ARD - Ardagh Group S.A. (ARD) Q4 2022 Earnings Call Transcript
Ardagh Group S.A. (ARD)
Q4 2022 Earnings Conference Call
February 23, 2023, 11:00 ET
Company Participants
Paul Coulson - Chief Executive Officer
John Sheehan - Chief Financial Officer
Conference Call Participants
Roger Spitz - Bank of America
Edward Brucker - Barclays
Jay Mayers - Goldman Sachs
Presentation
Operator
Welcome to the Ardagh Group S.A. Fourth Quarter 2022 Update Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Paul Coulson, Chairman of Ardagh Group. Please go ahead.
Paul Coulson
Good morning, and afternoon, everyone. And thank you for joining us for the fourth quarter call for Ardagh. It follows the release of our results for the quarter earlier today. And on this call, I am joined by John Sheehan, our CFO.
Our remarks during this call will include certain forward-looking statements. These reflect circumstances at the time they're made and the company expressly disclaims any obligation to update or revise any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors. Our fourth quarter and full year 2022 financial report can be found on our website at ardaghgroup.com. As in earlier quarters, we've provided pro forma financial information in respect of the acquisition of Consol glass in Africa, which was completed during the second quarter of 2022.
Before commencing, I would like to acknowledge the support of our colleagues, customers and suppliers in 2022 in managing a volatile, and frankly, challenging environment. Earlier today Ardagh Metal Packaging, AMP, posted its fourth quarter results, and a replay of its earnings call can be accessed at ardaghmetalpackaging.com. We will not be providing any additional information regarding AMP on this call.
So if I could start with the fourth quarter group results, the highlights of which were group revenues of $2.2 billion, increased by 19% at constant currency compared with the fourth quarter of '21. Strong top line growth reflected increased shipments, principally in glass packaging and the acquisition of Consol as well as the pass through of input costs -- increased input costs. Group adjusted EBITDA rose 22% at constant currency to $323 million on a report basis, driven by a strong performance in glass Europe and Africa, including the impact of Consol and modest year-on-year growth in AMP. And this is partly offset by a lower outturn in glass North America.
On a pro forma basis for the inclusion of Consol, group adjusted EBITDA increased by 7%. If we look at segmental performance with a focus on constant currency results, briefly recapping on AMP, fourth quarter revenue grew by 5% to $1.1 billion compared to prior year. Global beverage can shipments increased by 1% in the quarter with growth of 1% in Europe and 3% in North America, offset by softer volumes in Brazil. Full year shipments in AMP grew by 5%.
EBITDA of $159 million increased by 1% on the prior year, but was held back by softer-than-expected shipments in the Americas, net favorable mix and the impact of inventory management initiatives. AMP's growth investment program is now largely complete with materially lower growth CapEx planned in '23 than in '22 and a significant further reduction in 2024. AMP's focus is to leverage its well-invested asset base to deliver EBITDA growth and consistent dividends to shareholders over the medium term.
So if I turn to glass packaging, fourth quarter glass packaging revenue increased by 35% to $1.13 billion, reflecting 19% growth in shipments and the pass-through of higher input costs. Revenue for the quarter pro forma for the acquisition of Consol increased by 15%. Glass Packaging adjusted EBITDA for the quarter increased by 80% to $164 million compared with the same period last year and on a pro forma basis increased by 27%.
Overall earnings performance in Glass Packaging exceeded our expectations in the quarter, with growth in Europe and Africa more than offsetting a decline in North America.
And if I look more at our glass segments, starting with Europe and Asia. Revenue in Europe and Asia increased by 73% to $709 million in the fourth quarter, reflecting 3% like-for-like growth in shipments, a full quarter effect in Consol and the pass-through of higher input costs. On a pro forma basis, revenue increased by 27%, with strong year-on-year advances recorded in each geography.
Fourth quarter adjusted EBITDA in Europe and Africa increased by 110% to $142 million compared with the same period last year, and pro forma for the acquisition of Consol grew by 35%. In Europe, demand exceeded our expectations and shipments increased despite being measured against a very strong fourth quarter of '21. Demand growth was led by the beer market and likely reflected some pull forward from 2023 ahead of planned price increases. Nonetheless, market conditions in Europe remain healthy and inventories are low.
