クラウン・ホールディングス（CCK）2026年第3四半期決算説明会：缶出荷量は6％増加、EPSガイダンスを維持

主要ポイント

• クラウン・ホールディングスが発表した2026年第3四半期の調整後希薄化後EPSは2.39ドルとなり、前年同期の2.24ドルから7%増加した。報告ベースの希薄化後EPSは前年同期の1.85ドルから2.08ドルに増加した。
• 売上高は飲料缶の出荷量増加と原材料コストの上昇分の転嫁により、前年同期の32億ドルから37億ドルに増加した。為替換算の影響により、売上高は800万ドル減少した。
• 世界全体の飲料缶出荷量は6%増加し、アジアでの2桁成長、北米での6%成長、欧州での4%成長が含まれる。
• セグメント利益は前年同期の4億9,000万ドルから4億8,400万ドルに減少した。飲料缶出荷量の増加はインフレや輸送用包装部門の不振により相殺された。
• 中東紛争に関連するインフレの影響により、第3四半期のセグメント利益は約1,700万ドル、調整後希薄化後EPSは約0.12ドル押し下げられた。経営陣は第4四半期の見通しにも同様の逆風を織り込んでいる。
• クラウンは2026年通期の調整後希薄化後EPSを8.35〜8.45ドル、調整後フリーキャッシュフローを少なくとも9億5,000万ドルとする見通しを示した。

主要財務データ

事業および営業業績

飲料缶

世界全体の飲料缶出荷量は、第1・第2四半期にそれぞれ5%増加した後、第3四半期には6%増加した。年初来累計の伸び率は6%近くに達した一方、経営陣は通期での世界成長目標である4%〜5%を維持した。

南北アメリカ飲料部門の売上高は、主に金属コスト上昇分の価格転嫁額2億4,000万ドルおよび販売数量の増加を反映して20%増加した。北米の数量は6%増、ブラジルは4%増、メキシコは約1%減となった。原材料コストの転嫁分を除いたセグメント利益率は17.7%であった。

経営陣は通期の北米出荷量が3%〜4%増加すると見込んでいる。また、2027年には北米の生産能力がフル稼働に達する可能性があり、潜在的な成長は利用可能な生産能力に制限されると述べた。

欧州の出荷量は4%増加した。欧州大陸全体での7%の成長は、ペルシャ湾岸諸国での4%の減少により一部相殺された。セグメント利益は、数量増がインフレ、事業ミックス、および約400万〜500万ドルの立ち上げコストによって打ち消され、前年同期並みとなった。

ギリシャおよびスペインでの拡張プロジェクトは予定通り進展しており、英国ピーターバラの工場では第3ラインの増設を行っている。経営陣は、欧州における立ち上げコストが第4四半期、さらに一部2027年第1四半期まで続くと見込んでいる。

アジア太平洋地域の利益は、東南アジアにおける10%台半ばの数量増がエネルギー価格や輸送コストの上昇を相殺し、増加した。経営陣は、アジア地域が2027年も成長を続けるものの、そのペースは1桁台前半から半ばへと減速すると予想している。

インドへの事業拡大

クラウンはインド初となる飲料缶工場の建設に着工した。2ラインを備える同工場はすでに90%以上の契約が完了しており、経営陣によると契約構成比は約60%がビール、40%が清涼飲料水となっている。同社は、この投資の回収期間が過去6年間に完了した他の主要プロジェクトと同等以上になると見込んでいる。

輸送用包装およびその他の事業

輸送用包装部門の出荷量および利益は、経営陣の予想を下回った。幅広い製品カテゴリーにおける需要の低迷に加え、特に運賃をはじめとする投入コストの上昇が重くのしかかった。見積もり活動は改善しているものの、経営陣は回復に対する確信を深めるには、確定した設備注文を確認する必要があるとしている。

経営陣は、輸送用包装部門の第4四半期前年同期比の実績について、利益がゆるやかに減少し、第3四半期と同様の傾向になると予想している。

北米の食品缶市場では、野菜およびペットフード向けの旺盛な需要が1桁台後半の出荷量増加を牽引したものの、エアゾール缶の売上低迷により一部相殺された。またクラウンは、メーカー各社が世界的に増産を図るなか、飲料缶設備事業の手元注文（受注残）が好調であると報告した。

業績見通し（ガイダンス）

この見通しは、ユーロ／ドル為替レートが約1.12ドルとなることを含め、為替レートが現在の水準付近にとどまることを前提としている。経営陣は、好調な出荷量が予想以上のインフレを打ち消し、EPSガイダンスの中央値を維持できたと述べた。運転資金の効率改善も寄与し、フリーキャッシュフローの見通しは「少なくとも9億ドル」から「少なくとも9億5,000万ドル」へ引き上げられた。

