When you look at the durable market, that’s the one that’s gone through the most extensive destocking of any market. And it really goes all the way back to last May of last year when the retailer sort of got 2x the amount of inventory they needed because they were buying everything they could think of to — because of supply chain prices, and then they started destocking over 14 months ago. That bullet finally hit us in the fourth quarter of last year, really knocked us down about 40%, when the underlying market was only down 10% to 15%. So, a lot of destocking. Got even worse, 10% worse into the first quarter. And then fortunately, we saw that destocking start to abate in the second quarter. Got 22% better in the second quarter versus the first quarter.
So, we saw momentum there. You just don’t see it in the results because of the medical and packaging destocking that occurred. So that destocking will continue to lessen as we go into the back half of the year and be another tailwind as you go into it. And then, of course, Building & Construction, I’d say, is one that’s been doing some destocking this year. Demand is down. And we expect that to be sort of flat to the first half, because that market still has more action taken. There’s also maybe some more help with first home builds. So, there’s a spectrum of things going on when you look at it, but it’s — each of them sort of add up to less destocking. But it’s not as much as we had hoped for in April, and that’s really the predominance of how our volume forecast came down, which is the entirety of our earnings reduction when you combine that with the need to take inventory actions for this lower demand outlook to make sure we hit the $1.4 billion of cash.
So, all those then feed into a year next year that’s going to look better, right? When you don’t have all this destocking going on, which we’re assuming for 2024, you have some normal seasonality coming back into the demand outlook for next year that’s going to help improve things. And you’ve got the recovery of all this volume almost, and sort of down markets are our highest value markets, right? So it’s been a huge mix hit to us this year. And as we’ve shown in past recessions, when the mix comes back and if there’s a little bit of restocking, the high value of these markets drops to the bottom line pretty significantly, especially with the costs we’ve taken out of our fixed cost structure. So it all comes together, which is building momentum in the second half to having a much better year in 2024.
Josh Spector: Okay. Thanks. If I could just ask it very quickly then. So, your volumes were down 15% in the first half. What’s your baked-in assumption on the second half, all those things put together?
Mark Costa: You’re saying what is our specific volume forecast that we’ve got as a combined company for the second half relative to the first half? Is that what your question is?
Josh Spector: Yes, are you assuming down 15% for the majority? Down 10%? Down 5%? I’m just trying to get a kind of quantum of what you’re considering.
Mark Costa: So, as we look at, I think it’s — altogether, the volumes in the back half of the year are going to be a bit less than the first half of the year, but I don’t think we’re going to provide a quantitative number to it. it’s basically just a little bit down when you put it all together. The real headwinds in the back half of the year is the — from a sequential point of view, first half, second half, the entirety of our earnings decline is the inventory management, right? So, that $75 million sort of additional headwind sort of aligns with sort of where our earnings outlook has now moved. So, volumes are relatively stable when you put all the ups and downs, right? So, some down in AFP, some up in stability in AM, stability in Fibers and CI, sort of a flat volume number from a sequential point of view.