Operational performance was excellent in the quarter, benefiting from investments we've made in recent years. And we maintained a disciplined focus on the recovery of inflationary input costs, notably energy. Energy supply continued uninterrupted through the period and energy market price volatility eased somewhat. Our investments to diversify fuel flexibility, principally involving light fuel oil and LPG are on track to be in place from mid-'23, well ahead of the winter peak in demand for energy.
Our Africa business performed strongly in the quarter with good year-on-year production growth driven by the second furnace at our Nigel facility near Johannesburg, which came online in May 2022. Shipments increased compared with the same period last year, led by demand from the beer and nonalcoholic beverage sectors.
During the quarter, we also commenced work on the construction of a third furnace at our Nigel plant. This project is on schedule to commence production in late '23, and output is fully allocated to customers.
It's now almost a year since we completed the acquisition of Consol in Africa and the integration has proceeded very well. Consol is the market-leading business run by a high-quality management team and has served a great customer base over the past 80 years. We look forward to supporting the continued development of the business as it invests to meet growing demand.
We anticipate some reduction in shipments in Europe for the early part of the year. Indeed, it was a very strong close to '22. In Africa, we will see full year growth contribution from the furnace commissioned in May last. But we expect 2023 earnings for the Europe and Africa segment to be well ahead of last year.
Moving to Glass North America. Revenue in the quarter declined by 1% to $4.18 million, a 9% reduction in shipments more than offset the pass-through of higher input costs. Profitability was impacted by planned downtime taken in response to softer demand and adjusted EBITDA of $22 million was $2 million lower than the same period last year. Since our last update, we further advanced our turnaround program in North America, led by our Glass North America team and drawing on substantial input from the wider glass team in Ardagh.
Three key strands underpin the turnaround program. Firstly, improving operational performance to drive output, enhance that with resilience and deliver consistently high-quality products to our customers. We made encouraging early-stage progress in this respect. And secondly, we want to ensure that our commercial contracting arrangements provide timely and effective pass-through of actual costs as well as proper pricing to deliver suitable returns on our investment.
In the past year, we've worked to improve these mechanisms and use the opportunity of contract renewals to reset terms, and in some cases, reduced -- we've reduced our exposure to certain volumes. Progress on contracting arrangements to date has been very good. Finally, as part of the plan, we plan on making targeted investments over the next 3 years in higher quality capacity, which will enhance efficiency and cost competitiveness.
Following completion of the turnaround program, we will operate a lower number of furnaces than at present. However, these furnaces will, on average, be larger in scale and more efficient and will result in a relatively modest overall net reduction in our capacity. This will leave us with a much improved glass manufacturing network in the U.S., which will benefit from reduced ongoing maintenance costs. And as we've noted previously, we expect this investment program to be primarily funded by the Glass North America business, requiring probably some limited support in the early stages from the rest of the group. And the work we've undertaken in America and the progress achieved to date leads us to expect an improved financial outturn at Glass Packaging in North America in 2023.
If I could turn now to our liquidity and capital structure. Total cash and available liquidity was $2.1 billion at year-end, including over $1.1 billion in cash. This was in line with prior quarters as we deliberately maintained significant financial flexibility against an uncertain backdrop, and we expect to continue to do so throughout '23.
Liquidity at the ARGID Restricted Group was $1.1 billion at the end of 2022. Strong liquidity is supported by well-structured debt maturity profile. Earlier this week, we announced the refinancing of our South African rand debt, previously our shortest maturity. This facility was increased by ZAR 3 billion or USD 160 million to ZAR 9.2 billion or in total USD 500 million with maturity extended to 2028.
The enhanced facility supported by the leading South African banks underpins our current expansion project at the Nigel plant in South Africa as well as providing increased liquidity to the group. And following this refinancing, we have no debt maturities before '25, 2025, an average maturity of over 4 years and minimal exposure to interest rate rises. Net leverage at December '22, at the end of '22, December '22 was 6.2x LTM adjusted EBITDA at the ARGID Restricted Group pro forma for a full year of Consol and for dividends from AMP.
With scale presence now in place in each of our glass and metal packaging markets, we are focused on deleveraging. In 2023, this will be principally achieved through adjusted EBITDA growth, whilst in June 2024 and later years, it will be through a combination of earnings growth and free cash flow generation. We expect to delever by at least 0.7 of adjusted EBITDA to 5.5x over the course of '23. Our main focus in 2023 to 2026 is to significantly reduce leverage at the group. This is expected to materially reduce our refinancing requirements with the lower absolute level of debt, enabling us to achieve refinancing, which is largely weighted to the secured debt market.