リスクと注視事項

• インフレ：エネルギー、産業用ガス、運賃のコストは紛争前の水準を上回ったままである。経営陣は現在、中東紛争に伴うインフレが下期のEPSにおよぼす逆風を約0.20〜0.25ドルと試算しており、第3四半期と第4四半期にほぼ均等に分散するとみている。
• コスト回収の遅れ：一部の非金属コストに関する契約上の回収は、過去の実績に基づく見直し方式（ルックバック方式）を通じて2027年に行われる。これらの仕組みは主に北米および欧州の大半に適用されるが、中東やアジアでは同様の規模で適用されるわけではない。
• 中東の需要：ペルシャ湾岸地域における第3四半期の出荷量は4%減少した。クラウンの第4四半期の予測は、ホルムズ海峡周辺での制限が続く間、中東の一部事業で低迷が続くことを前提としている。
• 輸送用包装：見積もり活動の活発化が確定注文にまだ結びついておらず、需要回復の時期は不透明なままである。
• 生産能力の制約：経営陣は2027年に北米事業がフル稼働状態になると見込んでおり、生産能力の追加がなければ数量成長が制約される可能性がある。
• プロジェクトの立ち上げ：複数の拡張プロジェクトにより、2027年初頭まで立ち上げコストが発生し続ける見込みである。

アナリスト質疑応答のハイライト

2027年の価格設定とコスト回収

経営陣によると、関連する生産者物価指数（PPI）は直近で約9%で推移している。北米における契約価格改定の多くは2027年4月1日頃に予定されており、2026年のインフレによる逆風の大半を改定により回収できる見込みである。ただし、価格決定メカニズムは地域によって異なるため、世界全体への影響を完全にカバーできるわけではない。

2027年の飲料缶需要

クラウンは2027年も世界全体での出荷量増加が続くと見込んでいる。経営陣は、北米がフル稼働近くで操業し、欧州は市場全体と同水準で成長、アジアは1桁台前半から半ばのペースで拡大すると予想している。また、ブラジルでは顧客ミックスが改善する可能性があり、中東地域情勢が緩和されれば同地域での需要改善も期待される。

経営陣は、現在の需要のモメンタム（勢い）の要因として、飲料市場の成長およびアルミ缶への包装シフトの継続を挙げた。また、ロンドン金属取引所（LME）のアルミニウム価格の下落が顧客のコスト負担を軽減し、販売促進活動を後押しする可能性があるとも指摘した。

資本配分

クラウンは年間約9億〜10億ドルのフリーキャッシュフローを創出すると見込んでいる。経営陣は、市場の集約が進んでいることから大規模な缶メーカーの買収は困難とみられ、非金属分野での大型買収の可能性も低いと述べた。

より高いリターンが得られる他の代替案がなければ、クラウンは自社株買いを継続する計画である。経営陣は、今後数年間にわたり年間約6億〜8億ドルの自社株買いを実施することは妥当であると述べ、発行済株式数が現在の約1億800万株から2027年半ばまでに約1億株へと減少する可能性があることを示した。

M&Aとオーガニック投資

経営陣は引き続き飲料缶事業のオーガニック（自律的）成長に注力しているが、物件が取得可能であれば小規模な工場の買収も検討する可能性がある。クラウンは現在、複数の主要な設備増設プロジェクトを進めており、資本を投じる前に将来の出荷量をどの程度契約で確保できるかに基づいて追加投資を判断する方針である。

決算説明会トランスクリプト全文

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決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning, and welcome to Crown Holdings Third Quarter 2026 Conference Call. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to turn the call over to Mr. Kevin Clothier, Senior Vice President and Chief Financial Officer; Sir, you may begin.

Kevin Clothier

Thank you, Rich, and good morning. With me on today's call is Tim Donahue, Chairman, President and Chief Executive Officer. If you don't already have a copy of the earnings release, it is available on our website at crowncourt.com.

On this call, as in the earnings release, we will make a number of forward-looking statements. Actual results could differ materially from those statements. Additional information concerning factors that could cause actual results to vary is contained in the press release and our SEC filings, including Form 10-K for 2025 and subsequent filings.

Reported diluting -- diluted earnings per share were $2.08 compared to $1.85 in the prior year quarter. Adjusted earnings per diluted share were $2.39 compared to $2.24 in the third quarter of 2025, an increase of 7%.

Net sales increased to $3.7 billion, compared to $3.2 billion in the prior year quarter. The increase primarily reflected higher global beverage can shipments and the pass-through of higher material costs, partially offset by $8 million of unfavorable foreign currency translation. Global beverage can volumes increased more than 6%, including double-digit growth in Asia, 6% growth in North America and 4% growth in Europe.

Segment income was $484 million compared to $490 million in the prior year quarter. Higher global beverage can shipments were offset by inflationary cost pressures and lower results in transit packaging. Inflationary pressures from the Middle East conflict impacted third quarter segment income by approximately $17 million across all businesses and adjusted diluted earnings per share of $0.12.

We have included a similar impact in our fourth quarter estimate. Adjusted free cash flow was $771 million through the first 9 months of the year with capital spending of $310 million. As we continue to invest in growth projects in Brazil, Spain and Northern India -- excuse me.

