Q1 2024 O-I Glass Inc Earnings Call

Participants

Christopher Manuel; VP of IR; O-I Glass Inc

Andres Lopez; President, Chief Executive Officer, Director; O-I Glass Inc

John Haudrich; Chief Financial Officer, Senior Vice President; O-I Glass Inc

Ghansham Panjabi; Analyst; Robert W. Baird & Co. Incorporated

Michael Roxland; Analyst; Truist Securities, Inc.

Arun Viswanathan; Analyst; RBC Capital Markets

George Staphos; Analyst; BofA Securities

Bryan Burgmeier; Analyst; Citigroup Inc.

Gabrial Hajde; Analyst; Wells Fargo Securities, LLC

Presentation

Operator

Hello, everyone, and welcome to the O-I Glass First Quarter 2024 earnings conference call. My name is Emily, and I'll be facilitating your call today. (Operator Instructions) I will now turn the call over to our host, Chris Manuel, Vice President of Investor Relations. To begin, please go ahead.

Christopher Manuel

Thank you, Emily, and welcome, everyone, to the O-I Glass First Quarter 2024 conference call. Our discussion today will be led by Andres Lopez, our CEO, and John Haudrich, our CFO today will discuss key business developments and review our financial results. Following prepared remarks, we will host a Q&A session. Presentation materials for this call are available on the company's website. Please review the Safe Harbor comments and disclosure of our use of non-GAAP financial measures included in those materials.
Now I'd like to turn the call over to Andreas, who will start on slide 3.

Andres Lopez

Good morning, everyone, and thanks for your interest in O-I last night, we reported first quarter earnings of $0.45 per share. As expected, results were down from historically robust performance in the prior year period. Lower earnings primarily reflected softer demand due to the market downturn and temporary production containments to balance supply with lower shipments, while net price was down slightly, our margin expansion initiatives are off to a particularly good start to this year. Although it's lower than originally anticipated, consumer consumption patterns are gradually improving, and we are encouraged by the progress in our shipment trends since the fourth quarter of last year.
As conditions gradually improve. We are focused on the factors within our control. I'm proud of the continued excellent operating performance across the enterprise, and we have increased our full year margin expansion initiative target as we seek to optimize our 2024 results amid slower demand. Importantly, we continue to advance MAGMA to create a long-term competitive advantage for the company, and we are excited for the start-up of our first MAGMA greenfield plant in Bowling Green, Kentucky this summer. As we look to the balance of the year, we are adjusting our full year 2024 outlook to reflect a slower market recovery, which John will review later. Nevertheless, we remain confident about the long-term trajectory for glass demand as well as stronger future earnings potential as markets recovered over time.
Let's turn to page 4 to discuss current market trends. While still soft, the commercial environment is gradually improving. As shown on the top chart, our shipments on a year-over-year basis were down 12.5% in the first quarter compared to a 16% decline in the fourth quarter of 2023.
Additionally, April shipments show gradual improvement as demand was down about 10% from prior year on a per day basis when adjusting for the shift in the Easter holiday between 2023 and 2024. Consistent with discussions in previous calls, inventory stocking across the value chain has been a significant driver for lower shipments this past year. De-stocking using the later stages for products with a short cycle such as beer and maybe some foot. While activity will likely continue for a couple of quarters for longer cycled products, including spirits and wine. Additionally, consumer patterns are improving, but at a slower rate than expected.
As illustrated in the bottom chart, trends improved consistently over the course of 2023, but were choppy during the first quarter this year and lagged our expectations. Softer consumption is attributed to the factors we hear about in the news everyday to adjust cost inflation on food and beverages products driving price elasticity challenges, prolonged higher interest rates and consumer confidence that remains below pre-pandemic levels. Furthermore, we have seen a limited share shift and some trade down, especially as our customers ramp up promotional activity, which tend to favor more value brands.
As we look to the balance of the year, we expect shipments will improve as the stocking activity drops off over the next several months. However, we have revised our 2024 forward sales volume outlook to reflect a more gradual improvement in demand over the course of the year as we now project a slower rate of consumption recovery than originally anticipated, which is shown in the circle in the lower chart. Overall, we now expect our 2024 sales volume will be flat to up low single digits compared to our prior outlook of low to mid single-digit growth.
As markets improve, we anticipate long-term glass demand will continue to benefit from key mega trends such as premiumization, health and wellness as well as increased interest in sustainability. How at all, we expect glass demand will substantially recover to pre-pandemic levels over time. Importantly, we are well positioned to take advantage of the rebound as it unfolds.
Now I'll turn it over to John, who will review our first quarter performance and updated 2024 outlook in more detail.
Starting on page 5.