If I could turn to sustainability. Throughout 2022, we actively progressed the environmental and social strands of our sustainability agenda. The last quarter saw a number of important achievements in relation to furnace technologies and water reduction. In Poland, our recently completed furnace at Wyszkow will reduce the electricity requirement of the furnace by over 40%, whilst in Limmared, Sweden, our collaborating with a leading spirits producer to move to a partly hydrogen energy-fired furnace will lead to significant reductions in CO2 emissions in the second half of '23.
And in Europe, we continue to advance planning for our first hybrid furnace, which can potentially deliver a reduction of up to 60% in CO2 emissions compared with conventional technology. In water consumption, where we are targeting a 26% group-wide reduction by 2030, recent investments in closed loop water solutions in Sweden and Poland will lead to a reduction of 21% for our glass Europe business.
Our social sustainability initiatives, an important pillar of which is supporting and developing STEM education in our community progressed strongly in 2022, and our program now encompasses established STEM projects in the United States and Germany involving almost 400 schools. And early-stage work on developing STEM programs in both South Africa and Brazil is advancing well.
And as we enter 2023, we remain focused on progressing further along our sustainability road map, advancing our hybrid furnace objectives and executing several significant renewable energy projects across all our regions.
If I look to outlook for the year ahead, AMP has guided to full year 2023 adjusted EBITDA growth of the order of 10% of the $625 million reported for '22. We also expect strong progress in our glass businesses this year.
At the ARGID [R] Group, we project adjusted EBITDA of at least $1.05 billion, including dividends from AMP. As I outlined earlier, net leverage at the ARGID Restricted Group is expected to end '23 at 5.5x adjusted EBITDA, a reduction of 0.7 of EBITDA compared with December '22.
So having made these opening remarks, we will now be very pleased to take any questions that you may have. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions]. And our first question comes from Roger Spitz with Bank of America.
Roger Spitz
So the glass volume in Q4, up 19%. Is that on an organic basis, i.e., not including the addition of Consol?
Paul Coulson
John, would you take that?
John Sheehan
Yes, sure. Roger, no, that reflects the inclusion of Consol in the current period but not in the prior period. In Europe, we were up mid-single digits on a like-for-like basis. In Africa, we were up low single digits on a straight like-for-like basis.
Roger Spitz
And what was North America year-over-year for --
John Sheehan
North America was down high single digits, down 9%, we said.
Roger Spitz
Got it. And would you happen to have all 3 of those for the full year 2022 on an organic basis?
John Sheehan
Yes, Europe was up slightly above mid-single digits, around 6%. Africa was up mid-single digits in the period. Obviously, we didn't have it for a full year, but in the months that we had it versus the same month last year. And in North America, the volume was down 4% over the full year.
Roger Spitz
Great. And then any -- you gave some EBITDA guidance, of course. But you have for the full group CapEx, interest taxes and working capital that you often give?
John Sheehan
Yes, sure. The -- so I know AMP have given its -- given guidance. But if you're looking at the ARGID Group, so the main cash flow items there, there will be capital expenditure with the full year of the African business will be about $450 million. Working capital, again, in the ARGID Group should be a small use probably around $650 million. There will be interest -- cash interest of about $300 million, cash taxes about $50 million and then growth CapEx, we'll see how the year evolves. We have about a new furnace going in, as Paul said, in Nigel 3 in South Africa. And then we will be spending some on in North America. So that could be in total of the order of a couple of hundred million.
So we don't expect any big change in the ARGID Group this year in terms of the debt pay down. The deleveraging will be through EBITDA growth that we've outlined. And then as we get into 2024 and later years, it will be through a combination of further EBITDA growth and cash generation.
Roger Spitz
Great. And when you say ARGID Group, you mean consolidated with AMP glass restricted group combined?
John Sheehan
No, the ARGID Group, yes, in the dividend, which is $200 million, approximately from AMP and it's the glass businesses then.
Roger Spitz
Okay. This is the glass business that you're giving here.
John Sheehan
Correct. Plus the dividend from AMP.
Roger Spitz
Plus dividends, of course. Yes.
