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Ardagh Group S.A. (NYSE:ARD)
Q2 2020 Earnings Call
Jul 23, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, everyone, and welcome to the Ardagh second quarter 2020 results webcast. Throughout this, all participants will be in listen-only mode, and afterwards, there will be a question-and-answer session. And please note that this is being recorded.

I will now hand you over to Paul Coulson, Chairman and CEO. Please begin your meeting.

Paul Coulson -- Chairman and Chief Executive Officer

Welcome everybody. Thank you very much for joining us today for our second quarter earnings call, which follows the publication earlier today of our results for the quarter. With me today, as usual, are David Matthews, our CFO; Shaun Murphy, our COO; and John Sheehan, our Corporate Development and Investor Relations Director.

As is usual, our remarks will include certain forward-looking statements. These reflect circumstances at the time they are made, and the Company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those that are set out in our SEC filings and news releases.

Our earnings release, financial report and related materials for the quarter can be found on our website at ardaghgroup.com. Information regarding the use of non-GAAP financial measures may also be found in the Notes section of the release, which also includes a reconciliation to the most comparable GAAP measures of adjusted EBITDA and adjusted earnings per share. Details of our statutory forward-looking disclaimer can be found in our SEC filings.

Before I move to discuss our results for the quarter, I would like to acknowledge the dedication shown by our 16,000 colleagues over recent months. Their outstanding commitment has enabled Ardagh to continue to play its role in the efficient functioning of the essential food and beverage supply chain. The task force, which we established in February last to coordinate our pandemic response, has been highly effective. And our priority remains providing a safe and healthy working environment for all our employees, while at the same time, serving our customers.

So, turning to our second quarter results, where I will focus on constant currency performance. Revenues for the quarter of $1.61 billion were 5% lower than the second quarter of 2019, and this comprised of 3% reduction in volume and mix and the pass-through of lower input costs. Adjusted EBITDA of $271 million compared with the prior year constant currency of $305 million, with growth in Metal Packaging offset by lower earnings in Glass Packaging, where our exposure to on-premise demand is higher.

Our second quarter performance represented a strong result in an unprecedented macroeconomic environment. This outturn was underpinned by our business mix focused on supplying sustainable, convenient and cost-effective consumer packaging to leading food and beverage brand owners. We estimate that approximately 80% of our products are sold through off-premise and retail channels, and this has mitigated the impact of premises closures for much of the quarter. Trends toward the end of the quarter were positive as lockdowns began to be lifted in most of our markets.

Turning to the results by segment, Metal Beverage accounted for over half of Group revenue and EBITDA during the quarter and recorded a strong performance. Total beverage can shipments in the quarter increased by 3% compared with 2019, led by high-single digit growth in Europe. In the Americas, units shipped were down low-single digits in the quarter compared with the prior year due to weakness in Brazil in the early part of this quarter. Specialty can volumes shipped Groupwide increased by 9%.

Revenue in Metal Beverage Packaging in Europe for the quarter of $395 million was 1% lower than the same period last year, reflecting volume/mix growth of 2%, offset by the pass-through of lower aluminum input costs. Units shipped in the quarter increased by 8% as our balance presence in beer, carbonated soft drinks and other fast-growing beverage categories continued to serve us well. Adjusted EBITDA for the quarter of $70 million was in line with the same period this year, as volume and mix growth and a strong operating performance was offset by COVID-related costs.

In Metal Beverage in Americas, revenue for the quarter was $435 million, and this represented a 5% reduction compared with the same period last year, reflecting volume/mix growth of 1% and improved contract pricing, which was offset by the pass-through of lower aluminum costs. Volumes shipped in North America in the quarter were in line with the prior year. This followed first quarter growth this year of 7% and a 15% in March as pantry loading pulled some demand forward from the second quarter of 2020.

Demand remains strong across all categories in North America, and our capacity is fully sold for the remainder of the year. We are currently investing to support our customers' continued growth, driven by new and expanding beverage categories and ongoing sustainability shifts. In the second half of 2020, we will benefit from these investments and expect to resume growth in shipments.

In Brazil, where the closure of premises has severely impacted industry volumes in March and April this year, shipments recovered strongly in May and June, recouping much of the earlier decline. Brazil remains a highly attractive market, and we expect the recovery in volumes to be sustained.

