Jakob Cakarnis: Michael, just a question for you. I was just wondering if you could talk through some of the fixed variable cost structures across both of the divisions. And just noting you did talk about some plants downtime, which is a little bit higher than expected. Can you just talk about how that’s flowed through to some of the cost benefits in the half whether that will occur into the second half of the year if the volume environment remains weak?
Michael Casamento: Yes. I think you got to think about it in the context of just our cost of goods and the breakup of the cost of goods where we focused on taking some of that cost out. Of our COGS, about 60% to 70% of it is the raw material. You then get into labor, which is around that 10% to 15% and then things like energy and freight. So where we really focused was around just managing the labor in the half, particularly flexing downtime to match our customers where they were down, managing the overtime to take that out as well. So we — if anything, we’ve recovered inflation. We talked about that, the $160 million. But within the performance in the half, we absolutely took some cost-out. We haven’t specified the exact amount. But to Ron’s point earlier, there was a few hundred heads as well from a direct labor standpoint that came out as well as just generally managing and flexing that cost in line with the demand.
Operator: We’ll take our next question from Kyle White with Deutsche Bank.
Kyle White: Just curious, given the kind of customer elasticity that you’ve talked about, have you seen any shift in your customers’ go-to-market strategies on pricing as volumes have started to decelerate? Any sign of increased promo activity that could drive volumes? And I understand it might be hard to give a general statement given your diversification within Flexibles. So I guess I’m most interested on hot fill and cold field beverages within rigid packaging, but any details would be appreciated.
Ron Delia: Yes, it’s a good question. We have seen some shifts in the consumer and some of that driven by actions that the brand owners have taken. In the beverage space, and if we just focus on North America, some of these points would hold in Latin America as well, but in the beverage space in North America, when the consumer is under pressure, they tend to revert to multipacks and smaller unit sizes, right? And so if they’re going to buy a soft drink, they’re likely to buy it in a pack of 12, where the unit price is lower than buying it through the convenience store in the cold chain. So we have seen some of that. That’s probably contributed to the softness, particularly on the cold fill side. I think we’ve seen some other examples in other segments in Europe in the coffee segment.
We’ve definitely seen soft volumes in the more premium end than the single-serve system sales, and we’ve seen higher sales in the segments that are multi-serve. So think about capsules in a system versus ground coffee or instant coffee. The instant coffee is what’s being pushed at the moment. So we are seeing a little bit of that sort of behavior. It’s maybe just a different degree of emphasis across their product mix as they help the consumer through a high inflationary environment.
Operator: We’ll take our next question from Cameron McDonald with E&P.