Operator
Our next question comes from [indiscernible] with Stifel.
Unidentified Analyst
I was wondering if you can talk a little bit more about the modernization investment program that you're planning for in the United States. If you could share with us what you think the approximate cost of it would be? And also, if you have started discussions with your major customers, how that has gone overall, what has been their response to it?
Paul Coulson
Well, the program is over a 5-year period, so -- which -- and that, of course, includes retargeting our CapEx spend there. So it's -- it will probably be over a 4 or 5-year period, a couple of hundred million above what otherwise would have been the CapEx spend in North America. That's the first thing.
And obviously, we have a number of furnaces coming up for rebuild over that 4 or 5-year period, and we're retargeting how we do that. And as I said in my remarks, we plan to reduce the number of furnaces significantly, probably a small-ish net reduction in overall capacity, but certainly much more efficient and productive capacity and lower operating costs.
In terms of the reception of our plans from the customer base, it has been very good because, as you know, our network in common with other production networks for glass North America has been pretty heavily underinvested over the last number of years. And the underlying building blocks to sorting this out are: one, having improved pricing and contract terms with the customers, and they have been very receptive to that. We've had a very -- prior to the program, has gone very well.
The second part is improving our own operating efficiencies, which have been poorer compared to Africa and Europe in our business. And then thirdly, of course, we're then making the investment to improve efficiency. And this is appreciated by the customers who are focused on supply chain security to protect their brands. So we're pleased with the way this has gone and it has been well received.
Unidentified Analyst
Okay. Great. And just a follow-on for me, and I apologize if some of this was covered already. The hedging program for 2023, how much of it is complete at this point in time? And then maybe related to that, given the pretty low prices, are you able to take advantage of that maybe even for 2024.
Paul Coulson
We're pretty much covered for 2023. I mean it's a very -- it's not quite as simple as it used to be in prior years and up to then because you've got different customers in different regimes, different facets of our hedging. But yes, you can take it that we're covered on our pricing to customers for the year is based on that protected position. And as I said earlier, we've also taken steps to alternate some of our energy supply in LPG and fuel oil in Europe, which protects us against any physical interruption of gas supply, although I don't think that's going to be the case next winter anyway because Europe has pivoted quite quickly away from Russian gas and into protecting itself.
Obviously, you've got elevated costs. But as you referenced, those costs are coming down now. So we would be pretty confident that we're not going to have any interruptions of supply and we're covered financially.
Unidentified Analyst
Right. So I know you typically do it on a rolling basis anyway. Have you even started to roll in some 2024 hedges in this environment?
Paul Coulson
Yes, we have. But again, customers have got involved in a much more detailed way with us and indeed, our competitors on hedging and who knows what and how it's done, what the options are. So it's not quite as vanilla as it used to be.
Operator
Our next question comes from Ed Brucker with Barclays.
Edward Brucker
So the guidance given for the full group implies -- well, a pretty big EBITDA number for glass, it looks like. I just wanted to get a sense for where that growth is coming from? Is it volumes coming through in 2023, higher shipments? Or is it primarily benefit from the cost side where you're offsetting lower energy prices still pushing cost faster.
Paul Coulson
Well, it's coming from increases in all 3 regions of our glass business in Africa, in Europe and in the U.S., right? That's the first thing. It's coming from a combination of some volume increases following investments we've made. It's also a combination of increased prices due to energy pass-through that we've been passing through now, which were largely energy-based as you know. And thirdly, it's coming also from cost reductions and efficiency programs. So it's really a mixture of things, but with increases coming across all 3 regions. And yes, you're right, the guidance does imply significant growth in our EBITDA in our glass business.
Edward Brucker
And then for those energy pass-throughs, do -- on the other side as energy prices go down, do those -- do you have to give back those pass-throughs? Or will those pass-throughs negatively affect you over time?
Paul Coulson
Well, it depends on the timing of them. It depends on the customer. So yes, obviously, if we have lower cost on energy, we pass the benefit of that through. But we're seeing a restoration of our margins, which were before all this energy volatility started a couple of years ago, where we would expect over time to revert to our more normalized margins, which we didn't have last year, clearly. So the -- yes, there will be adjustments, of course, in pass-throughs eventually to customers of reductions in energy costs, but there will also be other contracting features, full utilization, et cetera, et cetera of capacity, et cetera, et cetera, improvements throughout the region. So it will be a mixture.