Second quarter adjusted EBITDA in beverage cans in the Americas increased by 5% to $69 million compared with the same period last year. And strong growth in North America was partly offset by a lower outturn in Brazil. Growth was driven by continued evolution of our business mix toward stronger performing bev categories, contracted price increases and a strong operating performance across our plant network.

If I turn to Glass Packaging, our businesses performed well in the climate in which they operated, given the -- and given the greater level of on-premise consumption in both Europe and North America. Total shipments in the quarter declined by 9%, but trends were positive in June as restrictions began to be lifted.

In Glass Packaging Europe, revenue of $368 million for the second quarter was 8% lower than the same period last year. Lower revenue reflected a 10% reduction in volume/mix and the pass-through of lower input costs, and this was partly offset by contract price increases. By end-use category, demand in food was strong, offset by declines in other categories. Adjusted EBITDA in Europe for the quarter of $76 million was 21% lower than the second quarter of 2019, principally reflecting lower volume/mix and the under-absorption of fixed costs as a result of such lower production.

Revenues in Glass Packaging North America declined by 6% to $408 million compared to the same period last year. Volume/mix declined by 6% with a greater fall in April and May, followed by growth in June. As in Europe, beer demand was lower with other major categories broadly in line with prior year levels. In Glass North America, second quarter EBITDA was $56 million, and this was 23% below the same period last year, again reflecting lower volume/mix and unabsorbed fixed costs.

So, if I turn to our current view of our markets, demand in the second quarter evolved pretty much in line with our expectations, although the recovery in Brazil was faster than we had expected. And while it's too early to assess how consumers will react in the new environment, we would currently characterize market conditions as follows.

In Metal Beverage Packaging, the European markets remain healthy, and our balanced and broad end market mix should continue to be a positive. Market conditions in Beverage Americas remain favorable with a continuing strong backdrop in North America. In Brazil, the environment has been more volatile but the market has recovered well during the quarter and prospects are underpinned by continuing and continued substrate shifts from returnable glass bottles in Brazil. In each of our beverage can markets, we are sold out for the remainder of this year.

In Glass Packaging, both in Europe and North America, trends in June were encouraging, and the progressive relaxation of lockdowns and other restrictions will be important in the coming months. And in the context of this market assessment and with our -- in line with our current expectations, we expect a single-digit decline in constant currency EBITDA for 2020 as a whole.

Turning next to our investment growth projects, the implementation of our business growth investment program continued during the quarter and with a year-to-date spend through the end of June of just over $75 million. And while there has been some slippage in timing due to COVID, these projects remain a strategic priority for the Group with each being backed by customer contracts and they are individually deleveraging in their own right.

Turning to liquidity and capital structure, in parallel with a strong operating performance, we availed attractive financial market conditions during the quarter to significantly enhance our liquidity and capital structure. In early April, we issued $700 million of secured 2025 bonds to augment our liquidity, and we ended the quarter with total available liquidity of $1.6 billion, which included $1.45 billion in cash. In May and June, we refinanced our 2022 and 2024 debt maturities to late 2026, as well as over half of our January 2025 unsecured maturity was extended and refinanced to late 2027. And following these opportunistic moves, our average debt maturity is now six years with no bond maturities before 2025.

So to conclude, our performance in the second quarter was strong in Metal Beverage, and our Glass Packaging businesses successfully managed the most challenging environment we've faced in many years. And as we look to the future, our well invested asset base, long-standing customer relationships, highly committed team and a strong capital structure position us well to benefit from further improvements in market demand.

So having made these opening remarks, we will now be very pleased to take any questions which you may have. Thank you.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Anthony Pettinari from Citi. Please go ahead. Your line is now open.

Anthony Pettinari -- Citigroup -- Analyst

Good morning.

Paul Coulson -- Chairman and Chief Executive Officer

Good morning.

Anthony Pettinari -- Citigroup -- Analyst

Paul, you've talked about being sold out in all of your regions in the beverage cans, which echoes some of your peers, and you talked about the growth investments. Just wondering if you could give, to the extent that you can, any more color on amount of capacity that you may bring online, time line, if these projects are coming online sort of as expected, if you have seen any disruptions from COVID, etc.?

Paul Coulson -- Chairman and Chief Executive Officer

On the capacity in the US, we haven't seen -- there are currently ongoing capacities being brought on. As we said before, Anthony, our investment and our increased capacity will be within our existing facilities. We are not building any new facilities at present. So, that means they will come on reasonably quickly. They are coming on stream. They will on -- some of them will be on stream by later this year and in next year. The market is very strong. Demand is very strong. And we are very comfortable increasing our capacity.

