Crown Holdings Inc (CCK) 2012 Q2 法說會逐字稿

Good morning and welcome to the Crown Holdings second quarter 2002 (sic) earnings conference call. Your lines have been placed on a listen-only mode until the question and answer session. Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Timothy Donahue, Executive Vice President and Chief Financial Officer. Mr. Donohue, you may begin.

Thank you, Shirley, and good morning everyone. Welcome to Crown Holdings second-quarter 2012 conference call. With me on the call today are John Conway, our Chairman and Chief Executive Officer, and Tom Kelly, Senior Vice President, Finance.

Before we begin, I would like to point out that on this call, as in the earnings release, we will be making a number of forward-looking statements. Actual results could vary materially from such statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and in our SEC filings, including comments in the section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations in Form 10-K for 2011 and in subsequent filings.

A reconciliation of Generally Accepted Accounting Principles to non-Generally Acceptable Accounting Principle earnings can be found in our earnings release, and if you do not already have the earnings release, it is available on the Company's website at CrownCorp.com.

You will also find a reconciliation from net income to EBITDA, credit ratio computations and supplemental cash flow data on the Company's website.

I will first review the quarter and update guidance for the year. John will have some comments and then we will open the call for questions.

Diluted earnings per share were $0.89 compared to $0.83 on last year's second quarter. On a comparable basis, diluted earnings were $0.84 per share in both the second quarter of 2012 and 2011. For the six months, comparable diluted earnings per share were $1.30 against $1.32 in 2011. All businesses were above, met or were close to expectations in the first half and we remain confident in the full year.

Demand in Europe continues to be weak due to well-known ongoing economic issues and to very poor weather. Overall European unit volume sales were 3% lower in the second quarter compared to 11%.

Demand in our European Beverage business was firm and slightly ahead of the prior year, but was offset by lower unit volume sales in three-piece steel packaging -- that is food can enclosures, aerosol cans and specialty packaging. Our business, which is resilient but not immune to economic conditions, reflects the continued weakness in Europe. We had planned for much of this weakness, and early in the year adjusted our production schedules to reduce inventory.

On a currency neutral basis, net sales were level to the prior year as higher global beverage can sales were offset by lower unit volume sales in European three-piece steel packaging.

The strengthening US dollar relative to the Mexican peso, euro, pound sterling and Canadian dollar have the effect of reducing sales by $101 million in the quarter. Our review of revenue by segment will be on a currency neutral basis, and the unfavorable currency impact by segment was as follows -- $7 million in the Americas Beverage segment, $2 million in North American food, $30 million in European Beverage, $47 million in European Food, $10 million in specialty packaging and $5 million in non-reportable.

In Americas Beverage, revenue increased 1.5% over the prior year with overall volume in the segment up by the same 1.5% figure.

Volume in Brazil continued to be strong and was up 21% over the prior year's second quarter, offsetting a 1.9% decline in North America. The overall Brazilian market was up 5.5% in the second quarter over the prior year, and our share gain is the result of capacity additions in both 12 ounce and specialty can sizes made in the first half of last year in the growing regions of the northeast and in the South. Sales unit volumes in North American Food were down 5% in the quarter, but for the six months remain 1.5% ahead of last year. As we discussed in April, there was some customer pull-ahead into the first quarter, and we had expected the strong first-quarter volume performance to balance out over the course of the year.

Cost reductions from last year's restructuring activities helped plant operating performance productivity and profitability continue their improvement over the prior year.

On a currency neutral basis, sales in European Beverage were level to the prior year as unit volume growth in the United Kingdom, Dubai and Saudi Arabia offset weakness in France and Spain, the results of ongoing economic uncertainty and adverse weather in northwest Europe.

Segment income was down $6 million in the quarter and reflects unfavorable currency translation of $2 million and lower production levels.

Sales in European Food were down 5.5% ex currency in the quarter. Volumes were down 1% as some crops were weather-delayed and are now being packed in July, notably peas in the UK.

Currency translation reduced segment income by $5 million in the quarter, with the operating shortfall the result of lower production activity and unfavorable product and location mix. That is less large diameter cans, more small diameter cans and production activity being lower in our much larger, more efficient plants, notably in France and Italy.

In Specialty Packaging, revenues were down due to lower overall demand. Segment income reflects the lower sales activity and $1 million of currency translation, which was almost fully offset by cost reductions.

Demand continued strong throughout Asia during the second quarter, with beverage can sales volumes up 29% over the prior year as new plants in Hangzhou, China and Putian, China and the second line in Phnom Penh, Cambodia all contributed. Global aerosol can volume was down 4%, mainly reflecting the weak conditions in Europe, where again we have adjusted our production activity.

In the second quarter we began commercial beverage can production in Ziyang, the third beverage can plant we have commissioned in China alone over the last 12 months. Production of beverage can ends in Heshan, Guangdong province also commenced in the second quarter, and in two weeks we will begin can production in the Heshan plant. At this time, we still expect double-digit beverage can growth in 2012 over 2011.

In 2010 we initiated a sizable global capacity program focused on the emerging markets -- principally Brazil, China and Southeast Asia -- announcing total capacity additions of more than 14 billion beverage cans. With Heshan's completion in two weeks we will have completed capacity additions for 9.2 billion beverage cans of the 14 billion unit program, including six new greenfield sites and capacity additions at six additional facilities. In 2013 we expect to commercialize three additional greenfield sites as well as add a second line to our Putian, China facility; in total, 2.9 billion additional units to be added in 2013.

During the quarter we recorded a gain of $10 million related to insurance proceeds received in excess of net book value for the Thai flooding in 2011. The proceeds were received in early July, so you will see that in the third quarter cash flow.

We also recorded $3 million for restructuring related to the program we initiated in the fourth quarter of 2011. The activities are progressing well, and we will begin to realize cost savings in the third and fourth quarter and into next year.

Also on the income statement we recorded a $5 million foreign exchange gain related to two items. The first $3 million related to currency moves on intercompany debt between the Mexican peso and the euro, and reverses the $3 million loss we had on this intercompany debt in the first quarter.

The second item, $2 million, related to a decline in the value of the Brazilian real to the US dollar. The value of the real declined in the second quarter compared to the dollar, making the real debt on the books of our Brazilian company less worth less, i.e., a gain to us, helping to offset the negative operating impacts of a strengthening dollar.