Capital allocation remains an important component of our value creation strategy. During the third quarter, we repurchased $81 million of the company's shares, bringing year-to-date share repurchases to $598 million, including $115 million of dividends -- when including $115 million in dividends, we returned more than $700 million to shareholders during the first 9 months of 2026, while maintaining net leverage ratio at approximately 2.5x.

Based on our strong year-to-date performance, we expect full year 2026 adjusted diluted earnings per share to be in the range of $8.35 to $8.45 and the fourth quarter adjusted diluted earnings per share to be in the range of $1.63 to $1.73 in fourth quarter.

Our full year outlook assumes net interest expense of approximately $355 million, exchange rates at current levels, including a euro-dollar at approximately $1.12. Effective tax rate of approximately 25%; depreciation of approximately $325 million, noncontrolling interest expense of approximately $145 million. Dividends to noncontrolling interest of approximately $110 million, adjusted free cash flow of at least $950 million. Capital spending approximately $550 million. Year-end adjusted net leverage of approximately 2.5x.

The company is executing well, delivered another strong quarter. As we look ahead, our strong balance sheet, consistent free cash flow generation and disciplined capital allocation strategy, position us well to continue to invest in attractive organic growth opportunities while returning capital to shareholders. With that, I'll turn the call over to Tim.

Timothy Donahue

Thank you, Kevin, and good morning to everyone. As Kevin just summarized, the company had another solid quarter of performance as continued strong global demand for beverage cans helped offset the majority of rising input costs. .

Global beverage can shipments advanced 6% in the quarter, following 5% growth in both the first and second quarters with year-to-date growth standing at close to 6%. We remain confident in the outlook for beverage can demand with our full year global growth target in the 4% to 5% range.

The company's businesses are responding well to global economic challenges to continue supporting our customers' needs as we all navigate a world of growing tensions. As Kevin described, inflationary headwinds, primarily a result of the Middle East conflict were greater in the third quarter than we previously anticipated, and we have included a similar headwind in our fourth quarter estimate.

Energy, industrial gases, freight, among other costs, all remain elevated from pre-conflict levels. And as many of you are aware, the contractual recovery of these and other nonmetal costs will occur in 2027 via a look-back formula. Revenues in the Americas Beverage segment advanced 20% in the quarter, primarily a result of $240 million in the pass-through of higher metal costs and higher sales unit volumes.

Volumes in North America grew 6%, Brazil was up 4%, with Mexico down about 1% in the quarter. Against the strong prior year comp, income improved in the quarter on the back of contribution from volume gains, although the majority of the volume contribution was offset by rising input costs.

Adjusting for the pass-through of higher material costs, segment income margin was 17.7% of sales in the quarter. Can demand remained strong in North America, and we expect full year shipments to be up in the 3% to 4% range.

European volumes increased 4% in the third quarter with 7% growth recorded across the continent, offset by a 4% reduction in the Gulf states. Capacity expansion projects in Greece and Spain remain on plan, and we are also installing a third line to the Peterborough U.K. plant.

These capacity additions will bring much needed capacity to our system, helping to serve our customers' growing needs. Income level to the prior year reflects higher volumes offset by rising input and start-up costs. Income in Asia Pacific advanced during the quarter on the back of mid-double-digit Southeast Asian volume gains helping to offset higher energy and transport costs. Performance across the Transit Packaging business disappointed in the third quarter with both volumes and profits falling short of prior expectations.

Soft volumes across all product offerings were compounded by higher input costs, notably freight. While we do see some green shoots, we remain cautious on -- until increased quoting activity results in firm orders. Strong vegetable and pet food demand contributed to high single-digit volume gains in North American food offsetting softer aerosol can sales.

And activity across our beverage can equipment business remains strong as global beverage can makers look to increase their capacity to meet a world of continuing growing can demand.

To summarize before opening the call to questions, global beverage can volumes advanced 6% in the quarter, full year growth now estimated at 4% to 5%. Earnings per share advanced 7% and up 11% through 9 months. Cash flow remains robust. And as Kevin described, the company has now returned more than $700 million to shareholders year-to-date.

The balance sheet remains strong with leverage remaining unchanged at 2.5x through the peak summer selling season. And with that, Rich, we are now ready to take questions. Thank you.

Operator

[Operator Instructions]

Our first question is from George Staphos from Bank of America.

質疑応答

George Staphos

Thanks for the details. Tim, I wanted to ask a question with a couple of parts trying to get at the fourth quarter. So can you talk about what sort of exit rate you're seeing on volumes from the third quarter into the fourth quarter for your key regions?

And relatedly and again, trying to get at the fourth quarter, and you said most of this is the elevated level of inflation. With inflation being higher than expected, what's the offset such that you're working -- your free cash flow is actually going up. You would think that with inflation being a bigger burden understandably, that the free cash flow go -- would have been lower, but it's higher.

So Help us understand what's going on in volume in the fourth quarter as you're entering and how you're offsetting the inflation, such that free cash flow is up? And then I had a quick follow-on.

