Operator: Your next question comes from the line of Daniel Kang from CLSA. Please go ahead.
Daniel Kang: Morning everyone. So, you spoke about protein turning a corner in January. Can you just elaborate on how you’re seeing stock levels and the potential for an end in destocking in other product categories?
Ron Delia: Yes. Look, I think as it relates to the trend on destocking from — sort of break it down in a couple of buckets. Firstly, we’d say the really pronounced end of year destocking that we saw in December, we don’t expect will repeat with the exception that — or we don’t expect will continue with the exception of globally in healthcare and the North American beverage. We know that in those two segments for different reasons that we’ve mostly covered we’re going to see continued destocking certainly through Q3 and likely into Q4. So, we’re not expecting a big bounce back there. Other than those two segments, other places where there was really accelerated destocking in December, we’re not expecting to see a repeat of.
And so therefore, on a general basis, we would expect that we’re going to start to come out the other end of this inventory cycle that we’ve been weathering for the last several quarters. We see some signs of that. Already, I mentioned I mentioned meat as one place that seems to have stabilized, premium coffee in Europe is another. So, there are some reasons for optimism. But again, we’re not getting ahead of ourselves here, and we recognize we have two important parts of the business in healthcare and beverage, which you’re going to continue to go through some more destocking from here.
Operator: Your next question comes from the line of Keith Chau from MST Marquee. Please go ahead.
Keith Chau: Hi there gents. Just an extension of Daniel’s question on destocking and part of my ignorance, but how can you actually tell what is destocking, what is underlying volume trend? Can you specifically quantify that with data that you’re seeing internally? Or is it based on discussions you’re having with customers a bit of an approximation internally? Can you just give me a sense of how you work out what is underlying consumer weakness? What is destocking? What is cyclical? What is structural?
Ron Delia: Yes. Look, it’s part art and part science. So, firstly, there’s a lot of discussions with customers and remember in some parts of the business where even co-located with customers. So, there’s a high degree of customer intimacy across the business. And the starting point is the discussions and the joint planning dialogue that we have with our customers around the world. So, that’s arguably the most important input. But then we also try to triangulate with data. And what do we look at? We look at things like in categories where there is scanner data, which is not the case across our portfolio, certainly not in healthcare. But in food and home and personal care and places where there’s good retail scanner data, we take a close look at that.
We also look at the scanner results for individual customers, individual companies and try to determine if there’s any difference between the overall market performance and the performance of our specific customers. And then we look at our volumes and try to triangulate between those three data points to see what’s the difference. Is there — if there’s sell-through or not and whether or not we’re seeing an inventory drawdown or buildup. So, it’s like it’s an approximation, but it’s a reasonably informed approximation, both with input from the customer directly as well as data and quantitative inputs.
Keith Chau: Okay, thanks Ron. That’s great color. And then just a quick follow-up on the point in January, and I appreciate it’s only a month. But when you talked about an improvement, are you talking about a positive growth comp in January or less bad January versus the last six months? Thank you.
Ron Delia: Yes. Look, we’re talking about it relative to the first half. So, it’s a little bit of both. But generally speaking, we’re talking about the comparison to the first half. And so we’re not talking about — we had some parts of the business that grew, but we’re not talking about general growth across the board. What we’re talking about is a general improvement relative to the first half and certainly the second quarter.
Operator: Ladies and gentlemen, this concludes our question-and-answer session. I will now turn the call back to Ron Delia for closing remarks.
Ron Delia: Thanks operator and thanks everyone for joining the call today. We’re, as you can hopefully pick up, pretty optimistic about our second half. We believe that the second quarter was the low point for us in terms of volumes and earnings growth and the business will build momentum from here. So, thank you for your interest in Amcor and we’ll speak to you next quarter.
Operator: This concludes today’s conference call. Thank you for your participation and you may now disconnect.