Net debt at the end of June was $3.56 billion, more than $100 million lower than at the end of the first quarter. For the first six months, free cash flow was $105 million above last year's level at this time. This is due to better working capital management, primarily lower inventory levels which are the result of lower planned production activity.

Through six months we're essentially on plan, despite the US dollar being much stronger than we had anticipated. European demand remains weak, but we planned for that. So at this time we estimate full year 2012 comparable earnings per diluted share to be in the range of $2.90 to $3.00, and for the third quarter to be between $0.95 and $1.05 per share. Free cash flow is still projected to be at least $325 million.

And with that, I will turn it over to John.

Good morning. It's a pleasure to be here with you. Tim, I think, has summarized well the Company's performance in the second quarter.

Generally speaking our performance was solid, particularly given the generally weak economic conditions in our more developed markets, especially Europe. The Americas had a good quarter, with our Beverage business and Food business continuing to perform strongly in North and South America. Asia continues to perform very well, both with regard to growth as a consequence of the capacity additions that we've been making for the last three years and very successful execution of our capacity expansion program for beverage cans in China and Southeast Asia.

Europe was clearly the underperformer. All of you are well aware of the general economic situation in Europe. The effect of relatively high unemployment and restrained spending of all types by the private sector and by government is that our customers are being very careful in their purchasing decisions, and tend to defer purchases as long as possible. At the same time, their customers are being frugal as well.

In addition, the weather in Europe was very poor in the second quarter. Temperatures were low and there was a lot of rain through Western Europe and Northwestern Europe in particular. As you know we have large businesses and France, the Benelux, Italy and the UK, including large low-cost factories where the impact of reduced production clearly comes through as unit costs go up.

The result of this was that our seasonal business in particular was pushed back as harvests have been delayed. Fortunately, we are seeing a nice pickup in July and believe that the Food business will strengthen in the quarter and probably into the early part of the fourth quarter.

Our Beverage business was also affected by the weather is a consequence of outdoor activities being curtailed. We were able to adjust production quickly in response to the reduced demand, and the result was very good working capital management which had a beneficial cash effect in the quarter.

Tim mentioned the progress of a number of our international beverage can capacity additions. As I said at the outset, the projects are going well and making the contribution to growth in sales and earnings that we had anticipated.

We have mentioned to you in the past that we are very carefully -- that we very carefully consider all of our capacity expansion plans, and continue to reassess them in light of changing market conditions. We have recently noted that although we believe China demand growth will be significant this year, it will not be as great in certain regions as we had thought.

As a consequence, we've decided to cancel our new beverage can plant that was planned to be constructed in this Changchun, China, north of Beijing. The market will not support added capacity at this time. For similar reasons, we decided to postpone construction of our Xinxiang beverage can plant south of Beijing, and now anticipate commercial production of beverage cans from that plant in 2014.

Reviewing the Brazilian market, growth has been more modest over this first six months of 2012 versus 2011 than we had thought. We believe that the market will pick up in the second half of the year for many reasons.

Nonetheless, we have decided to postpone indefinitely our new factory plan for Belem in northern Brazil. As you may know, we have a large two-line can factory in northeastern part of Brazil and we believe that this factory will be able to adequately serve the northeastern region and the northern region of Brazil without the addition of additional capacity.

Southeast Asian demand continues to be very strong, so our expansion plans there are unchanged. And with that, operator, we're ready to open the call for questions.

(Operator Instructions) Philip Ng, Jefferies.

Just wanted to get a little more clarity on how lines are tracking early into 3Q. It sounds like at the very least, weather it is improving a little bit; food pack is shaping up a little better. And if I remember correctly weather was a drag last year as well, so can you break down food, beverage and your aerosol business for 3Q?

I think weather does look like it is improving. The weather patterns, if you look at the European weather pattern, it looks like it is starting to move a little bit it should be a little bit better.

It has been -- so far, early in the year the weather has been absolutely atrocious in the UK. And while it is never great in the UK, it has probably been as bad as it has been in the last 100 years -- cold and wet, and even in northwestern France.

So it does look like it is getting better. I think we're talking to our customers and the retailers in Europe. We are expecting a fairly firm food can harvest and demand in the third quarter.

Beverage has been okay. It was a little softer Western Europe than what we would have liked in the second quarter, but we do think that is going to firm up as well in the second half of the year.

So when you factor in weather improving, I guess on the margin and the macro potentially getting worse, so should we assume volumes improve a little bit versus 2Q or pretty much the same for Europe?

We think the third quarter will show a pickup. I mean as Tim just said, we have been very carefully canvassing all of our customers.

And I mentioned in my remarks a phenomenon we're seeing this year, even more than last year, is the food customers -- all the customers, the food customers in particular -- are very reluctant to order cans until they are right on top of their seasonal packs. They're not buying ahead and having the security of having cans in their warehouse.

Now, we're going to be able to satisfy demand in the third quarter notwithstanding that, but it is an effect. But we do think there's going to be a very nice rebound in food in particular in the third quarter for all of the reasons that we have talked about. Weather is improving; harvests, although delayed, not canceled; and customers having to pull cans. But as we're checking with them as to what their filling schedules are, their filling schedule is not changing very much. Their can-pull from us, the timing has changed.

Okay, that is helpful. And then, John, you give us an update on some of these projects in Brazil and China. It sounds like you're pushing out a few. So with CapEx coming in a little bit, should we expect incremental cash flow that would've been allocated for growth be returned to shareholders? And any shift on your philosophy for buybacks versus dividends?

Yes, well, obviously CapEx will be coming down a little bit. We are assessing right now what we're going to do with the cash, but we want to be sure we understand exactly the CapEx effects first. But Tim might want to add to that.

Yes, I think the lower CapEx that you are hoping to see from the plant cancellation and/or deferrals, you will see more of that next year than you would this year. Much of the capital that we had planned to spend for those projects, Xinxiang, Changchun, was going to be spent next year.

And as we always do, to answer the second part of your question, we have been fairly transparent about saying that we're going to dedicate the large majority of our cash flow to share buybacks. And so, whatever free cash flow is plus or minus CapEx, you would expect that to go to cash flow and go to share buybacks.

On the last piece of your question, the dividend, it is an item we review all the time. And we will have several board meetings over the balance of this year and we will continue to review it with our board, but nothing to say at this point.

All right, thanks guys. Good luck on the quarter.

Phil Gresh, JPMC.

Just -- you mentioned in several of the businesses that you essentially underproduced in the quarter. Can you quantify it for us, how much that was?