Anthony Pettinari -- Citigroup -- Analyst

Okay. And then, there was a comment at the beginning on 80% of your sales to off-premise. And I was just -- was that a comment on Metal and Glass? And I am just wondering if you could give a little bit more detail on the percentage of on-premise for Glass Americas and Glass Europe?

Paul Coulson -- Chairman and Chief Executive Officer

Well, these things are very -- that's an overall number, Anthony. And these things are very much a judgment call in terms of what -- and an estimate of where we see it. What we were trying to do is to give you a flavor that quite a lot of our business, for instance, most our bev can business, virtually all of it, is off-premise. And we have seen a lot of strength, obviously, in the bev can demand, which I think was there any way pre-COVID. I don't think -- COVID has just exacerbated the demand.

Anthony Pettinari -- Citigroup -- Analyst

Okay, understood. I will turn it over.

Paul Coulson -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Brian Maguire from Goldman Sachs. Please go ahead. Your line is now open.

Brian Maguire -- Goldman Sachs -- Analyst

Hi, good morning, everyone. Paul, I just wanted to get a little bit more color on inter-quarter trends and sort of the entry rate into 2Q in a couple of businesses. I guess, in bev can, it's pretty clear it's sold out, so probably not a huge change in trend. But Glass seems like -- if I heard you right, there was a material improvement as the quarter went on. Did you say that Glass shipments were up in June in both Europe and in the US? And then within that, in the US market, I am just wondering if you are seeing any spillover benefits from the can being sold out like increased demand for beer bottles and things like that as people maybe have to put their product in maybe their second choice for substrate? Are you getting any spillover benefits to Glass business from that?

Paul Coulson -- Chairman and Chief Executive Officer

We are. There's no doubt that's happening. Some of it's happening because there has been increased demand for glass bottles in their own right, but there has certainly been some spillage across because of the tightness in cans. So we are -- and it's very hard to break out, Brian, what's the cause of this, but there has certainly been -- we are seeing increased and strong demand for beer bottles in the US, yeah, which is, from our point of view, a good trend.

Brian Maguire -- Goldman Sachs -- Analyst

And just the overall Glass trends through the quarter and into July?

Paul Coulson -- Chairman and Chief Executive Officer

Glass trends through the quarter improving as the quarter went on, particularly -- and if you look at Europe where obviously the lifting of the restrictions is probably more advanced than in the US, and we've seen good improvement there. And that improvement has continued into July. And it's pretty much the same trends in the US as well.

Brian Maguire -- Goldman Sachs -- Analyst

Okay. And then one, just the JV income, I think, was fairly high in the quarter. And obviously, we heard good food can earnings from Silgan yesterday. And just wondering if there are any one-time items in that as well? Or if you think that that's a repeatable number if current conditions continue?

Paul Coulson -- Chairman and Chief Executive Officer

I will pass that to John in a moment. But as you know, Trivium will report next week. But as we said before, Trivium is experiencing good strong conditions in food cans. They've some weaknesses elsewhere, but strong conditions in food cans. But they will report next week and you will see where they are at.

John, d o you want to comment on the other point that Brian has raised?

John Sheehan -- Corporate Development and Investor Relations Director

Yeah, sure. Brian, in relation to Trivium in the second quarter, the contribution I think at the EPS line is about $0.08 or so. There is a bit of a true-up there for the finalization of Trivium's purchase accounting. So, in a full year, I think using Trivium's kind of run rate, the contribution would be something in the mid-to-upper teens cents to Ardagh. So, I wouldn't extrapolate the contribution that you see in Q2.

Brian Maguire -- Goldman Sachs -- Analyst

Okay. Thanks very much. Take care.

Paul Coulson -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Mike Leithead from Barclays. Please go ahead. Your line is now open.

Mike Leithead -- Barclays -- Analyst

Great. Thanks guys. I guess first question just on the European beverage can business. I think if I heard you correctly, you mentioned unit volumes were up 8% this quarter, which feels a lot better than the macro and a lot better than one of your competitors reported earlier this week. So, I was hoping you could give just a little bit more color around the strength in that business this quarter.