Edward Brucker
Got it. That's extremely helpful. And my next question is just on updates on just market dynamics in glass in Europe. I saw a competitor come through and announced capacity expansion in over a couple of years, but definitely investing in there. Do you expect that market to remain pretty tight over time? And then your growth outlook for glass just in general? And then maybe if you plan to expand capacity in glass over time?
Paul Coulson
No. Within Europe, demand remains very good. Capacity is tight. So I'm not surprised that there's a little bit of other stuff that will come on stream. We have no plans to increase capacity in Europe. As you know, in Africa, where we are by far the more we're a big market leader in South Africa, which is by far the biggest part of the African business. We are increasing capacity there by 1/3 furnace going into our Nigel facility, which when that's completed, our Nigel facility in Johannesburg -- well outside Johannesburg will be our flagship plants globally. So that would increase our capacity there. In the United States, as I said earlier, we plan over the next few years to marginally reduce capacity and to make our network a much more efficient and improved quality network, which will lead to better results for both us and our customers.
Operator
Our next question comes from Jay Mayers with Goldman Sachs.
Jay Mayers
Paul and John. I guess the first question I had was with regards to the Americas kind of refurbishment plan, you had mentioned that the CapEx funding for that is primarily going to come from price increase, but you did mention that initially, there could be some funding from elsewhere in the group. Are you just alluding to using some of the cash balance you have on hand? Or is there kind of another part to that in terms of some of the initial funding? And then more broadly, appreciate the comments on debt pay down in the future years.
But as you think about kind of balancing that with the CapEx needed to right size your capacity in the states, is that all going to just be from free cash flow growth? Or are you kind of baking in some potential asset sales or dividend growth or anything like that?
Paul Coulson
No. We're -- well, let's deal with the Americas refurbishment. I mean that the funding of that will come largely from the cash flows and the -- what would have been set aside for CapEx in the first instance. So, it augments a little bit. There will be some from the group. We won't use our cash balances for that rather we use some of the free cash flow generation in the African and European businesses to transfer into the U.S. In our deleveraging program over the next 4 years, this year included, we see -- we've allowed for the investments that will be needed to complete the investment in the United States.
But that's going to be done on a gradual basis. It's also going to be done using free cash flow from the business in the U.S., which will start to generate more cash because of price increases that are going through of new arrangements with some of our bigger customers, longer-term commitments, better pricing, et cetera, better margins. And as I say, much lower cost operating costs as well. So all that's baked into the plan. We don't have any plans to sell any assets. We don't have any plans, for example, to sell part of our stake in AMP. None of that is included in our deleveraging plans from now until the end of '26. Rather focused, as John said earlier on increasing EBITDA, which this year will be a step change forward in that regard.
Secondly, in doing that in the future years as well, but then also starting to generate cash. The only thing where we base our plan that eventually, we're not in any hurry to do this, we will exit the Trivium business. But that's the only thing outside of really the glass business and increased cash flows there.
Jay Mayers
That makes sense. And then just as a follow-up on the EBITDA guidance for the year for the restricted group. So if we back out the dividend payments that you're going to be receiving from Ambev, the underlying glass EBITDA that we talked about is very strong. A lot of that seems like it's coming from Europe and Africa, but it does seem like there's also improvements in the Americas business. That obviously has been a bit of a challenge in your understanding you're kind of working on the refurb program now. But what is giving you the confidence to kind of guide us to stronger EBITDA there in 2023? Like what are you seeing on the ground today?
Paul Coulson
In the U.S. or generally?
Jay Mayers
In the U.S.
Paul Coulson
In the U.S., well, we're seeing an improved operating performance. And we're also seeing, as I said, improving as contracts come off, we're repricing them. So we're seeing improved pricing, and we're seeing improved efficiency. It's nowhere near where -- and we'll get to know were near where we want it to be ultimately. But we -- because the investment program will also take time. There's been a lot of work done over the last year in improving the thing. And what we're seeing so far, we're very confident of an approved outturn in North America in '23. That's what -- that's it.
I mean volumes are okay, I would say, in order of the U.S. glass at the moment. But I mean, what we will do during the course of this program, and we have the flex to do it, is that we will tailor our capacity to what that market is and focus on us and the parts of it, we're making the parts over that are key to us profitable through price increases and reorganizing where things are made and how they're made, et cetera.