Timothy Donahue

Okay. So very quickly, George, I'll let Kevin deal with the cash flow element. We got 2 things in our fourth quarter estimate. One, as Kevin described, if we had previously told you that we expected inflation to be about a $0.10 headwind in the back half of the year.

It's probably a little bit more than double that split equally between third and fourth quarter. So we've got another block, Kevin, $0.12 or $0.13 baked into our estimate for the fourth quarter.

The way we're able to offset that, at least in the third quarter was exceptionally high volume. As you know, contribution from more volume can cover a lot of costs and other problems.

As you described, exit rates coming into the fourth quarter, still fairly strong. It's hard for us to sit here though and anticipate that we're going to have 6% global volume growth in the fourth quarter. So our estimate for the fourth quarter, probably on the order of 3.5% to 4% and global volume growth, which historically speaking, George, you've been around a long time like I have, I always say that. It helps to have you around because I don't feel so old...

George Staphos

Watch it to...

Timothy Donahue

But 3% to 4% historically, in the can business, we would all do backflips if we could do that every quarter. It's just not the 6% we had in the third quarter, but 3% to 4%, maybe a little bit better than that.

We're quite happy. So continued elevated costs, continued volume growth, although hard to sit here today with an estimate to give you to think that while we're going to have volume growth, it could be as strong as the third quarter, still have volume growth, maybe a touch lighter. And I'll let Kevin deal with the inflation vis-a-vis cash flow.

George Staphos

Yes, we were just trying to see that there wasn't something that had now become negative, but I appreciate that. So keep going. Hi Kevin.

Kevin Clothier

Yes, George, I mean think about it. Look, the guide -- the midpoint of the guide is still exactly where it was at the end of the second quarter. So even though we've had higher inflationary pressures, we basically offset it with volume here.

So -- and that's the expectation because we've maintained the midpoint. We just narrowed the range. And then the delta to get the cash flow higher is just working capital is just running better than it ever has. So we expect working capital to be better than what we originally expected, and that's why we feel we can get at least $950 out versus at least $900...

Timothy Donahue

George, I just want to -- one last thing I'll talk about, because Kevin talked about working capital. We have 2 primary metrics whereby our managers are compensated in their bonus, economic profit and cash flow. And people will perform based on how you compensate them. They are well aware of how they are compensated, and they work to generate as much cash as possible. So it's just a function of the of a compensation program that we've had for more than -- almost 2 decades that works quite well.

George Staphos

Understood. Tim, I'll turn it over to be fair, and it's tenure, it's not age anyway.

Timothy Donahue

It's experience, yes, it's perspective. Rich, next question.

Operator

Our next question is from Matt Roberts from Raymond James.

Matthew Roberts

On our volume strength. So North America, 3Q really strong and actually better than 2Q despite World Cup benefit last quarter. So maybe in hindsight, the strength in 2Q still due to World Cup as North America is generally stronger given it carried through into 3Q.

Any timing or spot volume considerations in the second half here and given the strong underlying trends despite harder comps in '27? Any early indications on what we could expect for North America in '27? .

Timothy Donahue

Well, the first thing I'll answer is the Q3. The comp last year Q3 was very high. As you say, we had a very strong Q3 in earnings terms would have likely to have been better given the volume growth. But I think what you don't see is that although we've talked about it before, we had positive volume momentum in Brazil in the third quarter, whereby in the second quarter, I think we had negative volume momentum.

So Brazil was a little bit of a turnaround. I don't believe although we had 4% growth in Brazil in the third quarter, I think the industry probably did better than that. We're still running behind the industry a bit in Brazil given customer mix.

But our third quarter in Brazil was stronger than our second quarter in Brazil. And then that's the reason why you might be referencing that Q3 was better than Q2. A little early to say what 2027 is going to look like. I hesitate to say this, but it feels like we're going to be full next year in North America. The upshot of that is that we won't have a lot of spare capacity. So we'll see how it progresses from here until the next time we talk to you.

Matthew Roberts

And on Europe, another strong growth there on volume segment income was flat. Was that really all the inflation impact or any impact from start-up costs that we are going...

Timothy Donahue

You've got start-up costs, Kevin, I don't know, maybe $4 million or $5 million or something like that. I think the other thing you have is -- on the continent, we were up 7%. And in the Gulf states, i.e., the Middle East, we were down 4%, and so you've got some mix issues. But again, given everything that's going on in Europe, we're not disappointed with that result.

Matthew Roberts

Right. Great. And with the starting costs, is there any way 4Q operating income could be up or should we have more start 4Q or any considerations there? .

Timothy Donahue

Well, I think we're going to continue to have start-up costs, and that's already baked into the fourth quarter estimate. And we'll even have a little bit of start-up cost in the first quarter. That's right. We've got enough projects going on right now between the 3 projects in Europe.