Paul Coulson -- Chairman and Chief Executive Officer

Well, I'd say the numbers are the numbers, Mike. We have a very broadly based business in Europe and the markets where we -- and both in product and geographically, and we have seen enhanced demand. And it's not just -- the bev can story is not just about North America and Brazil. But we are feeling very comfortable and happy with the performance of our European business. So, it's right across the piste.

Mike Leithead -- Barclays -- Analyst

Great. Fair enough. And then, I think it's encouraging that you do have a little bit more visibility in your outlook. You talked about EBITDA constant currency forecast for the back half of the year. Can you just help us with -- if we assume kind of FX rates stay where they are, what you are assuming or what do you expect in terms of FX impact this year to EBITDA?

Paul Coulson -- Chairman and Chief Executive Officer

David, you want to deal with that?

David Matthews -- Group Chief Financial Officer and Director

Well, I think it's going to turn out to be broadly neutral because the currency has moved in the last few days. But I think it's going to end up being broadly neutral. There's a headwind as we go into the half year. But as of today, I think that will wash out in the second half to be broadly neutral.

Mike Leithead -- Barclays -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Roger Spitz from Bank of America. Please go ahead. Your line is now open.

Roger Spitz -- Bank of America -- Analyst

Thank you. Good afternoon. Do you want to -- care to talk about Q3 EBITDA and how that might look? Any thoughts you can tell us?

Paul Coulson -- Chairman and Chief Executive Officer

No. I don't think we want to go any further, Roger, than the indication we have given on where we see the outturn for the year. It's a pretty volatile environment. But I think as we best see it at the moment, given our current conditions, that's the outturn for the year as such.

Roger Spitz -- Bank of America -- Analyst

That's fine. Glass Europe and USA suffered from [Indecipherable] our fixed cost from the lower production. Can you provide any sense to the impact to EBITDA from each of these in US and Europe as opposed to lower sales volumes themselves?

Paul Coulson -- Chairman and Chief Executive Officer

No. I think it's an overall mix. Obviously, we have had some direct cost as a result of COVID, things like protective equipment and stuff like that, extra cleaning costs, etc., etc. But we haven't -- we have expensed them all. We haven't exceptionalized anything like that. That's all gone through -- again, through our EBITDA. So it's a mix of a number of factors. Volume/mix reductions leading to lower production, leading to some lines down, obviously leading to under-absorption of fixed costs, etc. It's a whole mishmash.

Roger Spitz -- Bank of America -- Analyst

Got it. Can you give any sense of your Glass operating rates in Q2 in each of Europe and the USA?

Paul Coulson -- Chairman and Chief Executive Officer

No. That's not a number we give out.

Roger Spitz -- Bank of America -- Analyst

Fine. Lastly, I think last quarter, you said base and growth capex was $350 million and $250 million respectively. Are those still good numbers to use?

Paul Coulson -- Chairman and Chief Executive Officer

I think in terms of maintenance capex, $330 million is probably our expectation for the year. That's a little bit down from the $350 million we talked about previously. On business growth we -- as I said, we spent $75 million in the first half. We expect to spend between another $125 million and another $150 million, which would make the total $225 million for the year.

Roger Spitz -- Bank of America -- Analyst

Thank you very much.

Paul Coulson -- Chairman and Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from the line of Mark Wilde from Bank of Montreal. Please go ahead. Your line is now open.

Mark Wilde -- Bank of Montreal -- Analyst

Good morning, Paul.

Paul Coulson -- Chairman and Chief Executive Officer

Hi, Mark. How are you?

Mark Wilde -- Bank of Montreal -- Analyst

Good. I would like to just come back to the debottlenecking in North America, just to try to get some kind of guidance as we think about sort of 2021 and '22 in terms of what that incremental expansion looks like in terms of just unit volume?

Paul Coulson -- Chairman and Chief Executive Officer

You mean our expansion?

Mark Wilde -- Bank of Montreal -- Analyst

Yes, exactly.

Paul Coulson -- Chairman and Chief Executive Officer

Yeah. That's not a number that we would give out, Mark, right? But as I say, it's expansion that's tied to customer -- long-term customer contracts. And also, it's within our existing facilities. So, we are increasing the number of lines within our facilities. But we are not building any new plants.

Mark Wilde -- Bank of Montreal -- Analyst

Okay. All right. Let's see, can you also -- can you update us on the situation with that US trade case on glass with China?