John Haudrich

Thanks, Anders, and good morning, everyone. Oh, I reported first quarter earnings of $0.45 per share. Consistent with our expectation, results were down from a historically high earnings of $1.29 per share last year. As illustrated earnings primarily reflected a decline in segment. Operating profit was slightly higher. Nonoperating expense was mostly offset by some favorable FX. Additional details on nonoperating items are included in the slide.
Let's turn to page 6 and discuss recent performance across our two segments. The Americas posted segment operating profit of $102 million, which was down from $176 million last year. Net price was a slight headwind and sales volume was down 15% elevated operating costs reflected significant temporary production curtailment to balance supply with demand, which was partially offset by favorable margin expansion initiative benefits in Europe, segment operating profit totaled $133 million, down from $222 million last year.
Like the Americas, net price was a modest headwind and sales volumes were down 10% higher operating costs reflected the impact of elevated temporary production curtailments, lower JV performance and prior year energy credits that did not repeat. These headwinds were partially offset by benefits from our margin expansion initiative program.
Let's turn to page 7 to discuss our updated 2024 business outlook. As noted on the left, we have adjusted our full year earnings guidance for a few factors net price is stable yet we have reduced our sales growth expectations, reflecting a longer destocking process and a more gradual improvement in consumer consumption patterns than originally anticipated. Given softer demand we intend to take incremental production curtailments to ensure inventories remain in check. And importantly, we are accelerating our curtailment activity in the second quarter following the South softer start of the year to help mitigate slower sales growth, we have increased our full year initiative benefit target to at least $175 million.
Finally, our outlook has been impacted by unfavorable FX trends, higher interest rates, given the change in the forward curve and a higher tax rate. As a result, we now expect adjusted earnings should approximate $1.50 to $2 per share compared to our prior outlook of $2.25 to $2.65 per share. And we have updated our view of quarterly earnings allocation.
Free cash flow should range between $100 million to $150 million, reflecting lower earnings, partially offset by other favorable cash levers, including moderately lower CapEx. We intend to maintain a healthy balance sheet position and expect to end the year with leverage both in the low threes, which will naturally decrease as volumes and earnings recover as Andres discussed, we believe current market conditions are temporary. While it will likely take longer than originally anticipated, earnings should rebound when sales and production volumes substantially returned to pre-pandemic levels.
Now I'll turn it back to Andres, who will provide an update on our key strategic objectives. On page 8.