We've got a project in Brazil. And as I mentioned to you in the prepared remarks, our equipment business, the order book is really firm, and it's not just a North America or a European thing. It is a global growth spurt right now we're experiencing across beverage cans.

It feels a little bit like pre-COVID, although this feels a bit more organic, it's not fueled by COVID. This feels like there's a real momentum globally towards beverage cans either from the growth of beverages and/or substrate changes globally. So this feels really positive as we look forward.

Operator

Our next question is from the line of Ghansham Panjabi from Baird.

Ghansham Panjabi

On the cost inflation piece, I understand there's been a lot going on this year, and it just continues to get more volatile, et cetera. But if costs hold at this point, for 2027, will you be price cost at least neutral? Or will there be some lags? Or will you be ahead of the cost curve? .

Timothy Donahue

So as we sit here today, you all are well aware of the contractual mechanism we use at least in the North American market, which is PPI, I think correct me if I'm wrong, Kevin or Tom, but I think PPI right now is running at about 9%. .

Kevin Clothier

That's right.

Timothy Donahue

So it's a pretty big number as we get into 2027 as we reprice mostly around the April 1 time line, but it will be a fairly large repricing, which will recapture much of the headwind we've had in 2026, and we'll see where prices go next year with any luck, we'll get some abatement on rising prices.

We're already starting to see LME levels come down. Now that's not part of the PPI, but declining LME is a good sign with respect to the affordability of cans for our customers and the consumers. So -- why don't you give -- I'd like to say, yes, to answer your question, Ghansham, why don't you let us come back to you in late January when we talk to you and just firm that up.

But it feels like we're going to be in a much better position next year than we are this year with respect to the Middle East inflationary pressures.

Ghansham Panjabi

Perfect. And then for volumes, again, looking out to 2027, I realize it's early. So it sounds like the Americas segment is in a pretty good spot. You mentioned being sold out, et cetera, certainly North America. What about the other regions? Would Europe start to benefit from the incremental capacity additions? Can Asia sustain the growth? I love to -- love to hear your initial thoughts on those other regions?

Timothy Donahue

Yes. I think -- listen, there's always -- you and I have talked before, Ghansham, there's always business that moves around. People don't always like to hear that. Perhaps some business has moved around, but we're going to be full next year.

So -- and we think we're going to be full with a better mix, I'll just say it that way, in the North American market. We are hopeful that customer mix will be a benefit to us in Brazil next year as opposed to a headwind this year.

Europe, we expect to continue growing in the order of 3% to 5% or 2% to 4%. It's off a much bigger base now, the market, and we are as well positioned to benefit from market growth as anybody else. So we feel like we're at least in line with market growth in Europe.

Hopefully -- and it is a big hope, but we get a resolution to the Middle East conflict or we get the Strait of Hormuz loosening up a bit, perhaps we can return to growth. We've had a little headwind in volumes in the Middle East operations.

We get a little return to growth there. And Asia will continue to grow. It will not grow next year at the rates that it grew this year, but it will continue to grow in the low to mid-single-digit range.

So I think, as I said to Matt, Matt gave me the opening to comment about global beverage can demand, I think, not just for Crown, but for all can makers, I think we're entering a world over the next couple of years where we're going to see very strong demand.

Operator

Our next question is from the line of Phil Ang from Jefferies.

Timothy Donahue

Phil?

Philip Ng

Tim, sorry about that. Volumes are strong and certainly in an inflationary backdrop. I mean you're still growing earnings this year. So kudos to the team. When we look out to '27, obviously, you gave some great color on PPI, how that kicks in for North America. Europe, I believe there's an element that's tied to that.

But I'm most curious about other markets like Asia, Transit, your ability to take price and to offset inflation, certainly a very strong demand environment right now?

Timothy Donahue

So Asia, we do have a few long-term contracts. Many of the contracts in Asia are annual in nature. So we reprice those annually. Having said that, there are some markets in Asia that are very competitive. So we always look to remain competitive and either maintain a very stable business with a lot of cash flow or grow it when there's an opportunity.

So I do think we'll have an opportunity to grow the business next year. A little early to say where income will come in, but perhaps marginally up next year compared to this year. I'm very hopeful that we'll see the Middle East return to volume growth next year as well as Brazil. And again, pass-through mechanisms in those markets a little different than North America and Europe.

Philip Ng

Helpful. And then given the cash flow generation, you're buying back stock, returning cash. What about growing the business outside of projects you have. I'm most curious about North America. I mean, as you kind of alluded to your sold out, what's the path on that front? Is that something we should be focused on? And any other markets where you see an ability to kind of deploy capital for organic growth?

Timothy Donahue

Yes. I think until we -- until we announce a project, I would tell you right now, we've got 4 fairly large projects underway right now, 3 in Europe and we're finishing 1 in Brazil. So it's a lot of work for our team. We do all of the work ourselves in-house.

We don't outsource the work. So we've got a big, very sophisticated, competent project management and engineering team. We make a lot of our own equipment and I would just tell you that we continue to evaluate the opportunity with respect to how much we can sell ahead of ahead of making a commitment to put more capital in the ground. And so until we make an announcement, you should assume that the 4 projects we have is what we have at this point.