Paul Coulson -- Chairman and Chief Executive Officer

Yeah. As you know, there's two sets of tariffs there at the moment, Mark. One is the ones that were imposed by the government, and they are 25% tariffs in China, and they remain in place. At the international trade court, that process is still ongoing. We lost on the last year. We won the first time, lost the second time, and the process is still ongoing. But no tariffs have been introduced on foot [Phonetic] of that process. It's still ongoing. We'll see where it ends up. But I think the expectation is that certainly, we'll have the continuing tariffs on the Chinese imports that the government imposed at the very least.

Mark Wilde -- Bank of Montreal -- Analyst

Okay. And then, I wanted to just turn to Brazil. I see that you have got a customer -- a large beverage producer down there that has restarted its program of adding a new can plant. I think that's their first can plant in Latin America. Can you share some thoughts with us on why you think they are doing it? And what you expect its impact be on the market?

Paul Coulson -- Chairman and Chief Executive Officer

Well, I think the reason is that they -- that particular brewer is switching from largely returnable glass -- and remember, we are not in the glass market down there -- but returnable glass bottles to cans, which is where their competitors have been. And they made this investment because the sheer volume of cans that they need to switch from returnable glass to cans is quite substantial. And they will need more. They will need more capacity than they are buildings. So, they will need supply from the other players in that market. So, we don't feel that that's going to disrupt the market in any way at all. And their activity of switching -- their commercial activity of switching from returnable glass to cans is very much a positive for us and the other bev can producers there.

Mark Wilde -- Bank of Montreal -- Analyst

Yeah. I get the kind of glass going to metal. I am just kind of curious -- we haven't really seen big beverage companies backward integrate into cans or glass recently. So I'm just -- I'm curious about why you think they are doing this rather than just contracting with kind of existing players to expand capacity?

Paul Coulson -- Chairman and Chief Executive Officer

Well, I think it's a once off. I don't think it's a trend that's happening elsewhere, either within that group or on the country, I would say. Maybe if people were looking for that kind of approval now within the brewing companies, it might be forthcoming. But I don't know. But I think it's a once off. And I think the reasoning behind it is that there's such a big increase in cans down there because of this conversion, and also the market is strong. We are seeing very strong -- very, very strong conditions down there, and we are well placed. If there is a need to increase capacity down there to supply the market, we can do so quickly and within our existing facilities with three plants down there.

Mark Wilde -- Bank of Montreal -- Analyst

Okay. All right. I will turn it over. Thanks Paul.

Paul Coulson -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Debbie Jones from Deutsche Bank. Please go ahead. Your line is now open.

Debbie Jones -- Deutsche Bank -- Analyst

Hi. Thanks for taking my question.

Paul Coulson -- Chairman and Chief Executive Officer

Hi, Debbie.

Debbie Jones -- Deutsche Bank -- Analyst

I wanted to -- hi. I know you get this question a lot on metal supply. But I just wanted to ask it again, just given that we have had a few additional capacity announcements in North America and elsewhere, and I think there was an article this morning in the Wall Street Journal addressing imports of can sheets into the US. And I would like to understand how much visibility you think you have for you and for your customers kind of securing aluminum can sheet over the next two [Phonetic] years?

Paul Coulson -- Chairman and Chief Executive Officer

I think we are pretty comfortable in the arrangements we have, Debbie. I will ask John later to give you any more specifics. But I think we're pretty comfortable with the arrangements that we have, and we are not certainly seeing -- as we look forward to those years, we're not seeing stresses in the supply chain.

John, is there anything you would like to add?

John Sheehan -- Corporate Development and Investor Relations Director

Yeah. I think, Debbie, that we feel comfortable with that. Obviously, some of the other end market to which aluminum has gone are in for a tougher time being much more cyclical over the next while. So, we have seen a number of the producers indicate that can sheets would be an area that they will be expanding in. So, we don't see any issues.

Debbie Jones -- Deutsche Bank -- Analyst

Okay, great. Thank you. And my second question, we talked a bit in this sector about improving recycling rates. And I think Glass in North America is a notable place where you would like see that increase. So, I just wanted to get your thoughts on what Ardagh is doing? Where you think that rate can go in the US? And I think also very important, do you think -- as the recycling rate in North America improves, does that increase the attractiveness to your customers from a sustainability standpoint?