Andres Lopez

Thanks John. Despite the market downturn, we continue to execute on the five key priorities we established this year to enable our long-term strategy. We are off to a good start with our margin expansion initiatives, which are helping offset some of the current market pressures as noted, we have increased our full year target, which includes planned restructuring activities in 2024 that are now substantially complete. We will continue to evaluate our network requirements as future market trends unfold.
At the same time, we are expanding our business to enable profitable growth, as I will discuss further on the next page, our MAGMA greenfield project remains on schedule and we continue to advance attractive expansion projects while others remain on hold pending further market recovery. All MAGMA R&D is advancing well and we remain on track for our first gen three deployment in 2026. Likewise, we recently approved two new Ultra alliance in Europe to support increasing customer interest in lighter-weight packaging.
Our ESG efforts are progressing well and our 2024 capital plan includes all key projects that enable our long-term sustainability roadmap. Furthermore, we are excited that the US Department of Energy has elected to receive up to $125 million in funding over the next few years to accelerate deployment of industrial decarbonization technologies.
Finally, we intend to maintain a healthy balance sheet, as John discussed how at all, we are off to a good start this year as we advance our long-term strategy.
Magma on page 9, our various U.S. network is a great feat for many of the categories that we have served for decades and will continue to serve into the future. However, markets have evolved and we now see greater brand proliferation and increased product fragmentation Magma reimagining the entire glass making process to serve a more differentiated market MAGMA. It's more flexible. It's scalable and can be more rapidly deployed. It is smaller and will feed into an industrial warehouse, which lowers future capital intensity and operating cost.
Furthermore, MAGMA can be near located or co-located to reduce logistics cost and is designed around sustainability from the ground up in short, MAGMA is designed to meet the market requirements for today and into the future. We are nearing an important milestone, and we expect to start up our first MAGMA greenfield in either late July or early August, located in Kentucky, which includes nearly 100 whiskey. The Steelers. This new plant is an example of how MAGMA can enable profitable growth in attractive fragmented markets.
Let's turn to Page 10. We relate Magma and Ultra will increase wise right to win in the marketplace. In particular, increased flexibility, scalability and rapid deployment will create key benefits for Ally across attractive, differentiated markets and categories.
Oh, it all McMahon, all truck together represent a major leap forward and should expand O-I's total addressable market by over 30%. We look forward to hosting investors and customers at our new greenfield facility in the future, which will demonstrate all our innovative technologies that will create a new competitive advantage for life and enable glass to win in the marketplace.
Please move to page 11 for some final remarks.
Well, I continues to navigate well through challenging macro conditions and delivered solid first quarter results despite softer-than-expected chip and leverage. While we have revised our current year outlook to reflect the slower than anticipated market recovery, we are taking the right steps to position the Company for future success. We are properly aligning supply with lower demand, and we have increased our already record high target for margin expansion initiative benefits.
Despite the short-term challenges, we remain confident in the long-term positive trajectory of glass packaging, and we are well positioned for the rebound, which should significantly improve future earnings over time. Importantly, we are excited for the start-up of our first MAGMA greenfield plant this summer as we align our business to the future of glass packaging.
Before we take your questions, I would like to end with a few reflections from my time as CEO for the past several years, we have significantly transformed the Company and we are now a much more disciplined, agile and capable organization after stabilizing our operations. The team significantly enhance our ability to execute, and we have consistently delivered on our commitments. We rebalanced our network, expanding our Americas footprint on divesting non-core assets.
We have reduced risk and improve our cash flow profile with a fair and final resolution of our legacy asbestos liabilities. And we have the best balance sheet in nearly a decade while improving core performance and optimizing our business structure. We also develop new breakthrough technologies that will create a new competitive advantage for years to come. I'm proud of what we have accomplished and we'd like to thank the family for all that we have accomplished together. I would also like to thank each of you in the investment community for the interest in OI. over the years. The best is yet to come.
To speaking on behalf of Godrej Harvey, our incoming CEO is actively engaged in the transition is looking forward to joining the O-I team in mid-May and meeting with the investment community in the near future. Gordon has served on the Board for over eight years and knows the company well with his years of experience working in the food and beverage industry, including some of our customers, is well positioned to lead the company into a future.
Thank you, and we're now ready to address your questions.

Question and Answer Session

Operator

(Operator Instructions) Ghansham Panjabi, Baird.

Ghansham Panjabi

Thank you. Good morning, everybody, and congrats on your retirement and also on your very impressive legacy you're leaving behind.
I wish you well for the future.

Andres Lopez

Thank you.

Ghansham Panjabi

Yes. So I guess first off in terms of the volume adjustments relative to prior guidance, are there any notable categories that are driving that sort of de-rating, if you will? Or is it just broad-based points?

Andres Lopez

I think it is broad-based with the exception of the Andean countries, which are that is the place where we invested on expansion that is performing quite well. And in fact, the Colombia specifically is growing year on year in the mid 10s. Every area of the market is experiencing the slowdown with some markets having more destocking impact, for example, spirits in North America or experience in Mexico because of tequila. But for the most part, it is everywhere with the exception of on the Andean countries, specifically Colombia.

John Haudrich

Ghansham, I would add if you take a look on a category basis, consistent with what Andrew said is that we're seeing the best recovery and improvement in the beer category and it but it but it is choppy across the different markets, as Anders mentioned on in Colombia, for example, is doing quite well in some other markets. It's still kind of flattish to down a little bit.
But overall, we've seen the most improvement in beer, which again, is one of your shorter cycle areas that as we mentioned, that as they look at the destocking is substantially complete and we're seeing that improve yet you're still seeing that wine and spirits category stand still kind of down in that low to mid-single digits and with the expectation, it might drag a little bit longer, given the consumer consumption in that area is softer, it might take a little bit longer for that area to destock.