Operator

Our next question is from Hillary Cacanando from Deutsche Bank.

Hillary Cacanando

Great. So on transit, you mentioned some green shoots and quoting activity. Can you give us a little more color on where you're seeing that improvement and what would need to happen for you to become more constructive on the demand outlook into 2027?

Timothy Donahue

Yes. You could probably tell from my prepared remarks, we're a bit disappointed with the performance in Transit. We've started to see an uptick in industrial demand. Certainly, PMI in both the United States and Europe has been running in the expansion category for the last several months, and we have yet to benefit from that.

We are starting to see quoting activity pick up across the equipment sector. Obviously, we'd like to sell more equipment. You sell more equipment, you get more tools and service in the future and a lot of quotes, but we need to get some firm orders before we're going to get a little bit more constructive to use your words and/or confident to use my words before I want to put my neck back out there again. So disappointing, but it feels like things could be getting better. We're just not ready to say it yet.

Hillary Cacanando

Got it. Got it. And then as a follow-up, you recently broke ground on your first beverage can facility in India. So can you talk about the opportunity you see in the Indian market and how you're thinking about the ramp and return profile of that investment?

Timothy Donahue

Sure. So I think 1 thing I'd like to say is that -- it's our first plant in India. But let's be clear, Crown has been at the forefront of entering new markets well ahead of anybody else for decades. We were the first Western can company in China. We're the first Western can company across Southeast Asia, in the Middle East.

We've not had -- we've not had a lot of hesitancy to go into new markets, our hesitancy with India over the years had more to do with the fact that it was more of a spirits market than a beer market. That is changing as the Indian consumer continues to consume more beer as well as soft drinks.

And it appears that cans are becoming a more preferred package as well. in that market, like many other regions in the world. So I think it's fair to say that India is a very large country with a very large population and a very large middle class.

I mean, the population of the United States is 330 million. The population of India is pushing 1.5 billion, and I'll get to the middle class in India is the entire population of the U.S. such that 20% -- at least 20% of India, 300 million is middle class, and they have growing disposable income and the opportunity set would be there for us to have not 1 plant.

We -- I don't think we ever would envision going to a market as large as India over a 3-, 5- or 10-year period and only want to have 1 location. So we'll look to get this capital in the ground and get started up as quick as possible.

It's a big 2-line plant. I would tell you that right now, more than 90% is under contract. Our challenge is to get it up and running as quick as possible to serve those contracts. And the payback should be in line or better than we've seen with other large projects that we've put in the ground over the last 6 years.

Operator

Our next question is from Arun Viswanathan from RBC Capital Markets.

Arun Viswanathan

Congrats on the strong Q3 on the volume side. So I guess I wanted to continue that discussion. So obviously, maybe you can just offer some of your thoughts on what you're hearing from some of your customers. We know that inflation is up. The beverage companies, I think, have been struggling with balancing promotions and price with volumes.

So I guess what are you hearing on that front? Do you expect promotions to continue as you enter into '27? And do you expect -- you are facing a pretty tough comp. So do you think you can still grow volumes off of this, say, mid-single-digit performance in '26? .

Timothy Donahue

Yes. I think as I've said to some -- Arun to some of the previous questions, I think we see continued volume growth in '27, albeit perhaps not to the same level certainly in Asia that we see this year, you're not going to grow business double-digit every year.

But -- and some of the Asian growth we had this year was on the back of a renewed commercial strategy after a couple of years of getting our cost structure in line. We're now back in the market with a renewed commercial strategy. We'll have growth next year, but as I said, low to mid-single digits.

Middle East, I would hope is better than this year in the face of a war. Europe is going to continue to grow. It's just a matter of how quickly we can get capital in the ground and others can get capital in the ground to meet customers' growing needs across the European continent.

As I said, we're very hopeful that customer mix next year is more positive for us in Brazil than it was this year. And in North America, we're going to be sold out and the limits of our capacity will be tested, and that will determine whether or not our growth next year is 2% or 4%.

And we'll come back to you still wanted to press the issue on new capacity in North America. We're not there yet, but we'll come back to you in due time if we feel that's necessary.

Arun Viswanathan

And then just real quickly on the promotional activity. I guess that's more what I'm working customers, I guess, last time when there was some inflation, the beverage companies raise prices. And then when the inflation were treated, they weren't really willing to promote this immediately. So -- do you think those promotions will continue that kind of buy 2 to get 1 free in North America specifically?

Timothy Donahue

I think they need new volume, right? And the parent companies look to sell syrup, and the bottlers look to move volume. I think the 1 thing that's very positive for the can makers, where the can makers sit right now is LME looks like it's dropped below 3,000 or very close to 3,000 from a from a high of what, Kevin, 3500 or 3,600.

So we're starting to see some easing on LME. It would be nice to see some easing on the Midwest premium. But certainly, the LME has come off almost 20%. And that will give the beverage companies, the opportunity to promote if they continue to want to do so.