Jay Mayers
Got it. So does that mean while you're giving us the kind of guidance around a couple of hundred million for the refurb program. Is that is the reason why that's a little vague in terms of a specific number because it still kind of depends on how demand shapes up? Or do you think there is a more specific kind of number there?
Paul Coulson
It's evolving and it's not totally finalized yet. And it's at the -- particularly at the back end of the program, we have the flexibility to adjust if we find that markets are stronger or slightly weaker than what we had anticipated in the base case.
John Sheehan
And Jay, I think just to add -- Jay, I think on the cash requirements, we will look at various options, including leasing in certain areas. So again, that defers the actual cash requirement that will be needed for that plan in part at least.
Operator
Our next question comes from [indiscernible].
Paul Coulson
Perhaps, operator, we move to the next question, please?
Unidentified Analyst
Can you hear me now?
Paul Coulson
Yes, I can hear you now. Thanks.
Unidentified Analyst
Perfect. So thanks a lot for all the explanation. So the first question I have is, when I look at your EBITDA guidance of $1.05 billion for Europe, and that includes the $200 million of dividends. That has an implied growth -- that has an implied growth of about $200 million. And I guess $40-ish million of that should be just the extra quarter you have out of the South African operations, right? So that leaves you at like about 16 growth. Can I just understand how much of that extra growth in EBITDA is coming from the new furnace in South America? And so that's just like a result of CapEx versus how much is coming from actual improvements in your existing operations?
Paul Coulson
Well, I mean most of it is coming from improvement in our existing operations. The furnace in South Africa, you're referring to, I presume, was operational from May last year, from early May last year. So it was there for 8 months of the year. So -- and the new furnace in Africa doesn't come on-stream until the end of this year. It won't impact on '23 EBITDA. The increase you refer to almost a couple of hundred million is largely coming from an improvement right across the piece. And some of that capacity. John, do you want to give any more color on that?
John Sheehan
No, I think that growth that you talked about is the full growth. I think you said in your question for Europe and Africa, that's everything. So we would expect growth in each of the geographies. Obviously, Europe and Africa is a significantly bigger one. And it was most impacted, for example, by energy in Europe last year. So the growth would be skewed to that segment. But we expect growth in both segments. And yes, the additional effect of the furnace is limited and the third furnace is only kicking in at the end of the year.
But we have been investing consistently over the past 3 years. That's maybe been a bit masked by the pandemic or the energy crisis. So we're expecting to see returns on those cumulative investments as we get into 2023 as well as just the annual operating improvements that we're always going after.
Unidentified Analyst
Got it. I have 2 more. The second one I have is just on the furnace on the third furnace in South Africa is -- I haven't heard in my notes, but I could have it wrong. Is it that's going to -- you're going to spend $100 million on it this year? And what would be the EBITDA that then comes in '24 out of that furnace that you expect?
Paul Coulson
Well, we won't disclose the EBITDA coming from the furnace. The payback on it is very good. It's a total CapEx on us about USD 100 million. Some of it will -- most will be this year, but there'll be some that follow will linger into next year, okay? But it's -- obviously, it's significantly accretive to EBITDA and good payback because it's a third furnace in a very modern plant anyway. The first furnace was built there about 10 years ago, second one last year, third month this year, okay?
Unidentified Analyst
That makes sense. And then my last question is just in what regards to cash flow generation. I mean as you yourself said, I mean, most of the deleveraging is coming from EBITDA growth, but once you kind of go through the different cash items, and I guess you didn't mention on those, the leases, but also you still have a fair amount of extraordinary items there. I mean, when would you expect for the group to actually to become cash flow generative and to start deleveraging through organic cash flow generation? I guess my question is just because once your interest costs reset, you have that headwind to go against, right?
Paul Coulson
Yes. But I think -- but the answer to the short question is that, as we said earlier, we expect cash flow generation to reduce debt starting next year because we've still got the tail end of investment programs to complete. But we're not -- the business is big enough, our own network is big enough, and we're now going to start making sure that we generate cash and we won't be making -- there won't be any business growth investments and things like that. So that's the important thing. I think also in relation to the debt side of things, right, we have one maturity in '25, which we will deal with. And then we have the rest of our secured financing in '26 and then the unsecured financing in '27.