Ghansham Panjabi

Got it. Thank you. And then in terms of the destocking specific to wine and spirits, you know, what sort of time line is realistic as it relates to the the destocking component? And then also, just given the weakness you're seeing across the board. I know you have a lot of contracted business, but I'll just touch on maybe the competitive activity across the different regions, just given sort of a lower for longer buying dynamic?
Thank you.

Andres Lopez

So with regards to stocking out, we're seeing some interesting evolution lately. Demand trends are changing as we speak. So we're seeing some interesting evolution with regards to spirits and wine.
We expect this to continue through the second half, improving along the way, but it should be are recovering in the second half or at all.

John Haudrich

As far as the competitive environment on the only thing I think we can add is that we are managing our business as we have over the last several years to really balance supply with demand and be very, very, very crisp on our inventory levels so that we maintain the proper balance within our system. I really can't really comment too much on the competitors.

Ghansham Panjabi

Thank you.

Operator

(Operator Instructions) Michael Roxland, Truist Securities.

Michael Roxland

Thank you, Andres, John and Chris, for taking my questions. And Andres, congratulations and best of luck in your retirement.

Andres Lopez

Thank you.

Michael Roxland

Just on my first question, in terms of the accelerating curtailment activity, is that mostly occurring in the Americas? Is there something that specifically happened because you have always had a little more confident last quarter, you also were at a conference in late February where you reiterated your guide. So I'm wondering if something happened between the timeframes or versus last quarter that where you become more cautious and understand the backdrop is volatile, the consumer's volatile, but has something really happened more recently, you increase your cautiousness entry and negative figure out.

Andres Lopez

So curtailments have been more pronounced in the Americas, as you mentioned now, as we entered the year, we had an expectation with regards to the base of the stocking as well as the consumer consumption layer. And now Q4 with all the data we have was the lowest point in the year on year comps for us Q1 showed unemployment rate versus Q4, and April is showing an improvement versus Q1. Now we had a pretty slow March, and that's that's what may be the Q1 too low.
Now with all that in mind. And with the latest information at hand, we see the stock, it is taking a little longer than we originally anticipated. So we are correcting that and consumer consumption is recovering but is recorded at a slower pace.
Now there are some encouraging signs. For example, when we look at the wine in Europe, wine out of Italy, the exports are growing year on year and the latest data we have, for example. But then we got to see that to continue for the balance of the year. There is some positive evolution in beer and wine in inside Italy. At this point, there is improved performance of beer in North Central Europe.
So all of this is unfolding as we speak, and that makes it a little bit more challenging, but we believe we've now corrected that volume based on the latest information we have and more in line with the actual destocking pace as well as the level of consumer consumption.

John Haudrich

Yes, Mike, what I would add is if you take a look at the curtailment activity, we had about 8% curtailment in the first quarter, which is kind of an aligned, maybe a little higher than the sales volume decline that we were expecting in the first quarter going into the period. Obviously that the actual and the decline was bigger than that. So we are stepping up their curtailment activity. It will probably be anywhere between 10% to 12% level of our curtailment over the balance of the year with probably the peak being in the second quarter here as we catch up for adjusting for a little bit of slowness in the US in the first quarter.
As we look to where, as Andreas mentioned, we have been most active in our contract curtailment in the Americas, and so probably incrementally more curtailment will be occurring in Europe as we look to rebalance everything over the course of the year.

Michael Roxland

Got it. Thank you for that color. And then just my follow up, can you mention or comment on any additional opportunities you have in Magma to partially offset this additional demand? Because you mentioned regulatory awards totaled $175 million for the year. It sounds like you've accomplished a number of projects to achieve that target thus far. But what else I mean, what above and beyond the $150 million doing about $175 million how do you have at your disposal to help offset some of the persistent demand weakness? Thank you.