Yes, and I know, Phil, you had asked the question on the first-quarter call as it related to working capital. And I told you at the time that the reason first quarter working capital was higher than last year is we had less payable because we were bringing in less material in as part of the plan to lower overall production this year versus last year.

And as we look across a number of the product lines specifically in Europe, whether it be beverage, aerosols, food cans, vacuum closures, production levels in the second quarter this year anywhere from 5% to 15% lower than they were last year at this time. You will recall last year we got a bit excited after the first quarter. The food volumes were quite strong.

We felt we were going to see the big recovery from the '09 recession. It didn't materialize in the second half of the year, and we worked real hard to try to get it as low as possible last year. But we certainly made the decision early this year that we weren't going to carry a lot of inventory this year, so we have been curtailing production activity as best we can to keep inventories lower.

Got it. Okay. As we look at the second half, do you feel like you still need to underproduce at this stage or have you fully caught up? I know you had a little bit under production in the second half last year, so it's kind of taking that into account as well.

I think we probably have an opportunity now in the back half of the year not withstanding any other demand issues, but based on how we see demand in the second half of the year, which we think is going to be far firmer in the third quarter, certainly for food products than it was in the second quarter. And beverage looks to pick up as well. We think we are much better aligned right now than we were last year at this time.

Got it. Okay. And just looking at your operating cash flow that you have generated over the past couple of years in the second half, it looks to me like your annual free cash flow guidance could have an element of conservatism to it. Am I missing anything there? Or is there anything specific in the second half of this year that we need to take into account?

You might be right. We still have a fair amount of the year to go here.

Keep in mind that, as you know, we build working capital in the first half of the year. We're currently and we have been building working capital at euro levels anywhere between today's rate of $1.22 to earlier in the year at $1.30. Depending on where the euro goes at the balance of the year, we could be collecting that working capital back into the system at lower rates. So that declining euro value, if you will, translates into lower collected dollars from what we put into the system, so we're being a little bit conservative as it relates to that.

The only other thing I would say is that we were a little short last year and cash flow and -- but we didn't make a big effort in the fourth quarter. But having started this year with trying to flatten out the profile, you wouldn't expect as much perhaps in late fourth quarter as we had last year, only because we're going to be a little flatter to start the year.

Got it. Okay. And last question is -- I may have missed this, but in your EPS guidance, did you give an updated tax rate? And also, does it include any assumption of buybacks in the second half? I know you haven't really done any year-to-date. Thanks.

We did not give you any of that information in the prepared remarks. Previously I think we had said tax rate 28% for the year. I think based on country mix, we have obviously had a beneficial country mix in the first half of the year, and where we sit today right around 26%, why don't we say about 27% for the full year.

And that is basically country mix, more profits in lower-tax countries -- Middle East, South East Asia, et cetera -- compared to the higher tax rate countries. And share buybacks, we do have an element of share buyback baked into our EPS guidance, certainly.

Okay, all right, thanks a lot.

Ghansham Panjabi, Robert W. Baird.

Good morning. It's Matt Wooten sitting in for Ghansham today. If we could go back to CapEx for a minute, is the run rate for the first half the right way to think about CapEx for the full year? Or can you quantify your assumption for 2012?

Well, I don't think you want to look at the run rate in the first half as being indicative of the full year. We generally tend to do much more activity in the low seasons of the year. We had previously said $325 million of capital net of the insurance proceeds to help us rebuild the Thai capacity.

And why don't we think about a number this year between $300 million and $325 million. Most of the savings we're going to experience, as I said earlier, from the two projects being canceled that John mentioned will be next year.

Understood, thank you. And then a second question if I may, you discussed $65 million in cash restructuring in 2012.

Yes.

Is that still the right number to think about for the full year?

Yes.

Progressed through the -- okay. Do you think there's an opportunity to expand the scope of the program, given the weakness in Europe?

I wouldn't characterize the European food market, food can demand as being weak. I think we have a business that we think is very resilient. We think that over the medium and long term, the number of units demanded by our customers and the system are going to be fairly stable. So we wouldn't characterize the business as weak.

I think we have some timing issues this year related to weather, and as John said, customers' and consumers' reluctant to put anymore in the supply chain or their cupboards than they actually have to at any one point in time. So I don't think there is anything structural in food can demand that requires us to do anything.

There's always opportunity for cost savings, however, in an infrastructure or a system as large as ours. It is a $2 billion business and it is spread across 48 food can plants. So we have opportunity.

However, we have been pretty firm in our requirements to our European management that until the cost savings and the payback is so compelling, we're not willing to undertake the exercise. And when I say compelling we're looking for a payback in less than two years. So at this time I think it would be premature to consider we would have any more activity this year.

Okay, thank you for the detail.

Mark Wilde, Deutsche Bank.

Good morning Tim, good morning John. Just curious with this drought getting worse and worse here in the US, do you have any view on how this is going to affect your food can pack in the second half?

Yes, Mark, we've been following closely as well and talking to our customers. We think it is going to be very minimal. Actually our food can business is not very exposed to seasonal vegetables.

And in particular, I think the segment that is arguably possibly going to be most affected is sweet corn. And most of our customers, virtually all of them are in the far Upper Midwest, which has been a lot less affected. And over half of them irrigate as necessary. So we've been all over the problem, as you can imagine, and at this point we think the effect is going to be very, very minimal, if any, on our sales this year.

John, just if you tried to think about this for the industry as a whole, if you go back in your history with the Company when we have had a really severe drought like this, what does it do to industry volumes overall? Any sense of that?

No, I really couldn't speculate. Among other things, each of the can companies and each of the customers is so differently positioned -- proportion of seasonal, non-proportion, what are they, where are they. And that is to say where their business -- in drought areas or not.

I saw recently a drought map as you've probably looked at it. And it is very specific to certain areas, and within 100 miles rainfall looks to be adequate. So I think I just couldn't possibly; it is too complicated a subject.

Okay, and just on that last set of questions we had around restructuring in the European food can business, I think you've said that pretty clearly; not likely any additional activity this year. But if you look a bit further out, could you see some? And are there other areas in Europe that you might be looking at right now?

Well, I think what Tim is trying to say is we never want to say never. But at the moment, with the restructuring we have done, we don't see anything on the horizon that we think looks sufficiently attractive to do.

There are always things we can do to drive down costs, wonderful part of the business. And as Tim said, with the multiple countries, products, factories that we have in Europe, we're always looking at opportunities. But for the moment, nothing more this year and I don't anticipate anything next year, but it's possible. We don't anticipate anything next year.

