilities in nine countries, employing more than 6,300 employees and had sales of $4.7 billion in 2022.

For more information, visit https://www.ardaghmetalpackaging.com/investors

Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts and are inherently subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this press release is not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this release. Certain factors that could cause actual events to differ materially from those discussed in any forward-looking statements include the risk factors described in Ardagh Metal Packaging S.A.'s Annual Report on Form 20-F for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the "SEC") and any other public filings made by Ardagh Metal Packaging S.A. with the SEC. In addition, new risk factors and uncertainties emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual events to differ materially from those contained in any forward-looking statements. Under no circumstances should the inclusion of such forward-looking statements in this release be regarded as a representation or warranty by us or any other person with respect to the achievement of results set out in such statements or that the underlying assumptions used will in fact be the case. Therefore, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking information presented herein is made only as of the date of this release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014. The person responsible for the release of this information on behalf of Ardagh Metal Packaging Finance plc and Ardagh Metal Packaging Finance USA LLC is Stephen Lyons, Investor Relations Director.

Non-IFRS Financial Measures
This release may contain certain financial measures such as Adjusted EBITDA, Adjusted operating cash flow, Adjusted free cash flow, net debt and ratios relating thereto that are not calculated in accordance with IFRS. Non-IFRS financial measures may be considered in addition to IFRS financial information, but should not be used as substitutes for the corresponding IFRS measures. The non-IFRS financial measures used by Ardagh Metal Packaging S.A. may differ from, and not be comparable to, similarly titled measures used by other companies.

Unaudited Consolidated Condensed Income Statement for the three months ended June 30, 2023 and 2022
		Three months ended June 30, 2023						Three months ended June 30, 2022
		Before exceptional items		Exceptional items		Total		Before exceptional items		Exceptional items		Total
		$'m		$'m		$'m		$'m		$'m		$'m
Revenue		1,255		—		1,255		1,303		—		1,303
Cost of sales		(1,109)		(37)		(1,146)		(1,123)		(16)		(1,139)
Gross profit		146		(37)		109		180		(16)		164
Sales, general and administration expenses		(60)		(3)		(63)		(53)		(4)		(57)
Intangible amortization		(35)		—		(35)		(35)		—		(35)
Operating profit		51		(40)		11		92		(20)		72
Net finance (expense)/income		(49)		26		(23)		(34)		74		40
(Loss)/profit before tax		2		(14)		(12)		58		54		112
Income tax credit/(charge)		—		2		2		(16)		4		(12)
(Loss)/profit for the period		2		(12)		(10)		42		58		100
(Loss)/earnings per share						(0.03)						0.17

 

Unaudited Consolidated Condensed Income Statement for the six months ended June 30, 2023 and 2022
		Six months ended June 30, 2023						Six months ended June 30, 2022
		Before exceptional items		Exceptional items		Total		Before exceptional items		Exceptional items		Total
		$'m		$'m		$'m		$'m		$'m		$'m
Revenue		2,386		—		2,386		2,440		—		2,440
Cost of sales		(2,117)		(47)		(2,164)		(2,109)		(30)		(2,139)
Gross profit		269		(47)		222		331		(30)		301
Sales, general and administration expenses		(116)		(12)		(128)		(109)		(8)		(117)
Intangible amortization		(70)		—		(70)		(71)		—		(71)
Operating profit		83		(59)		24		151		(38)		113
Net finance (expense)/income		(99)		53		(46)		(62)		125		63
(Loss)/profit before tax		(16)		(6)		(22)		89		87		176
Income tax credit/(charge)		5		6		11		(25)		6		(19)
(Loss)/profit for the period		(11)		—		(11)		64		93		157
(Loss)/earnings per share						(0.04)						0.26

 

Unaudited Consolidated Condensed Statement of Financial Position
	At June 30, 2023		At December 31, 2022
	$'m		$'m
Non-current assets
Intangible assets	1,431		1,473
Property, plant and equipment	2,575		2,390
Other non-current assets	101		94
	4,107		3,957
Current assets
Inventories	570		567
Trade and other receivables	587		509
Contract assets	270		239
Derivative financial instruments	19		38
Cash, cash equivalents and restricted cash	182		555
	1,628		1,908
TOTAL ASSETS	5,735		5,865
TOTAL EQUITY	277		455
Non-current liabilities
Borrowings including lease obligations	3,611		3,524
Other non-current liabilities*	385		422
	3,996		3,946
Current liabilities
Borrowings including lease obligations	140		68
Payables and other current liabilities	1,322		1,396
	1,462		1,464
TOTAL LIABILITIES	5,458		5,410
TOTAL EQUITY and LIABILITIES	5,735		5,865
* Other non-current liabilities include liabilities for earnout shares of $27 million at June 30, 2023 (December 2022: $76 million) and warrants of $2 million at June 30, 2023 (December 2022: $7 million).