Andres Lopez

Yes. So we we see opportunities in multiple markets and Magma, given its flexibility, scalability and time to market and many other things, lower capital intensity, lower total cost of ownership, the ability to co-locate or near locate has many opportunities for MAGMA. So for example, what we're doing right now, Inc. in Kentucky is to put capacity right where the demand is for these aircraft as dealers are making capacity available for them to be able to guarantee our supply like that, you will be able to map similar situations across the United States and in other markets.
And there is enough operator, there are enough opportunities already identified to support a larger scale deployment as starting once Gen three is concluded. So we mentioned here that aided by Magna is very good for fragmented premium market, which is high value, and that's where we are focusing our efforts on our plants at this point.

John Haudrich

And Mike, to your question on what's driving the additional benefits we're looking for in the margin expansion initiatives going from $150 million to $175 million. Our Keep in mind, $75 million of that is related to restructuring of various facilities or SG&A reductions that we disliked made decisions on in the fourth quarter of last year. All that work is substantially done. And so we are at the run rate of that benefit already. And so that certainly helped us in the first quarter and gives us the confidence. So we really are looking at another $100 million above that. And if you look at historically how the company has performed on these initiatives, that's in our wheelhouse.
On one thing I would add and a big shout out to the operations team. We're seeing the best performance in the operation in seven years, and that is providing us a backdrop of being able to drive more benefits in that regard. And we are shifting some of our capital spend will be a little bit less on growth, right now because of the softness in the market and a little bit more towards cost related projects, automation, things like that, that's sustaining an additional benefits this year, but also really build the pipeline for continued benefits and continued margin expansions into the future.

Operator

(Operator Instructions) Arun Viswanathan, RBC Capital Markets.

Arun Viswanathan

Great. Thanks for taking my question. I guess I guess again, I just wanted to go back to the volume front. So do you think it's possible that we revert to say a flattish or a [zero] or 1% growth trajectory maybe in the back half of this year, especially facing easy comps, Q3, Q4 and maybe some capacity additions and your Magna build-out? And then is that kind of where you place long term glass demand? Or do you think there's been some structural weakness now that we should revert to maybe a lower growth rate?

Andres Lopez

So our expectation is that we will go back to pre-pandemic levels. And the same is the perspective of our customers. So every customer we talk to is planning to go back to pre-pandemic or slightly higher depending on the industry in which they are. So now as the stocking finalizes, which has been the largest driver of our sales drop and consumer comes back up, we should be able to start seeing that level of performance knowing exactly where that is going to fall is difficult. But our expectation is that we're going to later in the year and exiting the year will be a much different pace when compared to today?

John Haudrich

Yes. To build off of that around, I would say that right now we're in a mode where we are recovering to is under said that pre pandemic basis on the consumer gradually starts to improve as we as we mentioned. So I think it's a little early to be able to call long term trends because we have to see a little bit more there. But as we look at what's driving the softness right now, whether it's destocking or whether it's just kind of the macros and things like that. It's too early to make a call that there's any change in the drivers for our business over the long term. So we haven't really changed that perspective yet.
Now to your question about the back half of the year too on. So it's included in our materials. On page 4, we do expect things in the back half of the year to be up mid-single digits or high single digits. Again, to your kind of what you're alluding to.
There are easier comps. We were down mid 10s last year. So we will be comping those to be able to give us stronger growth overall to recovering in time to pre-pandemic levels.
And then we'll see that the longer-term trends unfold

Andres Lopez

And everything we are right things driving Well, the answer to your question doesn't include any deployment of the aircraft.

John Haudrich

Okay, great.

Arun Viswanathan

And then a follow-up quickly on price-cost so I think you know, you may have addressed this, but you wanted to hold on to say two thirds of your pricing and that was put in place over the last couple of years. Do you still feel comfortable with that cadence, especially given that we've potentially seen some some further deflation on the raw side? Or how would you kind of characterize your outlook for price cost after this report?
Thanks.

John Haudrich

Yes, what was your first statement of price cost this year was we said it's stable with our original outlook of some pressure of coal with over $200 million or so of price cost pressure. We have not changed that. What we've seen is a little bit of a softening in cost inflation right and most of that's on the energy side, a little bit on raw materials and price has been adjusted a little bit primarily because, for example, the energy adjustments coming in North America get passed through to our customers pretty quickly on as we look to the overall backdrop of cost inflation, we're looking again low single digit cost inflation coming off a little bit of what we were thinking and keep in mind, you know, more than half of our business is under long-term agreements with price adjustment formulas.
So as we go into next year, there should be a natural continued recovery component of that. I think it's a little early to talk about the overall price marketplace going forward. But I believe that if you take a look at the history of this company over it with the exception in the last year or so. We've historically been a business that's been either neutral or a little bit of positive on net price in a more balanced environment with demand comes back into a little bit more normalized environment. So we believe that that's still the fundamental backdrop for our business. Of course, we just got to work through a little bit of the the transition here is as we referring to on the call.