Paul Coulson -- Chairman and Chief Executive Officer

Well, dealing with the latter point first, sustainability is a huge issue for our customers and recycling is a huge part of sustainability. And this is an area on which we are very focused. And we are also very focused on improving the supply of cullet in the United States. That's a very important thing for us. It's a major problem because far too much goes to landfill. The collection systems are not the way they are in Europe. And there's a long way to go. But the good thing is that there are some levers that we can pull in improving the collection systems with our customers. Some of the -- some o f our bigger customers in the United States are working at improving collection systems. It's probably difficult. I would say, things have paused a bit during the COVID thing, Debbie. It's probably not been top of everyone's minds, as you might imagine. But I think some of our bigger customers are working with local communities, etc. to improve the levels of collection, and we are working to see -- and we will invest to see improved cullet systems for ourselves. It's something that -- we do not have the same supply of cullet in the US Glass business as we have in Europe, both from a -- particularly from a quality point of view. So, it's an area where there's much improvement to be got. But at least the good news is the improvement can be got.

Debbie Jones -- Deutsche Bank -- Analyst

Okay. Thank you. And if I can just ask one follow-up, I was curious, just because of everything with COVID and the impact on recycling, is the reduced amount having a material impact on your margins in both the US and Europe?

Paul Coulson -- Chairman and Chief Executive Officer

Reduced amount of cullet supply?

Debbie Jones -- Deutsche Bank -- Analyst

The availability of cullet.

Paul Coulson -- Chairman and Chief Executive Officer

No. We haven't had any issues. I don't think there's any issues in relative terms to the US pre and post COVID, and certainly not in Europe.

Debbie Jones -- Deutsche Bank -- Analyst

Okay. Thank you. I will turn it over.

Paul Coulson -- Chairman and Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from the line of Travis Edwards from Goldman Sachs. Please go ahead. Your line is now open.

Travis Edwards -- Goldman Sachs -- Analyst

Hi. Thanks and good morning. Just a quick one, maybe a bit higher level. Just, you completed a few transactions in April, June regarding your capital structure. I am just wondering at a high level, how you are thinking about the capital structure now? Are you satisfied with the current state of things as you have improved liquidity and pushed out maturity walls? And then, I guess second part to this question would just be, as visibility sort of improved on the earnings front, you gave a little bit of color on expectations for the full year. Any changes or color on your expectations for deleveraging getting back to sort of your 4.5 times target? I guess, I'll pause there for any color you can share.

Paul Coulson -- Chairman and Chief Executive Officer

Yeah. Look, I think we are very happy with what we did in the debt markets. And we took advantage of a situation where the Fed was supporting the bond markets, where the European Central Bank was supporting them and where you had strong performance in the equity markets, particularly in the US. So, that led to opportunities for us to refinance, to raise liquidity in the first instance, which we did early on, very early on in this whole pandemic situation. And then, as the quarter evolved, it enabled us to refinance and extend our maturities at very attractive rates. So I think, by and large, for the most part, we are very happy with where the capital structure is. There might be a bit of tinkering at the edges, but nothing material there at all.

I think as we see -- as we move toward the end of the year, as we move through the year, we've obviously got quite a lot about liquidity on our balance sheet, cash on our balance sheet at the moment. And I think it's likely that we will seek to reduce that amount by perhaps reducing the amount of drawings under our ABL facility before the end of the year. We will wait and just make sure that the year is evolving as we expect it to. But do remember, we made that drawing at a time when we know how financial markets were going to react and perform and how indeed our business was going to react and perform. So, I would say that we've had good results in both our business and good results in terms of the financial system working very well.

In terms of deleveraging, obviously, with reduced EBITDA in the year that I talked about earlier, it's harder to get to the 4.5 leverage by the end of this year. And I don't see a significant change in leverage between the half year figures we published and the end of the year. But obviously, as we hopefully resume increased EBITDA and EBITDA growth and more normalized EBITDA in the coming years, we would move on with that deleveraging.

Travis Edwards -- Goldman Sachs -- Analyst

Great. That's really helpful color. I appreciate that. And just lastly, I think -- generally, I ask every quarter, but I was wondering if you have an updated RP capacity number? And then on that, as you talked a little bit about reducing liquidity, maybe paying down some of your borrowings, any chance that some of the cash that you have got now goes upstream to the HoldCo?

Paul Coulson -- Chairman and Chief Executive Officer

Well, first of all, the RP capacity at the moment is $650 million. The only flows that we are expecting to the HoldCo are the normal quarterly dividend at the moment. We have nothing else in mind at the moment. So, you will see the -- whatever it is, the $0.15 a quarter, that's -- which covers obviously our share of that and the HoldCo covers the interest on the toggle notes, which we will continue to pay. So, that's the -- they are the only plans we have at the moment for distribution upwards.