Okay, but that carries through to the nonfood businesses as well, John?

Yes, I will say yes. We can't think of anything as we sit here.

Okay, all right; sounds good. Listen, good luck in the third quarter.

George Staphos, BofA Merrill Lynch.

Thanks, hi everyone. Good morning. A couple of questions here, I guess first one would be -- I think you said European beverage can volumes were even, if I understood you correctly, if you could confirm that. And I think you said it was a trade-off obviously between Europe and the Middle East. Could you provide a little bit more detail in terms of the volume trends you saw by, if you will, region within your European segment in beverage can?

Yes, George, Tim is looking for the numbers right now. But broadly speaking, the Middle East was up somewhat year on year, demand (technical difficulty) continuing as well. And in Europe we were down somewhat year on year.

He will get the percentage exactly. I think down a little bit more than the overall market. We think the market was off a little bit. We were off somewhat more, and largely because the business for us in Spain/France was weaker than we had anticipated, which we attribute to some degree to weather, certainly, in France; end to a degree to economic weakness in Spain. But I don't know, Tim; do you have any color on the exact percentages?

The total Europe, George, was up 20 basis points; down about 3% in Western Europe, which as I said earlier, we had pretty good growth in the UK. We had growth in Turkey and Slovakia, and we had a shortfall, as I said earlier, in France and Spain. As you can imagine the weather and the economy in those two countries offset, by about 7%, growth in the Middle East largely coming from Dubai and Saudi.

Okay. You said [10%] in the Middle East?

7%.

Okay, now the Slovakian plant -- has that come up now? Or are we now past the point of point of worrying whether the second line or first one would work as you would expect?

Yes, it is running well and benefiting from the relative strength in the Eastern European beverage can market.

Okay. Now I want to come back to the food can profitability in Europe. It was down sharply. You mentioned, I think, a 1% volume drop, which is not terrible. You said FX was a minus $5 million in EBIT.

Those components, from my analysis, wouldn't necessarily add up to the type of EBIT decline you saw year on year. So, if maybe you could parse out the lost operating leverage from producing less than demand, help us fill in the other components to the EBIT bridge in that segment to the extent possible.

Production was down 5% in cans and about 4.5% in ends. You're not talking about small numbers here. You are talking 5% on $2.5 billion, right, so there's a lot of units that aren't being produced and not absorbing.

And then on the end side, you almost double -- okay, we have two piece cans. We still have a lot of three-piece cans, so the number of ends is almost double the number of cans. So you reduce that, it's a very big number on the production.

As I said, it's a little bit of product mix as well. And the larger diameter cans are harder to make. You make them slower, but you tend to do a little bit better margin-wise and there was less sales of those and more sales of the smaller diameter cans.

Yes. And, George, what we want to keep in mind is the European division, when we refer to the volumes, we still of course are including our North African food can business, our sub-Saharan African food can business. It's doing relatively well with a lot of smaller cans, fish and so on.

And then the effects of both the weather and economic conditions and France, Benelux, Spain were noticeable. And so -- and that is a good business for us. We have low-cost plants in those regions. We do very, very well typically.

We reduced production there. We see a marked deterioration in unit costs. And again, as I said earlier on the call, we are pretty confident based on talking to the customers that the business is going to come back quite strongly in the third quarter. We've got enough productive capacity to satisfy the rebound in demand that we are seeing. But when France reduces, and Spain to a lesser degree, the Benelux, it affects us.

Okay. I guess maybe I should've asked the question differently. There was no significant competitive factor in those results. It was really more the operating leverage and mix.

No. We don't yet know how the overall food can market did, but we are convinced, I am convinced that we're not losing share. That is not the issue. It's the whole food can industry and really the fillers being exceedingly cautious about their purchases, and the weather compounding that.

Okay. If we go to the nonreportable segment, you mentioned obviously that Asian beverage can volumes were up significantly. I think the number was something like 24% or 29%, somewhere in that range. Yet the EBIT growth was de minimis. It was flat, I believe, year on year.

I know aerosol is within that segment as well. Help us understand that, despite what was the good growth in overall Asian beverage cans that EBIT was -- if I got this correctly flat -- year on year.

I mean if I look at aerosol in the machinery operation that we have in the UK, aerosol being the biggest component -- I'm adding it up for you here; down $7 million between aerosol and the machinery, machinery being down $1 billion, aerosol being down $6 million to $7 million in the quarter year on year, primarily Europe.

And so Asia was actually up quite nicely. Tim is going to tell me something on the order of 20%. (multiple speakers)

A little more than 20%.

Segment income up 20%, which I think is very, very good when you consider, okay, the unit volume growth is great. On the other hand, we've got a lot of plants that are in a learning curve. And (multiple speakers) you put that all together, and actually Asia is going extremely well.

Tim referenced our growth in sales, but Southeast Asia continues to do very, very well. In terms of China we continue to do well. Our view on China -- we had come into the cure thinking that growth in the Europe would be as much as 18% to 20%, frankly more conservative than some, but we think pretty much in line with what knowledgeable people thought of the China market.

We have recently have taken a view that we think the China market -- beverage can market will be up about 13% this year, and regionally various things, and consequently the decision to cancel the plant north of Beijing.

Okay. The last one and I will turn it over. With that and with the tailing, if you will, or reaching the tail end of your capacity program from a couple of years ago, is it possible to say what the -- as far as intermediate term, say after 2015, 2016, capital spending might look like for the Company, capacity expansion?

It seems like the CapEx cycle is heading lower for you, which is obviously very good for cash flow. Help us understand what is possible at least to look at, at this juncture, to talk about at this juncture relative to capacity and CapEx for the future. Thanks.

We've got kind of a placeholder for CapEx, and Tim can talk to that in a moment. But I think what you are saying is absolutely right.

What we anticipate after we get through this bricks and mortar phase and all of the support facilities, land, et cetera, and all of the auxiliary equipment activities that are needed for a beverage can plant, for example, we'll then begin a phase where we are increasing capacity in the existing buildings, because our geographic footprint will be largely complete.

So you're absolutely right. We're anticipating we continue to get very good unit volume growth in the emerging markets, but a lot less CapEx per unit produced. I don't know, Tim; do you want to speculate on the CapEx in two to three years?

Actually, I really don't. That is kind of far away, so I don't.

How about next year, Tim?