Arun Viswanathan

Thanks.

Operator

(Operator Instructions) George Staphos, Bank of America.

George Staphos

Thanks so much.
Hi, everyone. Good morning. Thanks for the details. Unless again, congratulations on your retirement and everything that you accomplished at OI. and the support of our research.
And I guess I wanted to come back from to the extent that your customers had a view on this.
What was the reason in your view that March wound up being a little bit weaker than anticipated, you're not alone in that regard? Not trying to pick on a why it seemed like March was a little bit softer than expected. And even when adjusting for days for a lot of our companies, what was your customer base saying in that regard and why you feel comfortable that things do in fact, improve into 2Q?
Second question again related to what your customers are saying and to some degree you've already covered it. We're saying it's too early to call it perhaps is that as you look out the next couple of years, what worries you most about the volume outlook, what gives you the most confidence in the volume outlook, destocking was a recovery from destocking consumption and or its recovery and or changing consumer tastes. There's been some discussion in the trade about changing consumer tastes trade down and consumers moving away from traditional spirits. What are your customers saying in that regard relative to your demand outlook?
Thank you.

Andres Lopez

Okay. So the mean, it's difficult to know exactly what happened in March, but there are some things that might be impacting the numbers. For example, customers taking the opportunity to drastically reduce inventories before quarter end and the other thing is some of the customers have a fiscal year that is US ending or about to end. So most likely are taking actions related to that. And then we'll have a more normal operation going into a second half of the year. And because of the excess capacity at this point, we expect that the typical seasonal demand that we see wouldn't necessarily apply because customers have access to product right away.
So they didn't need to fill in advance or buy in advance and fill in advance to be prepared for the season. So those are some of the reasons, but it's difficult to know the pipeline. What's encouraging for us is that April has been a lot better than March and certainly better than Q1 to that's thus reassuring that we are in the past and to improve. Now, obviously, the at exactly the pace and the timing is a little difficult when we look two years out, there is some talk about changing trends, but we still got to see that materializing as we've seen before, some trends come up.
And then these appear to they fade away. So it's a little early to talk about that. I think what's good in our horizon is while we are enduring a significant volume of slowdown at this point, the company is in a very good place operationally, and our operating leverage upside is very large. So as volumes come back, we're going to we're going to ride. The wave is going to is going to be it's going to be positive.

John Haudrich

The one thing I would add and that is and we brought this point up in the last call is our pipeline for new product development is very, very strong. So to us, that is a signal from our our customers that they are looking to invigorate their brands and bring them forward and address whatever changes in consumer tastes and trends that are out there. And like I said, it's a very volatile environment and you go back into the pandemic and people are drinking very significant. And now there's a little bit of softness that you referenced and it's very difficult to find out what is a longer-term trend and what is a reaction to a different environment.

Andres Lopez

So time will tell and that activity on MAC. in all segments in all geographies and is a lot higher than we've seen in years. So and these both initiated by July and initiated by the cost.

George Staphos

Thank you, gentlemen.

Andres Lopez

Thank you.

Operator

(Operator Instructions) Anthony Pettinari, Citi.

Bryan Burgmeier

It's actually Bryan Burgmeier, sitting in for Anthony.
Thank you for taking the question. Maybe just following up on Andrew's question. If I think about why having maybe up 10% of capacity on the sidelines this year? And when does that start to create some risks for year end pricing negotiations in Europe? I'm just thinking about sort of the historical relationship between curtailments and price. And I guess does this level of curtailment usually support positive price for while?

John Haudrich

What I would say is at the end of the day on it comes down to balancing your inventories and making sure that the inventory situation is in the right place for whatever the market conditions are. And at Ally, that's what we are managing to is to make sure that our inventories in the year in a reasonably snug position. And I can't speak for the broader marketplace, but we believe that that is the most important thing that we as a company can do to position the Company for future success.

