Ardagh Metal Packaging S.A. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone Q4 report. Financial statements are prepared under IFRS as issued by the IASB and presented in U.S. dollars. The 2021 comparison includes the business as a standalone company after the April 2021 AMP Transfer; earlier periods were prepared on a carve-out basis.
Business context
Ardagh Metal Packaging supplies metal beverage cans and ends, operating 24 production facilities across Europe, North America and Brazil. The company reported two segments: Europe and Americas. It reported approximately 6,300 employees and revenue from more than 40 countries. AGSA indirectly owned approximately 76% of ordinary shares at year-end.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $4.689bn | $4.055bn |
| Gross profit / margin | $526m / 11.2% | $616m / 15.2% |
| Operating profit | $176m | $47m |
| Profit/(loss) for the year | $237m | $(210)m |
| Adjusted EBITDA | $625m | $662m |
| Net cash from operating activities | $205m | $458m |
| Capital expenditure | $595m | $686m |
| Net debt at year-end | $3.037bn | $2.424bn |
Revenue rose 16%, reflecting higher input-cost pass-through and favorable volume/mix of 6%, partly offset by $210m of unfavorable foreign-exchange translation. Gross margin excluding exceptional cost of sales was 12.6%, versus 15.9% in 2021. Adjusted EBITDA declined 6%; the reported profit improvement largely reflected lower exceptional SG&A expense and a large non-cash fair-value gain.
Operating cash flow fell $253m, principally due to a $202m working-capital outflow (versus a $16m inflow in 2021), lower exceptional operating items and higher exceptional costs paid. Cash, cash equivalents and restricted cash were $555m; the company also had $415m of undrawn availability under its asset-based loan facility, or $970m of stated available liquidity. Net debt increased, and the reported net-debt-to-Adjusted-EBITDA ratio was 4.86x, compared with 3.66x in 2021.
Total borrowings were $3.630bn before $38m of deferred debt issue costs. The debt included a $600m, 6.0% senior secured green notes issuance due 2027. Senior notes were 100% fixed-rate, with a 3.8% weighted-average interest rate. The company reported $712m of contractual long-term debt interest obligations and $1.298bn of purchase obligations in its contractual obligations table.
Material changes versus the prior year
- Americas revenue increased 23% to $2.726bn and Adjusted EBITDA increased 12% to $425m. Europe revenue rose 7% to $1.963bn, but Adjusted EBITDA fell 29% to $200m, reflecting input-cost headwinds, higher operating costs and currency effects.
- Gross profit fell 15% despite higher revenue, as cost of sales rose 21%, faster than revenue, amid higher input costs and start-up costs.
- Exceptional net finance income was $218m, versus $57m of exceptional finance expense in 2021. The 2022 income principally included a $242m fair-value gain on earnout shares and warrants, partly offset by $22m of foreign-currency losses.
- Capital expenditure remained substantial: $486m of 2022 spending related to the growth investment program. Management said the program was being re-phased to manage cash flow and align investment pace with demand.
- The company issued $260m of 9% preferred shares to AGSA, paid $251m in dividends, and repurchased 5.77m ordinary shares for $35m.
Outlook, commentary and risks
Management’s stated priorities are to grow Adjusted EBITDA and cash generation, improve product mix and manufacturing efficiency, and complete its $1.8bn growth investment program for 2021–2024. The filing does not provide a quantified FY2023 earnings or revenue forecast. Management expected cash, operating cash flow and credit facilities to be sufficient for at least the next 12 months, including maintenance capital expenditure, interest and dividends, and said longer-term needs would be met through operating cash flow and, where appropriate, financing or refinancing.
Key risks include elevated aluminum and energy costs, supply-chain disruption, inability to pass through input-cost increases, customer concentration (the ten largest customers generated approximately 57% of revenue), and potential excess can-making capacity. The filing also highlights foreign-exchange and interest-rate exposure, substantial debt and financing covenants, seasonal demand, production interruptions, cyber risk, environmental regulation and climate-related risks. The company stated that its 2022 SBTi-approved targets include reducing Scope 1 and 2 emissions 42% and absolute Scope 3 emissions 12.3% by 2030.
Other notable items: goodwill was $976m and management reported no impairment indicators; a one-turn reduction in the EBITDA multiple used in impairment testing still left recoverable amounts significantly above carrying values. Net employee benefit obligations, after employee benefit assets, were approximately $122m. The auditor identified valuation of earnout shares as a critical audit matter, citing estimation uncertainty in the volatility assumption; the year-end earnout liability was $76m. Management and the auditor reported effective internal control over financial reporting, and the auditor issued an unqualified opinion. The filing states that ordinary-share dividends are intended to continue at $0.10 quarterly, subject to Board discretion and applicable restrictions; preferred shares carry a 9% cumulative dividend.
Important facts for investors to verify
- How much of the $237m reported profit and year-over-year improvement is attributable to the non-cash earnout and warrant fair-value gain, and how should normalized earnings be assessed?
- Whether margins and Adjusted EBITDA recover, particularly in Europe, as input costs, operating costs and pricing pass-through evolve.
- Whether working capital normalizes and operating cash flow can support the growth program, dividends, interest and debt obligations.
- Debt covenant headroom, refinancing terms and the sustainability of leverage, given $3.037bn net debt and 4.86x reported net leverage.
- The cash-flow and financing implications of remaining growth-project commitments, contractual obligations and the 9% preferred-share dividend.
- The assumptions behind the earnout-share valuation and goodwill impairment tests, as well as the effects of customer concentration, energy exposure and aluminum availability.