Well -- I'm sorry. I think as John said, we do have a footprint by country and by region that I think we are pleased with. And as John has said in the past, it didn't happen by accident. It was by design. We picked certain markets and we avoided other markets.

And so, having said that, I think the future capital will be in the existing plants we have. But I think you generally are right, George. It's going to come down over the next couple of years.

We are certainly not going to have -- if at the time we initiated this program in 2010, it was a more than 30% increase over the volumes we had in '09, we're not going to -- as least as I can tell right now over the next several years have another 30% expansion program.

Okay, thanks very much. All the best in the quarter.

Al Kabili, Credit Suisse.

Hi, thanks. Good morning. I guess just first one on Americas bev, a similar line of questions in nonreportable. With Brazil up double easily -- well into the double digits and operating income only up $1 million year on year, and I know US was down, but I was hoping you could kind of help us to bridge that one little bit.

Well, I mean the US is down just under 2%, North America that is, US and Canada. And it is a far bigger business than Brazil. It's probably a business that is, at least in the second quarter, more than five times as large as Brazil.

Keep in mind the second quarter is a -- if it's not the -- it's probably the biggest quarter we have in North America, and it is also the smallest quarter we have in Brazil. So you're just looking at the size of the quarter relative to those two markets.

Yes, you've got to keep in mind just how small that business is in Brazil in that quarter. Nothing going on, no holidays, cold weather and so on.

Okay. Was there any meaningful margin compression going on in Brazil as well that we ought to be thinking about?

Nothing that we haven't spoken about before. We talked last year about some margin adjustment as a consequence of a number of things, but nothing beyond that.

Okay, and John, I guess on North America with the market continuing to trend down here the last few years, I know you haven't lost share. But the market is down and probably will continue to go down given secular issues with carbonated soft drinks. How are you feeling about your beverage can utilization in the US? And at what point -- are we getting close to a point where you have to start thinking about some capacity adjustments?

We don't have that issue at the moment and we don't foresee it over the next three to five years for Crown. As you know we have a market share of about 20%. We are number two in the US/Canada market now by a little bit, but well below the market leader.

And given our customers and their activity and our contractual horizon, we don't see the need to take any capacity out. Now what we are doing, though, is what everybody else is doing, is thinking about the subject. We're seeing a growth in nonstandard cans, what people call specialty, which are just cans other than a traditional 12 ounce in a traditional shape.

And there is growing interest in alternate cans sizes and growing interest in alternate products. I mean all of the things you know about energy drinks, lightly carbonated fruit juices, teas and so on. And that is all bottles for some people. And that is all, I think, very interesting. And to the extent that you use existing 12 ounce capacity to service it, you can't produce as many, you have more changes and, as a consequence, productivity on 12 ounce lines declines, if you will.

So it really does soak up a fair bit of capacity often at -- very often at better margins. So I agree with what you are saying. We're concerned about it. I think everybody is concerned about it. Our customers are clearly concerned about it.

But I don't see it as a -- for Crown, in any event, it is not a pressing issue. But it is something we're going to have to deal with in the years ahead.

Okay, that is helpful John, I appreciate that. I guess switching over to cash flow a little bit. Tim, with respect to the cash restructuring costs, I think it's what -- $65 million is the plan. Where have you spent year to date towards that?

(multiple speakers) I will have spent most of it, right, because we're starting to let the (multiple speakers)

We're looking. We think -- I'm guessing we spent well over (technical difficulty) [80%], but it could be towards 90%.

Okay, okay. Great. All right, and along those lines, will we see any of these savings hit in the back half? I know most of this is going to be a '13 event, but will we see any of these savings hit in the second half?

Yes. I think if we said we expected savings of, let's say, $25 million to $30 million, maybe $7 million to $10 million the back half of this year and the full amount next year.

Okay, great. And then final question. John, on China, with the projects you talked about postponing or canceling in China next year, I think you still have a couple for next year in the plan. And I was wondering if you could maybe assess the risk with those other Chinese projects that you are still looking at doing next year?

We're still pretty -- we are still confident of those. I mentioned the Xinxiang plant, the city south of Beijing (technical difficulty) where we're pushing that, so that won't start production until '14. But the others we think we will still be doing.

And again, as I said, okay, it is an off year in China. Everybody is a little bit concerned. We reduced our estimates of market growth to 13%. But it is still very, very good.

And then when you look regionally, our view is that on the coastal regions, the southern regions, Guangdong province and west, that the markets are still strong, growing and so we feel we need the capacity.

Okay, great. Good luck. Thanks again.

Alex Ovshey, Goldman Sachs.

Good morning guys. Can you tell us what the FX rates you have built in currently into your EPS guidance and what it was at the beginning of the year?

We had -- at the beginning of the year we were using [1.32] and I think where we are at now on average for the year we're using about [1.25, 1.26]. So even though the rate is lower right now, we're going to have an average rate obviously. So what that implies is the rate, the average that we have had to date through June and todays [1.23] used for the balance of the year gives us about [1.25, about 1.26] it looks like.

Okay, thanks, Tim. And the global beverage can volumes, what do you have baked in for the full year? I think in the first half, you said it was up 6%?

That is not how we look at the guidance. I don't have forecasted volumes by product line.

Okay. And then if we look at what your capacity base in global bev cans will be at the end of '12, how many more billion cans will you have versus '11?

You mean how many units we have added this year in terms of capacity?

Right.

Installed -- I don't have the sheet in front of me here.

We'll have to dig it out.

It's got to be about (multiple speakers) -- it's probably about 3 billion, 3.5 billion units.

Yes. We're guessing 3 billion, a big (multiple speakers)

Alex, if you go to any of the most recent presentations we have given, and it is on the Company's website, there is a plant capacity schedule there. And you can just add the ones up. It is about 3 -- probably five projects, 3.5 billion, 3 billion to 4 billion.

Okay. The question I'm really trying to get to is if, longer-term, out of that 3 billion to 3.5 billion you expect to generate X amount of dollars. What percentage of that X are you going to see in '12? And what percentage (multiple speakers)

Oh, you're not going to see -- you are certainly going to see far more of it in '13 and '14 than you will this year, obviously as the plants come up through learning curve. And I think the one thing we have always tried to tell you is that, for example only, if we add a plant that makes 1 billion units and we open the plant on January 1, in the first year we make 400 to 500 million units. And in the following year we make 850 million to 900 million, and then the year after that you make the full billion, so there's a lot of productivity to be gained, and therefore revenues to be gained in the subsequent years.

