O-I Glass (OI) 16th Annual Wells Fargo Industrials & Materials Conference summary

Strategic execution and performance

• Strong execution of the Fit to Win program in the Americas has driven a 60% increase in operating profit from 2024 to 2026, with the region outperforming Europe, which lags by 6–10 months due to a tougher operating environment.

• Europe faced a soft start in 2024 due to a $150 million energy reset and ongoing energy-driven inflation, but volumes began to improve in June, and cost-out initiatives are delivering results.

• Demand remains soft globally due to inflation and energy costs, but 15 new significant business wins are expected to contribute positively in the second half of 2024 and into 2027.

• The cost transformation program has already removed over $500 million in costs, with the target raised to $750 million, and further opportunities identified.

• The business is focused on shifting to higher economic profit (EP) categories, with food now the second-largest category after beer, and a clear strategy for each geography.

Market trends and category shifts

• Food's share of demand has grown from 15% to 20% over recent years, while alcohol has declined from 75% to 60%, reflecting a shift toward non-alcoholic beverages and food.

• Structural trends, such as the move from plastic to glass in food and dairy, are driving growth in glass packaging, especially in Europe and increasingly in North America.

• Wine volumes in Europe are down mid to high single digits due to structural factors like demographic shifts and reduced Chinese demand, with 8% of European capacity being removed.

• Premium beer and food categories are performing well, and the company is defending and gaining share in these segments.

Financial outlook and guidance

• Full-year 2024 guidance remains at $1.125–$1.225 billion, with a steeper but achievable path to $1.45 billion in the future, though with less margin for error due to external pressures.

• Second quarter outlook was adjusted for a later transition to positive growth, but the full-year trajectory is unchanged.

• Free cash flow conversion is targeted at 5% of sales by 2027, with restructuring charges expected to drop from $150 million in 2024 to $25–$50 million in 2025.

• Inventory drawdowns and improved supply chain management are supporting cash flow improvements.