And the plan we have is to -- through a combination of EBITDA growth and cash generation in '24, '25 and '26. We plan by the end of 2016 to be in a position if we so chose that our leverage will be way reduced which will enable us with absolute levels of debt lower enables us to refinance on an all secured basis if we so choose. In the past, we've had a policy or we had a policy of when there was a small delta, a relatively small delta between the cost of unsecured debt and secured debt, we took more unsecured debt.
Going forward, obviously, it depends where markets are depends where interest rates are, but we do have the flexibility or we plan to have the flexibility to be able to rebuy the entire over on a secured basis. To mitigate against integrate increases that you're talking about. But they don't hit us for quite some time.
Operator
Our next question comes from [indiscernible] with Deutsche Bank.
Unidentified Analyst
A couple of questions. So just again following up on the guidance, $1.05 billion, I think just to be very specific, if I subtract I think, $240 million, which is the full year dividends coming up from AMP at $0.10 a share. That gets us to 810, which is the implied guidance for 2023 glass EBITDA, correct?
John Sheehan
No, Richard, it's John here. The -- it's 200 million because I remember some of the AMP dividend goes to the minority the non controlled interest, so. It's just a little -- it's about 204 of last year pro forma.
Unidentified Analyst
Okay. So that's --
John Sheehan
So our assumption is the same.
Paul Coulson
$850 for glass and $200 for dividends. Richard, is the -- are the components of the guidance, okay?
Unidentified Analyst
Got it. And if I understand sort of the free cash flow calculations, you gave us the figures. Working capital use of $50 million, cash interest of $300 million, cash tax is $50 million. For the CapEx, you said $450 million and then you said growth CapEx of $200 million. So is that $650 million in aggregate CapEx potentially?
John Sheehan
Yes. Depending upon that, the investment timing in North America. But yes, the furnace in Africa is the bond of $100 million in the current year. So we looked at on that as we get more visibility through the year. But yes, that kind of number.
Unidentified Analyst
And could you provide the adjusted EBITDA for the full 12 months for South Africa for 2022 and what was the contribution of that in the pro forma 2021?
John Sheehan
Yes, the pro forma in the full year was, as we indicated on previous calls, it was up the order of $200 million pro forma, and the actual was about $160 million, which reflected a contribution for almost since -- almost immediately after acquisition from the second furnace in Nigel, good operating performance, very good operating leverage. So yes, pro forma would be just a shade over $200 million.
Unidentified Analyst
So 2022 adjusted EBITDA from South Africa, just over $200 million.
John Sheehan
Pro forma.
Unidentified Analyst
Yes. Full year. Got it. Okay. And last question, you already alluded to it, but can you give us any update on the potential sale of Trivium?
Paul Coulson
Nothing going on there at the moment. Obviously, in common with a number of other sales processes with the debt markets being effectively shut for a lot of last year, that has been put on the shelf in effect. And we're not anticipating an immediate sale of the stake in Trivium. I think there's a number of things to happen first before that is where we need to get back to debt markets where acquirers can see their way to providing appropriate value. So I think we see that as being something that will not happen this year or next.
Unidentified Analyst
For the same way that AMP provided 2023 sort of volume outlook by the region, would you be willing to share the glass volume outlook for Europe, North America and Africa for your businesses?
Paul Coulson
No, that's not something we would be prepared to go through.
Operator
Our next question comes from [indiscernible] with JPMorgan. This is the operator, please check the button on your phone.
And we'll go ahead and take our next question from [indiscernible] with Legal and General Investment Management.
Unidentified Analyst
Question that being asked by someone just before me, so no further questions.
Operator
[Operator Instructions]. Next question comes from [indiscernible].
Unidentified Analyst
I was wondering if you could just confirm. I understood well the EBITDA guidance is $850 million plus $200 million dividend, right?
Paul Coulson
Correct.
Unidentified Analyst
And then if I understood well that at the Trivium save is not envisaged this year or next because you're waiting for a better [indiscernible] environment.
Paul Coulson
As I said in answer to the last question, that's given information on that, but it's not happening at the moment.
Unidentified Analyst
Okay. Understood. And in terms of glass volume outlook without the breakdown by region at the group level was which one for next year?
Paul Coulson
[Technically Difficulty] we have a positive outlook for it because, obviously, we have capacity which has come on stream in South Africa principally, and we've made investments also in Europe. So we have a positive outlook in relation to volume, but we're not going to go into detail others, okay, as I said earlier.