Okay, got you. Thanks. Last question, what is the impact on the nonreportable segment of not having (inaudible) high capacity in the numbers? Is there any impact or is the insurance proceeds largely (multiple speakers)

There's very little impact. Two things, we are sourcing cans as best we can throughout the system to support our customers in Thailand. And for the -- for those cans that we are unable to source, where we had customer loss and/or the additional cost of freight cans in, we are covered by insurance.

Thanks Tim and John.

Chip Dillon, Vertical Research Partners.

Good morning John, good morning Tim. First question is looking at the US market actually taking a little different tact, given the growth and specialty it looks like with all the shipping of volumes next year, 2013, do we actually see a very tight market and one that would show up with perhaps better margins than we might have seen in recent years in the US market?

Honestly I couldn't say. We know what our situation is, and we're essentially sold out this year and next year. And so I think, frankly, we're the wrong Company to be addressing the question to.

Got you. I totally understand that. And then second question is looking at the situation in China, maybe I just missed it, but when did you announce the one plant south of Beijing? And why is it important that you move forward there and not in the one you originally announced north of Beijing?

I can't recall when we announced (multiple speakers)

They were all announced together.

(multiple speakers) Xinxiang, but Tim is recalling they were announced together.

(inaudible) okay.

And why, it's pretty simple. There are two or three things we have said that we feel we need to have before we want to move ahead. We would like to have a proportion of the business committed to a customer, and we want to feel confident that the regional market in which we're putting the capacity is going to be strong and growing.

And we have taken a look at the situation north of Beijing, the situation south of Beijing. By the way, I'm just using this to orient you. It is way north and way south, but okay.

And the conclusion is the north is not ready for additional capacity at this time for a variety of reasons. It could be we can't get a customer to commit, it could be we don't think the market is strong enough. It could be both. But we think that the activity south of Beijing is still holding up, but delayed.

Got you. And then looking at the working capital, I know that it has obviously not built as much as it normally does, and you mentioned strong management. But I think, Tim, you said also currency might be a play there.

As we look at the progress, or as we look at the change in working capital being much lower than normal, how much of it would you say is management working capital on one hand? And how much of it is currency on the other hand that probably will see a reduction of the drawdown in the second half?

I'm trying to -- let's see here; the -- there is certainly a currency element there. But I think if we just looked at receivables and inventory, they're down $400 million and payables are down $300 million, so that only leaves about $100 million net exposed to currency. So I would think the majority of working capital management is a very small amount that is currency given the net position we're talking about there.

Okay, that is good. And then just lastly, just one last quick one. In the Belem situation in northern Brazil, I know you originally announced that as a billion can operation back in October of '10, and now I believe you have just either cancelled or postponed that [indefinitely].

How much of that is just the market not growing quite as fast as you thought? And how much of that might be just other capacity that might've slipped since then? I'm not sure if there is any, but could you address that?

Yes, it is mostly -- almost entirely that the market has slowed. And Tim referenced that in the second quarter things picked up a little bit in Brazil. But as we were telling you earlier, it is seasonally such a small quarter that we don't read a lot into that.

So our fundamental concern is that market growth has slowed, and we talk our customers always. We've talked to all of them about what do they think is going to happen with regard unit volume growth. They're more subdued than they were.

We talk with them about packaging conversions more to cans from glass and so forth. They are still very bullish on cans but a little less than we thought. And so we just took a look at the entire region and decided we were going to try to be a little bit more prudent, and that is why we made the decision.

Got you. Thank you.

Chris Manuel, Wells Fargo Securities.

Good morning, gentlemen. Just a few follow-up questions, most have been asked. But one area that we haven't touched on yet is with regards to pricing and price compression. I know in the past you have talked about having price compressions, some issues principally in Europe. I think as we look at your margin trajectory, even on flattish volumes it still is coming in a bit.

At what point do we begin to anniversary that? Is that still an ongoing issue? Does it potentially get worse given some of the softness in Western Europe that you are seeing right now? Can you give us maybe some thoughts and color there?

We haven't seen much in price compression. I think there has been a little bit. There is always going to be when volume softens a little bit. But that isn't the fundamental thing.

It really is, as Tim said, to us it is a lot less production in the second quarter than we ordinarily would have in the Food business. So that may become more of an issue towards the end of the year, depending upon how the third and fourth quarters come back, but that hasn't been the biggest thing. The biggest thing has just been the extreme reluctance of customers to buy ahead of their precisely known needs and (multiple speakers)

I'm more -- sorry, on the beverage side. I apologize.

On the beverage side --

More specifically on the beverage side.

No, no; beverage is really fundamentally unchanged.

So -- all right. And then I want to circle around two other topics if we can. You indicated that when you looked at the China market, you thought originally coming into the year might be up high teens, 20%-ish. And you lowered that down to something -- lower teens. Can you talk a little bit about what you are seeing and why?

Or what is behind that? Is it consumption levels are not coming in where you thought? Is it that maybe conversions from three-piece to two-piece over there are coming in lower? Or kind of a -- and then possibly as well, what you are anticipating the next year or two, how that continues to play out.

Yes, I think there've been three things. The beer conversions have slowed a little bit. The overall beer market is growing as it was. But the beer conversions, glass to cans, have slowed a little bit below our rate. Nothing fundamental about the way our customers are thinking about how they want to go to market, it is just the rate of change has slowed somewhat, more in certain areas than other areas.

Some of the soft drink companies are pushing PET little bit harder. You may or may not know, Chris, but in China in carbonated soft drinks, the can tends to be the premium package. It is priced that way and the volume driver for the soft drink companies tends to be more PET, and so they have been pushing PET little bit harder. It could be a reflection of the economy generally.

And of course we have this phenomenon that I think you are very well aware of, where one of our very large customers getting quite a bit larger, this herbal tea company had an altercation, a problem with their franchisor, if you will. The end result was that they had to re-brand -- not a lot, but they had to re-brand. And then the franchisor decided to come into the market more directly, and that didn't hurt overall volumes but it slowed the process of three-piece welded converting to two-piece aluminum. We still think it is all going to happen, but it's going to be delayed.

So those were all the things, and undoubtedly maybe general slowdown in growth in China from 10%, 11% GDP growth to what they are now -- people are now saying 7.5% to 8%. That was all -- that is all, we think, part of it. And we're not disappointed with 13% overall growth rates in an absolute sense, but obviously less than we had planned for.