Travis Edwards -- Goldman Sachs -- Analyst

Perfect. Really appreciate the time. Thanks for the color. See you.

Operator

Thank you. Our next question comes from the line of Gabe Hajde from Wells Fargo Securities. Please go ahead. Your line is now open.

Gabe Hajde -- Wells Fargo Securities -- Analyst

Good morning. Thanks for taking the question. Hope you all are doing well.

Paul Coulson -- Chairman and Chief Executive Officer

Good morning.

Gabe Hajde -- Wells Fargo Securities -- Analyst

I'm curious -- Paul, I know and appreciate that you don't want give out about specific numbers, but just, I guess, given the magnitude of what you are investing, the $225 million that you called out, I think that would equate to, I don't know, three to four lines on the beverage can side. I know you talked about maybe a couple of cost reduction measures in there as well. But can you comment at all if that's all isolated to the US or if you are adding any capacity in your beverage can operations in Europe? And I guess, sort of coinciding with that question, you talked about 8% volume growth, but I think in the press release, it talks about 2% volume/mix. Is that just a function of lower specialty can growth in Europe? Just trying to understand that.

Paul Coulson -- Chairman and Chief Executive Officer

Okay. I will ask John Sheehan to deal with the latter question. I think, look, in terms of our investment, the business growth, it's right across the piste. It's across the five business units. It's skewed more to bev cans than glass, but it's right across the piste and it's a mixture of different things. So, it's in the three bev can units, Brazil, the US and in Europe, and it is the same in Glass in North American and Glass in Europe. So, different things in different places. It's a mixture.

John, do you want to touch on the shipments versus the volume/mix?

John Sheehan -- Corporate Development and Investor Relations Director

Yeah, sure. The shipments growth, they were skewed in the second quarter, Gabe, toward standard in Europe. Then second thing was just the IFRS 15 effect has an impact there just in terms of the revenue coming in. Then also, there's a pass-through of lower aluminum costs, which meant that the shipments don't get fully reflected in the revenue line.

Gabe Hajde -- Wells Fargo Securities -- Analyst

Okay. And then, I guess, somewhat relatedly to utilization rates in Europe, maybe industry or yourself. We've had some other competitors talk about some unacceptable returns in certain geographies within Europe. I am curious if you guys are seeing that or if you are happy where sort of your contracts are and/or commercial opportunities?

Paul Coulson -- Chairman and Chief Executive Officer

Well, I think we need to see improvement in margins in Europe and we need to see improvements in pricing. And I think we are seeing that and we are cycling our way through, as we mentioned previously, some contracts that have taken a while to run off. I think we're -- I saw those comments, and I think they are correct. I think we need to see proper pricing and improved pricing. And I think that it's interesting that this period has shown to our customer base and to the market generally how important the can or the glass bottle and -- let's talk about the cans first, how important it is to the brand owners because if they can't get the stuff into cans, they are not going to be able to sell it. And I think people have realized that -- those who have focused on pricing, etc. have found themselves a bit short. And we've certainly focused on improving our margins and improving our mix and operating with people who value the product that we produce and how important it is for their brands, because if you've got a brand that you got demand for, you can produce the liquid or juice, that's no good if you haven't got the supply of high-quality cans or glass bottles to put it on the shelves. So, I think there has been an improved realization of that, and that's a good thing because it's been forgotten about sometimes in the past.

Gabe Hajde -- Wells Fargo Securities -- Analyst

Thank you for that. Two more quick ones, if I may. Can you kind of comment a little bit on the Glass side in Europe specifically? I know there was some capacity coming to the market to service different, I guess, categories. And now, we have seen kind of a step back with COVID. How would you anticipate kind of commercial discussions evolving for next year? Are things still pretty tight? I know price has been kind of a contributing factor to the positive side over the past couple years.

Paul Coulson -- Chairman and Chief Executive Officer

We are comfortable that we will be in balance. We'll have to -- we've got some lines down at the moment, but they are down because of reduced demand because of COVID. And as I said earlier, we are seeing -- as the restrictions are lifted in the economies in Europe, we are seeing that improving. The speed at which those lines come back and that capacity comes back is, well, we'll have to see what happens. But we're -- our expectation is that we will -- demand and supply, that relationship is very important to have in line. And we expect that to be the case. And I go back to what I said to your last question about a greater understanding of the importance of the supply chain among our customer base.

