Europe, I think we think we’ve got — we’ve got to continue to look at Europe. I think we’ve got to continue to look at South America just be cognizant of the fact that there’s a lot going on in those regions. There’s a couple conflicts in Europe and the Middle East. So all of that will certainly play a role. Inflationary pressures, whether or not the regasification takes place in the mirror in which we think in Europe. So, a lot going into those conversations and decisions, but I think our footprints really solid to deliver on the plans that we’ve built here, pretty modest growth for this year. And just trying to take advantage of all the actions that we’ve laid in place and continue to see plants perform and more productivity to be generated as volumes inflect.
Arun Viswanathan: Thanks a lot.
Daniel Fisher: Yeah.
Operator: Our next question comes from line of George Staphos with Bank of America. Please proceed with your question.
George Staphos: Hi. Thanks very much. Good morning everybody. Thanks for the details.
Daniel Fisher: Morning.
George Staphos: Hey, Dan — good morning. So, first question I had. Thanks for the rundown on what you’re expecting. I know you’re focused on Ball Corporation obviously, but what do you think the market, particularly North America will grow at this year if you had a sense? Should we assume kind of the — what your normal growth would be two to four, or do you think it’s a little bit less than that or more than that.
Daniel Fisher: Yeah. I do think it’ll be in that two to four range. I don’t — there’s been some contractual shifts a little bit that’s been well documented. So, us being flat means that we’ve rebalanced our portfolio. I think some others may be growing a bit. So yeah, I’d say low end is the 2%. Let’s see what happens in peak season, but we’re off to a much more normalized pricing behavior by our customers which is really — we’ve talked about, this we need to see that in order to feel some level of confidence in the underlying volumes, and they need volume. So, I’m feeling good. It’s in that longer term range with the possibility to inflect into 2025. There’s a number of conversations in and around some substrate shift. That’s back in the ether in a manner in which it hasn’t been for the last couple years, so you might exit the year with a slightly better run rate, but I think that two to three, two to four is a pretty good range industry-wide.
George Staphos: Okay. No, I appreciate that Dan. And one question I had in terms of impact. It’s having other positive or negative for you in terms of your operations and demand. There’s been some discussion in the trade about some of the beverage companies having their operational issues to plan around which may have led or may lead to disruptions? Will that be a help ultimately for you to that impact fourth quarter at all? Just trying to peer there to extent that we can. And then my last question, I’ll turn it over. When you talk about carbon footprint, what we’ve seen is, and we’ve talked about this in the past, the plastic guys beginning to push on carbon footprint. What’s your one to punch in terms of why you think aluminum is better on that metric versus plastics when we look about carbon footprint through the supply chain? Thanks guys and good luck in the quarter.
Daniel Fisher: Yeah. I think from a balance sheet standpoint, our current spec depending on what region you’re in it could be better and could be worse just for full disclosure. I think our plans and the investments that you’re starting to see and rolling capacity coming online that’s not fully online that continues to be invested in. And a number of those, it’s 85% recycled content that’s been guaranteed on the sheet, it’s green energy and the backdrop of what’s going to be fueling those facilities. So a lot of that’s happening and a lot of that’s happening around the world. We’re already, for example, in Brazil, much better than any other substrate in terms of the carbon footprint there. And so a lot of the — a lot of the supply chain, a lot of the investments and a lot of that industrial complex and around aluminum will reflect getting to where Brazil is.
On top of that, there are technologies that are being introduced on the virgin aluminum side that are quite encouraging. And we actually just introduced 10% virgin aluminum on our cup with 90% recycled content that’s very close to carbon neutral, because the virgin aluminum now, there’s a couple of aluminum companies that have developed carbon free smelting operations and technologies. Those will continue to be invested in, a number of companies will do that. And so as you start to progress toward 2030 really being the goal, whereby people are going to have to put up or shut up. I like the trajectory of flight for aluminum right now much more than I did even two years ago to be quite honest with you. So, I think the investments are showing up.
This — the supply chain are committed in a lockstep in a number of associations to get to some of these aspirational targets. And there are offtake agreements and investments happening to ensure that that happens. So, this is no longer a theoretical argument for us. We have real plans to get there. And I’m confident we’ll get there in a shorter period of time than anybody else. But we have to continue to see that investment and continue to step into that. So that’s the truth. And we’re headed and it’s going to become more and more transparent and we’re working with our customers to get there. They need this as well with some of the SEC reporting that’s being talked about in 2027 and obviously the European reporting requirements that show up in 2026.
So, we’re kind of sprinting after this carbon neutrality in a way that everybody’s kind of got to put up or shut up. And I think we’re in a good spot to deliver.
George Staphos: Thanks Dan. And just on customer disruptions and what it might mean for you.
Daniel Fisher: Yeah. We have the ability now with our — we’re talking specifically in North America, we have the ability. We’ve got a little slack capacity. We’re running our plants much better than we were over the last two to three years. And so, I think we’re going to be able to react better. We have much better dialogue, much better supply plans, much better S&OP process. We were all forced to dust those off over a COVID and the supply chain [technical difficulty]
Operator: Ladies and gentlemen, please stand by your conference will resume momentarily. Again, ladies and gentlemen, please stand by your conference will resume momentarily. Your conference may now resume.
Daniel Fisher: Okay. Thank you. Sorry about that. We lost connection there for a second. I think in response to the last question, I think we’re in a good spot to react to volume surges, if you will, just because of how we’re operating in North America, the slack capacity we have in the conversations and the S&OP process that’s been established and currently being refined and improved upon each and every day. So, feel good about our ability to react to that.
George Staphos: Thanks Dan. That’s great.
Operator: Our next question comes from the line of Mike Leithead with Barclays. Please proceed with your question.
Mike Leithead: Great. Thank you. Good morning, guys.
Daniel Fisher: Good morning.
Mike Leithead: First question just on North America. I think for the full year, your volumes were down about 7%, but your operating EBIT was up about 11%, which suggests your unit economics got quite a bit better this year. So, if we do return to say a 1%, 2% volume type environment, I guess what sort of incremental margin should we expect on actual volume growth here in the business?
Daniel Fisher: Yeah. Keep in mind just as a reference point. This year had a bit of catch up in terms of PPI economics. And so if you — I think a go forward position more in line with our historical, if we get a percent of growth, we should get 2X in terms of earnings inflection. There’s a chance to do a bit better because our footprint is in a better spot. It’s more cost effective. But I would think in that 2X the volume unit growth in terms of earnings flow through and maybe a smidge more for the next coming years, depending on mix and channel and category and customer.