Okay, that is helpful but -- so the bottom line is over the next few years you still anticipate high single-digit, low double-digit growth, just maybe slowed from (multiple speakers)

Absolutely. I think we have said -- I think we have been using 12% year on year growth as kind of a five-year projection.

On a growing base, which is -- in unit terms is still very significant for the industry.

I don't want to get carried away. But I think as you know, I think the Chinese beer market is twice the size of the US beer market now and it has grown 5% to 6% year as an example, and everything else is growing, too, off much bigger bases.

If I could follow it up with a little bit more discussion on both North -- or I'm sorry, on South America and Europe in a similar direction. So, I recognize it's a small quarter there. But as you look at South America, particularly Brazil, it has slowed a bit over the last 12, 18 months but is still growing at a nice level.

Do you think kind of a mid-single-digit level is a reasonable assumption? I recognize your volumes are up more than that given capacity, but overall market and a mid-single-digit level the next year or two is still achievable?

That is what frankly our people believe. That is what we think the industry down there, the can industry, for example, believes. It's certainly what our customers are telling us. We are just being quite cautious.

It will require quite a rebound in the second half of the year, and I think everything particularly in Brazil, which is so important to us, generally speaking is going very, very well. But the economic growth has slowed, as you know.

There's a lot of talk about the good things that are going to happen. Minimum wage is going to go up. Unemployment is still very low and that is all quite positive, and the middle classes and they've got quite an elaborate definition of the different levels and how they're moving. That all seems to be quite positive.

I think a negative that we're aware of, you're aware of is consumer credit, which was virtually nonexistent in Brazil up until about five years ago, has grown at quite a rate. And there is some people who believe that the average consumer in Brazil needs to pay off his credit cards a little bit and pay more attention to his mortgage and car payments, and that may be dampening discretionary consumer spending. So, all of that together -- we think the market is going to do fine. But we just think the rate of growth has slowed, and we're being cautious this year.

Novel concept of paying off debt; I like that. I'm joking.

But when we talk about Europe, a similar issue as you think about Eastern Europe versus Western Europe, and particularly in the Middle East as well, it had paused for a few years. It seems to be back growing again. You specifically cited a few regions in Western Europe that had been more soft, and obviously you had some new capacity that came online in Turkey as well.

What is your anticipation there? Do you anticipate more of the same? You've done a good job, as you pointed out in the prepared remarks, that year to date anticipating this, getting production in line. Do you think now that Western Europe can stabilize from here and go back to kind of low single-digit growth at some point? I guess what is your anticipation for the next 12, 18 months?

Well, we think that in beverage in Europe, the fundamental direction is still positive and healthy. I think we've been using something like 4% to 5% unit volume growth across Europe for quite some time, and we haven't changed our view.

And the reasons are around -- beer conversions continue from glass to cans. The influence of drinking and driving and smoking prohibitions continue to force people to consume beer, everything else, more at home than at pubs and bars, et cetera. That continues. And that is positive.

Energy drinks continue to grow. We have some, not a lot, but it is a factor. Carbonated soft drink continues to do well for cans. Of course Eastern Europe is going to continue, so all of those things are positive.

The thing this year that makes it real hard for us to forecast the next 12 to 18 months, but we're not negative, is the weather. The weather has been absolutely dreadful. And you almost can't overstate how crappy the weather has been in France, Benelux, northern Germany, even northern Italy and the UK.

And we have become obsessed with looking at the weather map every day, and you almost can't believe it what the temperatures are. The temperatures tend to be high 50s, low 60s in Paris, London now has gotten a little bit better the last couple of days, and constant rain.

So you can get carried -- but we think there's going to be a bounce back. It looks like things are improving a lot in the third quarter. And so we still think the market is going to be up overall, but it was a little bit of a disappointing quarter.

And I think, Chris, if you looked at industry data for the last 10 or 11 years you would see that every year with the exception of two years, '03 because of the German deposit legislation and '09, the deep recession year, but every other year growth in Europe -- and I'm including Eastern Europe and Russia in those numbers, but Russia no greater than Western Europe -- has been anywhere between 4% to 10% in every other -- in eight of those other years.

So I think we're still very positive on European growth of cans.

We are. And the market even now is a little over half the North American beverage can market, US/Canada. So I think there's good room to grow. I wish we were somewhat bigger, frankly, in Europe than we are.

That is very helpful. Thank you gentlemen.

Adam Josephson, KeyBanc.

Good morning everyone, thanks. A couple questions. What have been the recent trends in your margins in China? And how much improvement are you expecting there?

I think the -- I will answer the question as follows. We have not seen -- if you are asking have we seen margin compression, the answer is no.

The recent trend in our margins is impacted, however, by startup costs we've had for a number of the projects we've had. And those startup costs, when you have three to four projects ongoing at any one point in time, are not insignificant per quarter. But I would say there has been no margin compression.

And as those costs roll off, presumably you would expect fairly significant improvement next year and in subsequent years?

Yes. Coupled with increases in productivity and the benefits of selling more volume, yes.

Sure. One regarding China and Brazil. Given the differences and per capita beer consumption and can penetration, would it be reasonable to expect the Brazilian can market will grow more closely in line with GDP than the Chinese bev can market?

Well, we think -- I think beverage can growth in Brazil should exceed GDP growth, and it has for the last five years, because the package mix -- although it is much -- much more of it has moved, for example, in beer, the cans, than five years ago, there's still a good ways to go. And the leading company there is a strong component of cans and they've been pushing cans real hard and then the competitors have to follow. So I think that is going to occur.

And frankly, the same thing in China; it's -- we're getting the benefit of [share of] GDP growth increasing per capita incomes, but also the package mix phenomenon for beer, for teas, these so-called herbal and Asian drinks -- it is all very positive from a packaging mix standpoint.

Great. In the Middle East and Southeast Asia, how much more quickly have you been growing than the local economies, and how likely do you expect that to continue for?

Well, quite a bit. I would have to go back and remind myself what all the GDP growth numbers are, but quite a bit. And in Southeast Asia to a degree, a way to think of it is in a number of countries they jumped over returnable glass for beer.

They didn't have a very big beer industry. They are now drinking a hell of a lot more beer, and they're not putting into returnable glass. They jump right into cans, and so that has been very, very positive.

In the Middle East one of the benefits we get is cans absolutely the best package of carbonated drink of any kind, simply because of the weather conditions, the shipping conditions, the handling conditions and you don't have any carbonation loss. So, both regions are very, very conducive for cans.

