And those would be healthcare need. You have heard us talk to that protein, protein breaks out and cheese and meat. Hot-fill beverage, obviously, would be one pet food premium coffee. And those are really the five focused categories that we drive. And we have seen, particularly in pet care, meat and cheese, we’ve seen growth in the quarter, which we are pleased with. Now I will say these are green shoots and don’t walk away from the call believing that this is like significant growth numbers. These would be low single digits. So we got to stay bolted here. But we like what we see, and we’d love to see a little more. Maybe a little more color here on cheese, as you particularly asked North America and Europe, we would be up also on the basis of less destocking.
Meat, also less destocking and some regional wins that we have seen. Sorry, I just want to take the other part of the question, which was just check my notes here on the sustainability side and targets being pushed out and the effect on our business. Look, we follow the discussions closely. Actually, we are part of the conversations. And of course, we noticed that some industry participants have started to think about resetting their targets for their sustainability initiatives. At the end of the day, we are talking about essentially putting circularity in place, a circular economy for plastic, which will be the critical initiative to keep plastic waste out of the environment. That requires a lot of things that have to come together, and we are going to have to work together.
Nobody can do that alone. And I think the understanding in the industry right now is after having worked very closely on the topic that it may make a little – take a little more time to get to the targets that we have set years ago. I mean I don’t know if you particularly think about Unilever, who has come out with pushing the targets backwards. But they were the first ones to come out and make a commitment, and that was sort of in 2017, if I have that correctly in my mind. And over the years, they have learned a lot, and the industry has learned a lot. So, I think it’s a matter of additional realism to just simply [Technical Difficulty] what they are saying. Now, in terms of Amcor, we have made a pledge in 2018, we are the first packaging company out there to pledge that will make 100% of our packaging recyclable and reusable or compostable by 2025, and we are pretty much around the corner.
We do not have the need to push our targets out at this point in time. We are making really good progress because we have, at this point in time, roughly 90% of our packaging portfolio in recycle-ready structures or we have those alternatives available, and we are ready to sell them to customers when they want them. So, everybody needs to do their piece. We are holding on to our targets right now. We don’t think that it means anything to us that others are pushing their targets out. We are very committed to our sustainability targets. Like the industry is, particularly our big customers are particularly Unilever is. So, we continue to drive that with full force.
Operator: Your next question comes from the line of Brook Campbell of Barrenjoey. Your line is open.
Brook Campbell: Yes. Good evening. Thanks for taking my question. Just with respect to trajectory in the business, this financial year has been better than expected. In the third quarter, you saw some EPS good versus back in Feb, the expectation was for the third quarter to be down a bit at EPS. And despite this, you have kept your fourth quarter EPS growth at mid-single digits, which is unchanged. So, my question really is, why wouldn’t the better performance for the first three quarters continue into the fourth quarter? Any reasons what’s holding you back from upgrading that fourth quarter expectation would be great? Thanks.
Michael Casamento: Yes. Thanks. Brook, it’s Michael here. I can take that one for you. So yes, look, we finished Q3 with EPS growth, which was really pleasing. And that was on the back of a couple of things, slightly better volumes really coming out of that December period as P.K. touched on earlier. When we look our way through January, clearly, we saw an improved performance and some of that was relating to some of the unwind out in December. We weren’t 100% sure on how that might translate for the rest of the quarter. And what we saw in February was some more unwind clearly from December, which helped improve the performance in the March quarter and led to us being able to deliver EPS growth, which was really pleasing.
So, you have seen us increase the full year guidance. We have taken the full year guidance to $0.685, $0.71, so an increase there. That’s really on the back of that improved performance in Q3. In Q4, we are still expecting sequential improvement, both in volumes and profit. And clearly, the driver of that, we are going to see that sequential improvement in the volume really held back by the continued destocking in healthcare. That’s really the key point that’s holding the volumes back in Q4 as P.K. touched on. That in itself has some unfavorable mix, which we have talked to in the past. So, that will continue into Q4, although start to abate and certainly down favorable mix from healthcare will unwind as volumes start to normalize into the future there.
But Q4 is still expecting good cost out, good leverage through the P&L from that cost initiative as well as the structural piece, adding through there. And we are also expecting the earnings trajectory to improve to that mid-single digit. We get benefits from the Q4, the absorption in Q4, which is seasonally our biggest quarter as well. So, we feel pretty good about where the outlook is for Q4. We have confidence in delivering within that range. What we have seen in the early parts of April confirmed the volume outlook, so we feel confident there. And we just felt that we didn’t need to get ahead of ourselves at this point in time. Clearly, we have given you a range. We have given the marketing range. So, that’s a reasonable range in Q4.
And if the volumes come in a little better than what we are expecting, then, clearly, that’s one way that the outcome for the full year could get towards the upper end of the range, along with cost and let’s see where raw materials impact as well. So, overall, I would say we feel pretty good about where we have landed in Q3 and what’s ahead of us in Q4 to deliver a good year.
Operator: Your next question comes from the line of Keith Chau of MST. Your line is open.
Keith Chau: Good afternoon Peter and Michael. Peter, a question just around the PPWR that was voted into European Parliament earlier in this month, can you give us a sense of what Amcor is planning with respect to any changes to the regulation around plastics in the European Union? I know there is some impacts that are expected to the, I guess a headwind for the plastics industry in Europe by 2030. But just we came to hear your views on whether you think there is a headwind for the Amcor flexibles business? And if there are any mitigation strategies that are being put in place or whether Amcor is planning ahead to mitigate those headwinds? Thank you.