Bryan Burgmeier

Got it. Makes sense and done. Maybe George just touched on this, but I'm just wanted to dig into the trade downs that you flagged in the prepared remarks a little bit. I'm just trying to think of it. Are you referring to people maybe moving from wine to beer, is it moving from a higher end bottle to a lower-end bottles or moving from glass to a different substrate? Just any detail there?
Thanks. I'll turn it over and good luck in the quarter.

Andres Lopez

So the trade-down activity is concentrated in some markets, so is not everywhere and for the most part is linked to promotional activity. So every time customers move forward with significant promotions. Those are typically in a lower cost package and that's where the trade-down happens. But we've seen also in some of those markets a start of a rebound and the consumption of glass, for example, in April was a positive year on year in markets that presented that before.

John Haudrich

I think we've seen some mixed trends do so for example, we flagged this one last quarter too, is that there was some trade down effect with beer in Eastern Europe. By the same token, we're seeing very strong in our market share position for glass in the Netherlands and in Colombia and in other marketplaces like that. So I think we've got there's no one universal answer about what's going on out there you see it market by market category by category.

Operator

(Operator Instructions) Gabrial Hajde, Wells Fargo Securities.

Gabrial Hajde

Andres congratulations, John, Chris.
Good morning, and thank you very much for you. But maybe it looks like you all are focusing on the controllables. Maybe on focusing just on the sort of more near term outlook, it wasn't clear if April volumes, whether on a day adjusted basis or otherwise were positive for you all in terms of shipments. And then just your confidence level in the near term kind of second quarter on view that it looks like from the chart, shipments will be flattish, maybe we'll start there.

John Haudrich

Yes, I gave for clarity, our actual shipments in April were up 3%.
Okay. On that note, that also benefited from the timing of Easter. If you normalize for the Easter period, it was down about 10% on a per day basis. And that compares to the first quarter when things were down about 12.5%. So we have seen some some trend in the positive. That's, but that's obviously a little slower of an improvement than what we had originally anticipated. So March was a bit softer, as Anders mentioned, April is improving, but also maybe a little slower than we anticipated with the backdrop of the looking at the Nielsen data with a little bit of a slower consumer.
But as we take a look at that and you see it on that page 4 and the lower right-hand corner, we have calibrated our growth expectations for each quarter of the year for a revised view of a softer consumer recovery pattern. And so we believe in with April being up 3% on on an absolute basis and then things playing out more on a normalized basis over the balance of the month, we should be in that kind of plus or minus a fairly narrow range of breakeven in the second quarter and then stronger volume at reported volumes in the back half as we see that gradual recovery, but also an easier comp against the prior year numbers.

Gabrial Hajde

Okay. One country, you guys talked about the Andean region and Colombia, but we didn't hear much about Brazil again, a lot going on there in terms of what we're hearing from a competing substrate. It seems like aluminum is maybe better hedged this year. Or maybe cheaper from a sourcing standpoint, just as that happens and we get more sanctions and things like that and costs move up. Tom, just curious how long some of the lead time you have in terms of discussions with your customers for pack mix down in Brazil? And then just maybe current commentary on what you're seeing.
Thank you.

Andres Lopez

Yes. So the economy in Brazil has been performing quite as stable. So it didn't go through what the economies are going through is being has been okay now our performance. So the performance of glass in beer is very solid. It is driven by premium. And just to give you an idea, our year to date, first quarter year on year Y-on-Y growth is 5.3%, which is well ahead of the growth in your substrates.
Now it is important to take in consideration that when short rates talk about their demand, they include carbonated soft drinks in Huawei, which is a segment in which we don't participate on. So that's driving a lot of what they are experiencing. But for us, a very important category in the country's beer and beer is doing quite well on. As we said before, the returnability improved over time after the pandemic until the percentage of the total volume of beer packed in returnable glass increase and it remains up.

Gabrial Hajde

Okay. Thank you.

Andres Lopez

Thank you.

Christopher Manuel

Okay, guys, that can handle our earnings call.
Thank you. And Melissa, that concludes our call. I would note that our second quarter call is scheduled for Wednesday, July 31. And as a reminder, make it a memorable event by choosing safe, sustainable glass. Thank you.

Operator

Thank you, everyone. For joining us today. This concludes our call, and you may now disconnect your.