Great, thanks. And one last one, in your guidance are there any FX translation benefits embedded in that $2.90 to $3.00?

Not other than what we're sitting with now year-to-date, $2 million.

Terrific.

But let's be fair here, right? That $2 million is a pittance compared to what is the negative embedded in the guidance, which is the strengthening dollar against all the major currencies in which we operate.

No, sure; thank you for clarifying.

Scott Gaffner, Barclays.

I just wanted to go back to the expansion plans. With the two plans -- with the one being canceled and the one being postponed, is it safe to -- two questions on this. Is it safe to assume there were never any contracts out on that capacity? And second, if there were any contracts, does that mean the level of contractual obligations on your 2013 expansions is now higher than it was when you mentioned on the last quarter?

I think the answer to that is the level of contracts for the remaining '13 projects is certainly higher in percentage terms. On the project that was canceled in China, and as we always said we wouldn't proceed unless we had a contract. And as John said earlier, for a number of reasons we have canceled that contract -- canceled that plant, it is probably fair to say we didn't have a contract.

We do have a contract in the northern part of Brazil in Belem. And as John mentioned in his comments, prepared remarks, we will continue to service that customer, which is under a long-term contract from the plant in the Northeast in Estancia.

Okay. And just in Europe during the quarter, can you talk a little bit about when in the quarter did you really see the weakness from your customers? How fast do you hear about that weakness? And when did you begin to pull down your production levels and working capital levels in response to that? And likewise, how fast can you then pick back up if demand does come back?

Across all of the businesses?

Correct, in Europe.

Well, we had a somewhat weak start, but markedly weak as we went into the latter half of our April and May. And the weather, of course, wasn't improving. So we're able to adjust very quickly and we did.

And so as I was saying earlier, we're staying really close now to where the customers are going to be in pulling cans, particularly in food more than they have. And we're very confident we can respond to their demand requirements in the third quarter.

Okay. And then just lastly the North American food business, the margins were significantly higher than what we were expecting. I know in the first quarter you sort of talked about the segment benefited from some shift in customer volumes. What was the driver of the margin improvement in the second quarter, and do you think that is a sustainable margin level?

Well, cost reductions are the main driver and it relates primarily to the restructuring activity we had in North American Food. That is, we closed a plant in the fourth quarter, which is probably about the sixth or seventh plant we have taken out of the North American Food system over the last four years.

We really have been fortunate. I mean as a consequence, we held off for a long time doing the restructuring in the US and Canada, as many of you know. And when we finally did it, it was a major program. It took us about a year and a half to get through it.

The result of it all is that our plants are very, very well loaded, that our shipping radius is appropriate, and our people have just done a phenomenal job driving down costs, driving down spoilage, reducing can weights -- all of the things you need to do in the business to be successful. So it has really just been a great outcome.

Is the margin sustainable? Well, I certainly think our performance is sustainable. As John said, are we able to do all of the things technically and manufacturing-wise to enable us to have the opportunity to make a better margin? And the plant loading certainly is, we believe, very high for an industry like North American food.

So those conditions are certainly sustainable. I can't comment on what the future price might be in the industry.

Right, no, it is a great margin performance. I think just to clarify, was there any benefit from shifting customer volumes in the second quarter as well? Did you address that as well?

No, no, no. Volume was down in the second quarter, right? As we expected -- when we talked you in the first quarter, we expected some of that outperformance in Q1 to reverse itself in Q2, or balance out I think is the word I used earlier. And margin was down about 5% in Q2. But all of the benefit we saw over the prior year was related to cost reductions.

Great.

You take a factory out, you take a lot of fixed cost out.

Thank you.

Todd Young, Morningstar.

Thanks and good morning guys. Two quick ones. In recent months we have seen some of the larger US craft breweries take more interest in aluminum cans. Do you have any interest in building a relationship with the craft breweries or is it -- is your interest in specialty cans primarily toward non-alcoholic beverages?

No, we have been working very, very closely with the craft breweries. We've done a lot of work with them. We have quite a high proportion of the craft brewing business already. We don't talk about it a great deal, but we're very, very interested in it. It is a nice phenomenon.

You're absolutely right. They're coming around to the virtues of the can. They're understanding that with some attention to labels and marketing and so forth, they can come up with something very distinctive. So it is still a very small base. We've got to admit that. But we are paying a lot of attention to it.

Okay, great. And with your competitors making some plans to build can capacity in China -- or I'm sorry, in India, do you have any interest in taking some of the CapEx that was dedicated to those Chinese and Brazilian plants and using it to build a presence in India?

You know, we've been selling into the Indian market for almost 20 years, principally from our plants in the Middle East, Dubai in particular. A lot of trade relations in Dubai traditionally with India. So we think we know the markets very, very well.

We have salespeople they are calling on customers. We do business development prospecting and have over the years. We think one day in the future it is going to be a wonderful market, but right now we think we are way, way ahead of any significant demand.

You've got various things going on. First of all, soft drink, soft drink in a country like India with per capita incomes as low as they are can stay returnable glass for a long, long time. And then if you add PET for high-volume sales, that is a very cheap way -- not a very good one in my view -- to go to market with carbonated soft drinks.

Product degradation I think is severe in hot climates, but okay, it's the way that a lot of soft drink marketers like to go to market, so real hard for cans to find a significant place.

Your turnover to beer, and if you pay any attention to it at all, you have first of all a problem. Indians don't drink a lot of beer. Maybe sometime in the future there going to, but they don't now.

And then you throw on top of that the limitations on shipping products as a consequence of poor infrastructure, as a consequence of duties, believe it or not, between states, regulations and so forth. The whole thing together -- and we've looked at this a lot. This isn't like something we don't pay any attention to. We've looked at it a lot. We have a very, very difficult time understanding why we should consider deploying capital to India, frankly even talking about India.

So, our message to our people in the Middle East is you keep selling into India as you have been, keep tracking the markets. And if one day you can persuade us this thing is going to take off, fine. We think beverage can supply in India is probably 50% to 100% now in excess of market requirements. So, no, zero plans for India.

Great, thank you very much.

I think that's the end of the call. Thanks, Shirley, for your moderation. That'll conclude the call. Please note that the third quarter 2012 conference call scheduled for October 18, at 9 in the morning Eastern Time. And we thank all of you for listening and look forward to speaking with you again in October. Bye now.

Thank you. This does conclude today's conference. We thank you for your participation. At this time you may disconnect your lines.