 

Unaudited Consolidated Condensed Statement of Cash Flows
		Three months ended June 30,				Six months ended June 30,
		2023		2022		2023		2022
		$'m		$'m		$'m		$'m
Cash flows from/(used in) operating activities
Cash generated from/(used in) operations (2)		302		91		74		(103)
Net interest paid		(74)		(48)		(82)		(51)
Settlement of foreign currency derivative financial instruments		1		20		(11)		30
Income tax paid		(6)		(8)		(15)		(15)
Cash flows from/(used in) operating activities		223		55		(34)		(139)
Cash flows used in investing activities
Capital expenditure		(96)		(169)		(222)		(286)
Cash flows used in investing activities		(96)		(169)		(222)		(286)
Cash flows (used in)/received from financing activities
Changes in borrowings		24		495		58		591
Deferred debt issue costs paid		(1)		(4)		(2)		(6)
Lease payments		(22)		(13)		(38)		(26)
Dividends paid		(65)		(121)		(131)		(121)
Treasury shares purchased		—		(3)		—		(3)
Other financing activities		—		(1)		—		(1)
Cash flows (used in)/received from financing activities		(64)		353		(113)		434
Net increase/(decrease) in cash, cash equivalents and restricted cash		63		239		(369)		9
Cash, cash equivalents and restricted cash at beginning of period		124		225		555		463
Foreign exchange losses on cash, cash equivalents and restricted cash		(5)		(28)		(4)		(36)
Cash, cash equivalents and restricted cash at end of period		182		436		182		436

 

Financial assets and liabilities
At June 30, 2023, the Group's net debt and available liquidity was as follows:
		Drawn amount		Available liquidity
		$'m		$'m
Senior Secured Green and Senior Green Notes		3,282		—
Global Asset Based Loan Facility		70		337
Lease obligations		392		—
Other borrowings		40		—
Total borrowings / undrawn facilities		3,784		337
Deferred debt issue costs		(33)		—
Net borrowings / undrawn facilities		3,751		337
Cash, cash equivalents and restricted cash		(182)		182
Derivative financial instruments used to hedge foreign currency and interest rate risk		12		—
Net debt / available liquidity		3,581		519

 

Reconciliation of (loss)/profit for the period to Adjusted profit
	Three months ended June 30,
	2023		2022
	$'m		$'m
(Loss)/profit for the period as presented in the income statement	(10)		100
Less: Dividend on preferred shares	(6)		—
(Loss)/profit for the period used in calculating earnings per share	(16)		100
Exceptional items, net of tax	12		(58)
Intangible amortization, net of tax	27		27
Adjusted profit for the period	23		69
Weighted average number of ordinary shares	597.6		603.3
(Loss)/earnings per share	(0.03)		0.17
Adjusted earnings per share	0.04		0.11

 

Reconciliation of (loss)/profit for the period to Adjusted EBITDA
	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	$'m		$'m		$'m		$'m
(Loss)/profit for the period	(10)		100		(11)		157
Income tax (credit)/charge	(2)		12		(11)		19
Net finance expense/(income)	23		(40)		46		(63)
Depreciation and amortization	100		89		198		175
Exceptional operating items	40		20		59		38
Adjusted EBITDA	151		181		281		326

 

Reconciliation of Adjusted EBITDA to Adjusted operating cash flow and Adjusted free cash flow
	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	$'m		$'m		$'m		$'m
Adjusted EBITDA	151		181		281		326
Movement in working capital	171		(70)		(175)		(395)
Maintenance capital expenditure	(26)		(29)		(62)		(49)
Lease payments	(22)		(13)		(38)		(26)
Adjusted operating cash flow	274		69		6		(144)
Net interest paid	(74)		(48)		(82)		(51)
Settlement of foreign currency derivative financial instruments	1		20		(11)		30
Income tax paid	(6)		(8)		(15)		(15)
Adjusted free cash flow - pre Growth Investment capital expenditure	195		33		(102)		(180)
Growth investment capital expenditure	(70)		(140)		(160)		(237)
Adjusted free cash flow - post Growth Investment capital expenditure	125		(107)		(262)		(417)

Related Footnotes

(1) For a reconciliation to the most comparable IFRS measures, see Page 9.

(2) Cash from/used in operations for the three and six months ended June 30, 2023 is derived from the aggregate of Adjusted EBITDA as presented on Page 9 less working capital inflows of $171 million (six months: outflows of $175 million) and other exceptional cash outflows of $20 million (six months: $32 million). Cash from operations for the three and six months ended June 30, 2022 is derived from the aggregate of Adjusted EBITDA as presented on Page 9, working capital outflows of $70 million (six months: $395 million) and other exceptional cash outflows of $20 million (six months: $34 million).

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SOURCE Ardagh Metal Packaging S.A.