Arun Viswanathan

I appreciate that. And then just real quickly, if I could just squeeze in 1 more, just on PPI. So in years past when you've had an inflationary pass-through maybe that weighed on EPS a little bit. Could you just kind of speak to how that would impact your '27 outlook, if at all -- will take some -- will there be a lag before you can see some earnings growth due to that PPI pass-through?

Timothy Donahue

Well, the pass-through will occur by contract. It is formulaic. Some contracts are early in the year. The majority, I think, are April 1. So it is formulaic and it's going to happen. And little -- the timing is as it relates to the third and fourth quarter of '26 is unfavorable. We know how this works every year.

I think as Kevin has said before, for the last couple of years, I think PPI was flatter 1% or 2%. And clearly, flat to 2% doesn't reflect the cost environment post April this year when the war started. So we'll get it back next year.

Operator

Our next question will be coming from the line of Jeff Zekauskas from JPMorgan.

Jeffrey Zekauskas

I think this summer was the hottest on record in the United States and Europe. Do you think that, that affected beverage demand and your can demand?

Timothy Donahue

I don't know. I -- Jeff, I don't know, to be honest with you. I think -- I think globally and even in the North American market, people are embracing cans, more fillers and more -- more companies that are introducing new beverage products or introducing in higher rates into cans than ever in the past.

And I think the younger consumer, which isn't me, but the younger consumer is well aware of the sustainability benefits surrounding the can and the infinite recyclability of aluminum as opposed to mass piles of plastics that are floating in the ocean and clogging our nation's water wave.

So I think there's a lot of things that are positive for the can. It's -- you could argue if it's too hot, people don't go outside. And if people don't go outside, they don't have picnic. So you can -- you can look at it a lot of different ways. I'm going to try to stay out of the global warming debate. I don't know. So -- but I think we're in a world where cans are being recognized for the benefits that they offer versus other substrates, and I'll leave it at that.

Jeffrey Zekauskas

And you talked about a look-back benefit in 2027 because of the inflation that was felt in the second half of '26, but not immediately recouped. So all things being equal, should there be, I don't know, a $0.20 a share benefit that accrues to Crown in 2027 because of the inflation in '26?

Timothy Donahue

Well, there is a benefit. Yes, it won't be the full amount we incurred this year because not all regions have that contractual look-back mechanism. We certainly have it in North America, and we have it to a large extent in Europe.

We do not really have it in the Middle East or Asia as more of those contracts are annual in nature. So perhaps half of that number, you might want to fairly say that we should see next year.

Operator

Our next question is from Chris Parkinson from Wolfe Research.

Christopher Parkinson

Tim, can we just circle back at kind of the beginning of this year. Obviously, there are a lot of moving parts. When you take a step back and look at where you stood then versus where you stood now, what are the things you feel generally better about in terms of the way the industry is trending, specifically in North America?

And what are the kind of 1 or 2 things we should be focusing on the most for 2027 in terms of moving parts in terms of your own thinking as CEO?

Timothy Donahue

Listen, I think the -- if you had told me on January 1 that we get through 9 months of the year, and we'd be global beverage can shipments for Crown would be up on the order of 5% to 6%. And I have taken that in a heartbeat on January 1.

And if you told me then that my quoting activity and my order book at CMB Engineering, our beverage can equipment company would be as full as it is now for the outlook I'd be thrilled.

I don't think we anticipated demand for us in North America or the world to be as strong as it has been this year on January 1, and we certainly didn't anticipate the strength of equipment demand that we're seeing right now as we look forward. So I think, as I said earlier, it feels like we're entering a world of increased beverage can growth, and it certainly feels as I said earlier, much more organic than it felt during the COVID period.

So I think the only thing I would tell you to look at it as we get into next year because things feel pretty good as it relates to demand. Hopefully, we see some easing on input cost pressures such that when we do get the contractual mechanisms, we recover what we lost this year that we're just not keeping pace with further cost pressures next year.

Christopher Parkinson

Got it. And just a quick follow-up, a couple of questions ago. You kind of ran through some quick math in terms of the entry into the Indian market. You've obviously been focusing on a couple of anchor customers per the press releases, but how are you thinking about that intermediate long term? Is that mainly -- is that the beer thesis -- are there possibilities with additional CSD customers -- just any additional color on how you're going to anchor yourself into that market and eventually, you obviously grow would be greatly appreciated?

Timothy Donahue

I'm sorry, if I gave you the impression that we only had beer customers. What I was trying to say that historically, the Indian consumer was more of a spirit drinker than a beer drinker. But we do have soft drink customers under contract.

And I'd say that perhaps at least 40% of what we have under contract in this new facility is soft drink with the 60% of it being beer. So we have a number of soft drink customers, including some of the very largest soft drink companies in the world.

And our growth aspirations requirements in that country will be anchored to our customers as they want us to go to other regions of a very large market with a very large consumer base.

