Ardagh Metal Packaging S.A. Q2 FY2026 earnings call

• Milestone Update

  • Ardagh Metal Packaging (AMP) celebrated its 10-year anniversary, growing from 3 separate regional businesses to one integrated global company
  • Over $2 billion in growth capital invested has increased total capacity by more than 30%, with specialty cans now representing over 50% of total volumes
  • Adjusted full-year 2026 EBITDA is expected to be approximately double the starting level at the company's formation
  • The company ended Q2 with $647 million in liquidity and a net leverage ratio of 5.2x, down from 5.3x at the end of Q2 2025
  • An unchanged quarterly ordinary dividend of $0.10 per share was declared

• Operational Updates

  • North American aluminum metal supply constraints improved significantly over Q2, with normal operating conditions expected for H2 2026
  • AMP is over 85% hedged for 2026 energy requirements, 80% hedged for 2027, and nearly 70% hedged for 2028
  • The company upsized planned new capacity projects in the UK and Spain following strong customer demand, adding $40 million to 2026 capital expenditure; project timing is under review
  • Specialty can mix continues to increase year-to-date, with underlying demand remaining robust across most beverage categories except beer, to which AMP has only low single-digit exposure
  • In the ongoing breach of contract lawsuit against Boston Beer, an amended judgment added $15.5 million in pre-judgment interest, bringing the total pre-tax expected award to ~$190 million; Boston Beer has posted a bond for the award and filed an appeal

• Market Dynamics

  • Global beverage can demand overall remains strong, with AMP expecting to return to modest global volume growth in H2 2026 after a 1% global Q2 volume decline (driven by contract resets and Brazilian softness)
  • European beverage can consumption trends remain positive, with capacity still tight across the region, and long-term growth supported by low can penetration relative to other packaging formats and accelerating innovation in cans
  • 2026 is a transition year for North America, with a small full-year volume decline after contract resets, followed by a return to growth in 2027, supported by new secured customer filling locations

Europe: Q2 2026 revenue increased 13% year-over-year to $698 million (10% increase on a constant currency basis), driven by favorable volume mix effects and input cost pass-through. Shipments grew 5% YoY, with strong growth in carbonated soft drinks, energy, and smaller growing categories, and stable underlying beer performance (reported declines reflect specific contract losses). Adjusted EBITDA increased 36% YoY to $105 million (33% on a constant currency basis), driven by stronger input cost recovery and volume growth, partially offset by higher operating and overhead costs. Europe contributes approximately 41% of total company revenue.

Americas: Q2 2026 revenue increased 21% YoY to just over $1 billion, driven primarily by input cost (including metal and freight) pass-through, partially offset by lower shipments. Adjusted EBITDA increased 2% YoY to $135 million, in line with expectations, as lower operating/overhead costs offset lower input cost recovery and lower shipments. North American shipments decreased 5% YoY (in line with expectations) due to post-contract reset volume declines, early-quarter metal supply chain challenges, and tough YoY comparables. Brazilian shipments decreased 15% YoY, following 14% first-quarter growth, impacted by World Cup-related competitive activity and customer maintenance downtime. Americas contributes approximately 59% of total company revenue.

Total company Q2 2026 adjusted EBITDA was $240 million, a 14% increase YoY.

• Full-year 2026 adjusted EBITDA guidance was upgraded to $775 million to $790 million, up from prior guidance, following stronger-than-expected first half performance, particularly in Europe
• Full-year 2026 total CapEx guidance is increased to $240 million, a $40 million upward revision driven by the upsized UK and Spain capacity projects; full-year adjusted free cash flow guidance remains unchanged
• Q3 2026 adjusted EBITDA is expected to range between $200 million and $210 million, compared to $208 million in Q3 2025 on a constant currency basis
• Europe is expected to deliver approximately 3% full-year 2026 volume growth
• North American full-year 2026 industry volume growth is expected to be low single-digit, with AMP expecting a small full-year 2026 volume decline (a transition year after contract resets), followed by a return to growth in 2027 at least in line with industry growth
• Brazilian full-year 2026 industry growth is expected to be low single-digit, with AMP volumes expected to broadly track the market

• Ongoing Middle East conflict has driven inflationary headwinds for freight costs and other oil-linked direct materials
• Brazil's beverage can market has become more volatile post-COVID, due to slower consumer economic recovery and increased competitive activity among major brewers, leading to higher quarterly volume volatility and difficulty forecasting performance, particularly for Q4 2026
• Favorable metal pricing timing benefits that boosted Q2 2026 results will partially reverse, creating a headwind in H2 2026
• FX headwinds are also expected in H2 2026
• Certain can sizes in North America, particularly specialty sleek formats, are operating at tight capacity
• The Boston Beer lawsuit award remains subject to appeal, with an uncertain final outcome
• Consumer inflationary pressures have worsened again, creating some downside risk for H2 2026 volumes

Q: With North America shipments down 5% in Q2, did AMP see any benefit from the World Cup? Also, how much above market growth could AMP deliver in North America in 2027 after this year's contract reset transition? / A: AMP saw no material World Cup impact on its North America volumes, in part due to AMP's low exposure to the mass beer category where most World Cup promotional activity occurred. Early-quarter metal supply constraints also muted any potential impact. For 2027, AMP is not issuing a specific above-market growth forecast yet, but notes that the same contract resets that hurt 2026 volumes will deliver positive gains from new filling locations next year. AMP's portfolio weighting to outperforming soft drink and energy categories supports confidence that it will grow at least in line with the industry.

Q: How large was the favorable metal timing benefit that boosted Europe's Q2 results, and how much of this benefit will reverse in the second half? / A: AMP's overall Q2 adjusted EBITDA beat the consensus midpoint by around $25 million, with more than half of this beat coming from favorable metal timing in Europe. Approximately one-third of this total positive timing benefit will reverse as a negative headwind in the second half. Combined with mid-single digit inflation headwinds from oil-linked inputs and a small FX headwind, this explains the lower expected adjusted EBITDA for the second half after a strong first half.

Q: Is the strong growth momentum in Europe expected to persist, and how does Europe's profitability profile compare to other regions, with room for further improvement? / A: Long-term European growth momentum remains fully intact, supported by strong can demand relative to other packaging formats, low current can penetration in many markets, and accelerating innovation that now launches directly in cans instead of moving from glass later. The upsized UK and Spain capacity investments reflect confidence in this trend. Europe has historically been AMP's most profitable region, and is still recovering from the impacts of the Russia-Ukraine war and energy crisis. AMP expects improved EBITDA performance this year, with further upside from ongoing cost reduction programs and tight market conditions.

Q: What are the main drivers of the expected Q3 adjusted EBIT decline from Q2 levels, and what impact did product mix have on Q2 results? / A: Q2 is historically AMP's high season for demand, so a sequential decline into Q3 is typical. The expected decline also reflects the H2 headwinds of inflation, reversing metal timing gains, and FX that management has already outlined. For Q2, product mix had a positive impact overall: AMP gained share in higher-value specialty cans in North America offsetting lost bulk volume, and had positive category mix in Europe, leaving overall company volume mix flat despite significant volume losses in North America.