Gabe Hajde -- Wells Fargo Securities -- Analyst

Understood. Last one for me. Can you give us a sense -- and I appreciate quite honestly, sitting here in an ivory tower, sometimes we don't appreciate how difficult it is to run these businesses, particularly given what's happened over the past one month. But do you have a sense for inventories, either within your system and/or your customers and how it may impact your working capital need or build for this year?

Paul Coulson -- Chairman and Chief Executive Officer

Well, our inventories are higher than they were at the mid-year last year. We are very tight in certain of the bev can jurisdictions on the inventories obviously with the market sold out. On the Glass side, they are higher, but we expect to normalize them and deal with the situation over the balance of the year. Obviously, with lines down in Europe particularly, we will reduce inventory. So, we were looking at this the other day, and I don't think we anticipate any problems by year-end. In some cases, we think we are too short of inventory. But overall, it's got to be -- it's got to go a distance to come down a bit. But we expect to normalize it.

Gabe Hajde -- Wells Fargo Securities -- Analyst

Thank you, Paul.

Operator

[Operator Instructions] Our next question comes from the line of Arun Viswanathan from RBC Capital Markets. Please go ahead. Your line is now open.

Arun Viswanathan -- RBC Capital Markets -- Analyst

Great. Thanks. Most of my questions have been answered. So, maybe I will ask a question on sustainability. Have you noticed any shifts in sustainability and behavior there among your customer base? I guess, is there an increasing appetite for cans and away from plastic? Or has there been maybe a move back to plastic, just given some of the barrier properties there? What are you seeing as far as cans versus plastic?

Paul Coulson -- Chairman and Chief Executive Officer

Well, we are seeing -- I think the facts speak for themselves in terms of demand for cans. How much of that is -- it's very hard to describe things to whether that's sustainability, whether it's a particular product, whether it's patterns of consumer behavior changing with COVID, etc., etc. But I think we are certainly not seeing shifts back to plastic from cans. And all that I can say is that the demand for cans worldwide in the markets we operate in is incredibly strong, and we are very comfortable. And we think some of that -- quite a lot of that is -- or some -- a good portion of it is driven by sustainability issues. Sustainability issues for our customers and in turn their end-users are a major thing, and they certainly haven't gone away just because of COVID. The focus on our customers on sustainability -- our sustainability policies is very strong and it's a big part of our discussions with all our customers.

Arun Viswanathan -- RBC Capital Markets -- Analyst

And then, just I guess on a related note, given that commentary, I guess, do you expect both your Beverage and Glass businesses that they're structurally better now post-COVID, given kind of higher at-home consumption levels?

Paul Coulson -- Chairman and Chief Executive Officer

Well, that remains to be seen. I think it remains to be seen whether demand structures change permanently or whether -- and we'll have to see. I think probably you are likely to see, at least for the short to medium term, more off-premise consumption than perhaps was previously the case as people are nervous about going into bars and restaurants and things like that, so inevitably. Whether our business is better structured, I am not so sure. What we will do is structure our business to meet the demands of the day. So as the markets evolve, yeah, we will seek to be nimble enough to change your structures.

Arun Viswanathan -- RBC Capital Markets -- Analyst

Okay. Thanks.

Paul Coulson -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. And as there are no further questions registered at the moment, I will hand it back to you, Paul, for any final comments. Please go ahead.

Paul Coulson -- Chairman and Chief Executive Officer

Good. Well, thank you very much everyone for joining us today. And please make sure to look after yourself and stay safe. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 46 minutes

Call participants:

Paul Coulson -- Chairman and Chief Executive Officer

John Sheehan -- Corporate Development and Investor Relations Director

David Matthews -- Group Chief Financial Officer and Director

Anthony Pettinari -- Citigroup -- Analyst

Brian Maguire -- Goldman Sachs -- Analyst

Mike Leithead -- Barclays -- Analyst

Roger Spitz -- Bank of America -- Analyst

Mark Wilde -- Bank of Montreal -- Analyst

Debbie Jones -- Deutsche Bank -- Analyst

Travis Edwards -- Goldman Sachs -- Analyst

Gabe Hajde -- Wells Fargo Securities -- Analyst

Arun Viswanathan -- RBC Capital Markets -- Analyst

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