Unidentified Analyst
Perfect. And if I may, the last question in terms of cash generation positive interest at the glass level only. Do you think it will be more positive in '24 as opposed to '23 already, right given the guidance to be different?
Paul Coulson
As I indicated in the previous answer, we expect cash generation for the year is '24, '25 and '26. We don't expect much of the way cash generate this year because of investments we're making, as John Sheehan outlined. So the position is we would expect to see cash generation and debt levels falling absolute debt levels falling in '24.
Operator
Our next question comes from [indiscernible].
Unidentified Analyst
Could you just clarify a bit more on the EBITDA guidance, and apologies I misunderstood that you're giving the total group guidance of $1.05 billion EBITDA for 2022 to 2023. Then you're saying for just the glass, you're guiding 800. Is that right?
Paul Coulson
No, no. No, no, no. No, no. This question is $850 is the guidance for glass in the year of the 3 regions we operate in for '23 and $200 million is dividends from AMP. That's where the $1.05 billion guidance comes from. Obviously, AMP's EBITDA is separate. And if you put the $850 million with the AMP's EBITDA, you obviously don't include the dividend of that for the ARGID Bond Group EBITDA which is $850 million for glass, plus $200 million, okay? Of dividends.
Unidentified Analyst
Right.
John Sheehan
That equates broadly on AGSA, if you take out the dividend and you add the AMP, it's of the order of about 1,550.
Unidentified Analyst
Sorry, because you fully consolidating your financials there.
John Sheehan
Yes, we fully consolidate but on a consolidated basis, you would take the 850 glass, and you would add AMP, which reported today 625 and indicated growth of the order of 10%. So that's in the kind of high 600s. So that plus your $850 million gets you to, call it, 1,550 of consolidated AGSA, but they are separate bond groups or restricted groups. So that's why we split them out because people found that helpful.
Unidentified Analyst
Yes, that's very clear. I just wanted to make sure that the EBITDA guidance for the glass was $800 million. And then I shouldn't actually...
John Sheehan
[Technical Difficulty] guidance.
Operator
Our next question comes from Jay Mayers with Goldman Sachs.
Jay Mayers
Paul, just one quick follow-up for you. With all the comments on North America restructuring, delivering. Wondering if you can just comment on where do you need to see the glass business from a balance sheet or operation perspective before you start to reconsider distributions to the yard finance box or shareholders more broadly?
Paul Coulson
I think the only thing I'd say in relation to that is that as we've indicated, we have no plans to pay any -- make any distributions this year. Obviously, in future years, we'll look at what the situation should be. But what I want to emphasize is, what I said earlier, is that our focus for the next 4 years, including this year, is on deleveraging, leading up to as we put the group in a much deleveraged position coming up to our refinancings in '26 and '27.
Operator
Our next question comes from Diego Silva.
Unidentified Analyst
Just two quick ones. Can you give any guidance on what would be the lease payments for 2023?
Paul Coulson
Yes. It's indeed around $80 million or so annually.
Unidentified Analyst
And then the last one is, I've noticed that your CapEx this quarter was particularly high. And I just want to understand, was that already the beginning of the North America restructuring plan? Or is this already taking part of the $100 million on the new furnace in South Africa?
Paul Coulson
It's the latter, yes. It's -- we are spending some money, as we outlined before, on the oil flexibility in Europe. So it's really just a timing thing. It came in broadly where we expected, but no, it wouldn't have been materially to do with the North American plan.
Unidentified Analyst
So if I look at -- I mean, I think the number was something like $250 million. Can I ask how much of the $100 million you've already spent now, so that I obviously don't include it for next year?
Paul Coulson
No. The -- what I said is there wasn't anything material spent on that. So CapEx but nature will slow. It can be a bit lumpy. So there was nothing more to it than that.
Operator
And this concludes today's question-and-answer session. I'll turn the call back to Mr. Coulson.
Paul Coulson
Well, thank you, everyone, for joining us today. We look forward to talking to you again in a couple of months' time with our Q1 results. Thank you very much for joining us today.
Operator
This concludes today's call. Thank you for your participation and you may now disconnect.
For further details see:
Ardagh Group S.A. (ARD) Q4 2022 Earnings Call Transcript