North America Volume Outlook
Q: How will North American volumes evolve post brewer share shift?
A: A prior share shift in the brewing industry led to a loss of approximately 2 billion units for us, which is already reflected in our numbers. We've won new business to fill that hole and expect volume increases in the back half of the year. We anticipate industry growth of around 1% to 2%, with beer being softer and carbonated soft drinks performing better. Regardless of slight fluctuations, we have strong visibility into our operating earnings and cash generation in North America.

Regional Market Outlook
Q: What's the updated outlook across various regions?
A: In South America, we're seeing strength continue from the fourth quarter into the first, particularly in Brazil, where the economy is incrementally improving. We expect higher performance this year compared to our initial outlook. Argentina is holding steady due to a good crop season, which should benefit us financially. In Europe, growth is ahead of expectations due to improved inventory positions and increased focus on volume, especially in the beer sector. However, we remain cautious about potential impacts from the Middle East on energy prices and consumer behavior.

Operating Efficiency Improvements
Q: How are you progressing on recovering operating efficiency?
A: We've regained approximately 1% of the 3% efficiency lost over recent years. This improvement is primarily due to reduced overtime and spoilage, largely from retiring older assets, which contributed to about 80% of the improvement. We have significant runway to achieve the remaining 2% efficiency gains across our newer assets and expect continued progress over the next 18 to 24 months.

Cost Reductions from Plant Closures
Q: Beyond plant closures, what's driving North American cost reductions?
A: The cost reductions are twofold: fixed-cost absorption from plant closures and improved operational performance. We've regained a couple of efficiency points lost over the past five years, thanks to eliminating higher-cost facilities and better performance from plants with more experienced staff. These factors have led to an almost 25% increase in EBIT despite flat or down volumes.

Use of Proceeds from Aerospace Sale
Q: How are the aerospace sale proceeds being utilized?
A: We've received over $5.5 billion from the aerospace sale. We've paid down approximately $2.8 billion in debt, including euro-denominated debt due in March, and plan to repurchase about $1.3 billion worth of shares in 2024, aligning with a recent Board authorization for 40 million shares. Our anticipated CapEx for the year is $650 million, consistent with prior guidance, and interest expense is projected at around $320 million, slightly better than earlier estimates.

South America Volume vs. Earnings
Q: Why did South America's EBIT growth lag volume growth?
A: In South America's peak season, we experienced a 26% volume increase but only a 10% EBIT increase. This is due to mix and timing differences, particularly in cans and ends shipments. When considering both the fourth quarter and first quarter together, volumes are up about 12%, and operating earnings are up over 40%. Therefore, it's important to look at performance over the entire season rather than isolated quarters to understand the leverage dynamics.

Aluminum Price Volatility Impact
Q: How does aluminum price volatility affect your business?
A: Currently, aluminum prices are at historically low levels, and there's a shift toward aluminum packaging in parts of Europe. While we remain vigilant about potential impacts from Middle East developments on energy prices, we aren't seeing concerns from customers or adverse effects on demand. Customers have become more attentive to hedging strategies, often locking in prices at favorable levels, which helps mitigate risks associated with price fluctuations.

Aluminum Supply Chain Risks
Q: How are you managing aluminum supply chain disruptions?
A: We've significantly improved our risk management since tariffs were imposed in 2016. With 21 different metal programs, we're not shipping metals affected by sanctions to sensitive countries, thus reducing exposure. We actively manage potential risks from sanctions or trade issues and consider the current risk level to be very low due to our diversified supply chain and proactive strategies.