Peter Konieczny: Yes. It’s also a great question and obviously falls into our sustainability strategy. Look, I will start out by saying that we are very supportive of regulatory and legislative developments that sort of drive the whole industry to this circular economy for plastic. And as such, the PPWR is actually welcomed from – by Amcor and from Amcor because I think we are making – we are creating an environment that allows us and the whole industry to make more progress into that direction. Again, everybody has a role to play. We are sitting in the value chain at pretty much the start. Our job is to come up with structures for plastic packaging that are recycle-ready that can be recycled. And I said a little earlier that we are making really good progress in hitting our targets by the end of 2025.
So, when customers want to have these structures, we are ready to provide them to the extent we are not doing that already today, right. So, these – many of these cycle ready structures are commercial. And by creating a regulatory environment, everybody gets level set. And we can work with certainty in certain directions in order to support the business and help the very efficient and high-performance packaging substrate, find its place also in the context of sustainability. I mean there is a place for plastic here. And we got to remind ourselves why we have so much plastic packaging. It’s because it’s a very efficient and high-performing substrate. The challenge is end of life. The circular economy addresses that and regulation that gets us into that direction is welcomed.
Operator: Your next question comes from the line of Cameron McDonald of E&P. Your line is open.
Cameron McDonald: Good morning. Question for Michael, if I can, just going back to the interest rate guidance. Can you remind us of what your hedging profile actually looks like? There was – obviously, last year, you had some significant interest rate exposure. And my understanding is that, that was mainly due to hedging and the exposure to floating rates. So, as interest rate expectations have been rather volatile in the last month or so, how do we think about your hedging profile in that and the exposure to that changing interest rate environment into FY ‘25, please?
Michael Casamento: Yes, sure. I think – look, the first point we could start, the debt profile today is about 70% fixed, 30% floating. With that, we have no maturities coming off now until the middle of 2025. So, from that respect, we have got a bit of flexibility in how we can manage the debt book and the interest exposure. As you look forward, we haven’t provided any guidance for FY ‘25. But clearly, we have given you some guidance for ‘24. If you look at our debt profile and then you look at some of the forward curves over the next 12 months or so, we are not expecting a material movement in our interest expense just based on the debt profile we have and the maturities that we have got coming. So, we have got some flexibility to work through how we manage that debt book and that currency exposure as well.
So, when you put all that together, we don’t see any material change or impact on the interest expense as we look forward into ‘25. But we will provide you further guidance on that in August when we provide the full year guidance for FY ‘25 at that time.
Operator: Your next question comes from the line of Anthony Longo of JPMorgan. Your line is open.
Anthony Longo: Hey. Good afternoon Peter and Michael. Just a quick one on destocking you spoken about that a fair bit already. But how are you ultimately thinking about the restocking cycle in light of as some of the early positive customer discussions that you have had to-date? And ultimately, what does that inform the top line growth expectations from here? I appreciate there is no guidance, but just how you are thinking about that and philosophies around your customers’ inventory management from here as well?
Peter Konieczny: Look, I will start and then maybe Michael wants to build on it. The way that we look at this is the destocking that we are seeing currently is really a correction of the industry of holding too much inventory after a pretty volatile environment, which was driven by partly supply chain shocks that we have seen in the industry sort of de-risking and protecting their top line by building inventory and then there are other reasons. But anyway, what we are seeing right now is that the industry is normalizing across the categories. We see healthcare a little bit delayed because that’s a very conservative industry, and they probably built more because of the dynamics over the last couple of years. And now they have – they are starting to be confident, again, in the environment so that they can also reduce their inventory levels again to a normal level.
Now, the new normal is probably different from what it was before holding cost of inventories because of interest rates drive that down further. The industry is looking at new efficiency levels in terms of running inventories, and that’s what we are going through right now. Going forward, we will see changes in inventory, but those will be tactical or they will go along with the seasonality of the business. So, I would not think about it as there was a trend to restocking. The industry is coming down to a new normal and everything that we see from there is going to be tactical or following the seasonality of the different businesses. So, that’s how I think about it. And therefore, once we have this extraordinary impact behind us, and we will see with our category and customer exposure and then also – hopefully going forward, also a renewed and stronger consumer interest and demand, we will see top line growth.
Tracey Whitehead: Operator, we have time for one more question, please.
Operator: Thank you. Your last question comes from the line of Andrew Scott of Morgan Stanley. Your line is open.
Andrew Scott: Thank you. Michael, just a question for you, $40-odd million of below the line items there, I see the restructuring charges up relative to last quarter. Can you talk to us just two things, cash versus non-cash there? And when do we get line of sight to maybe seeing an end of these below the line items?
Michael Casamento: Look, Andrew, the main items in the quarter are really around the restructuring program, which we have had in there for the last 12 months or so. That program is pretty much two-thirds of the way through. We have now started to see the benefits come through from that program. You might remember, we committed to invest around $170 million in cash. We have spent on that program to-date about $110 million. So, we have still got $50 million to $60 million to go. But we are starting to see the benefits come through from that, so we are pretty pleased about the progress. And really by the end of the calendar year, we would expect to be most of the way through that program. So, that’s the way we see it from there.