Operator

Our next question is from Mike Roxland from Troy Securities.

Michael Roxland

Tim, you mentioned over the last few years that you were focused on reducing costs, but now you're back to a renewed commercial strategy or commercial focus. Can you provide some more color on what that strategy, our commercial strategy entails and maybe what has changed versus your prior strategy?

Timothy Donahue

Well, I was specifically talking about Asia. So we had -- 1 thing that happens in Asia, I'll just give you a quick recap here. One thing that happens in Asia when you build a facility in many countries, you don't own the land, you get a long-term lease on the land.

Fortunately or unfortunately, for Crown, we've been there so long that some of the leases came due. The properties happen to be in areas which while they were industrial in nature in the past, when the factories were built, they're now more residential and the government wanted those back to build residential housing as opposed to industrial complexes.

So we had to exit 2 locations across Southeast Asia, 3 can lines and 3 end lines. So we took the opportunity as we were doing that to reset the cost base across Southeast Asia in the '23, '24 time frame and having completed that and getting the cost base back to where we wanted it.

We had a look at our commercial strategy and understood that we could use that lower cost base to go back into the market and grow our business and increased utilization or absorption in the remaining factories that we had.

Michael Roxland

Got it. Very clear. And just 1 quick follow-up on food cans. You mentioned you have strong reg and pet food demand. Any impact on your -- on the pack due to higher-than-expected weather in the Midwest?

Timothy Donahue

No, we had a -- I would tell you, we have a pretty balanced food can business. We have a number of East Coast producers, Southeast producers and a big strong presence in the Upper Midwest, not the lower Midwest.

So really, it's been a tremendous year. We have what we think is -- it's not the biggest food can business, but we believe it's the best food can business, really great partnerships with some great people, great family businesses and other businesses and we really enjoy the business, and it does well.

And we continue where we have opportunity to invest smartly to support those customers. So -- but it's been a great last couple of years, and again, another great campaign this year.

Operator

Next question is from Anthony Pettinari from Citigroup.

Anthony Pettinari

Tim, just following up on the Middle East. I think you previously had estimated $0.07 to $0.10 headwind in the second half after a $0.05 headwind in 2Q. I'm just wondering how you think that might shake out, and you talked about Gulf volumes down 4% in 3Q. I mean, is that what you're seeing in October? Or is there any...

Timothy Donahue

Again, Anthony, just to be clear, when we said $0.05 in Q2 and then $0.10 in the back half, we were talking about the inflationary impact of the Middle East conflict across our global operations.

We clearly got that wrong in the back half, $0.05 in Q2 and $0.10 in the back half is morphed into $0.20 to $0.25 split equally between Q3 and now our estimate for Q4. Some of that being volume declines in the Middle East, much of it being elevated energy costs and elevated freight costs globally.

Anthony Pettinari

And then the Gulf volumes down mid-single digits. I mean is that reasonable for 4Q? Or are you seeing any change there? Is there any kind of comp we should be mindful of?

Timothy Donahue

No, I think we should -- until we see the Strait of Hormuz, the restrictions there eased. I think you should consider that our estimate for Q4 includes continued declines across a couple of the Middle East operations.

Anthony Pettinari

And then maybe just 1 more. You've been taking share from glass maybe in most of your markets. I'm just curious, as you see these moves in aluminum with LME spiking and now coming back down does that really drive or impact adoption of cans versus glass or substitution out of glass?

Like if you just think about the last 3 to 5 years, I'm wondering if you can talk about that dynamic if it's accelerating, slowing? Like how sensitive is it to LME? I just -- any kind of...

Timothy Donahue

Yes, you're going to give me a chance to talk about sustainability, and Kevin is going to get really excited here because he loves this. I think let's be clear. In North America, there's almost no CSD in glass any longer. The CSD guys are not going back to glass. So where a declining LME helps us. It makes the can much more competitive against the pet bottle from a cost perspective, and we all know it's much more competitive across an environmental spectrum.

Globally, glass only works globally when it's returnable glass. And for those of you who have traveled internationally, you know that many storefronts are very, very small. Those shopkeepers do not want to recollect glass and have empty used bottles sitting there waiting for somebody to come pick them up because it's taking up very precious real estate they have to put saleable product.

They prefer to have salable product on the floor, not empty bottles waiting to be picked up. So the movement towards cans away from glass is real. I don't need to pile -- glass has a problem. I don't need to pile on the glasses problem. I'm not trying to do that. But the opportunity for cans to continue growing at the expense of glass is very real.

Operator

Our next question is from the line of Josh Spector from UBS. .

Joshua Spector

I want to come back to the inflation question. And I feel like you've been pretty comprehensive on North America and Europe. And just kind of given the comments around Asia not having the pass-throughs -- is that a good or bad thing for you now? I guess, is a tighter environment for can something you think you can get pricing faster? Or do you see that being more of a lag recovery?

Timothy Donahue

Well, depending on who the competition is and how realistic the competition is and where the competition is in terms of their own profitability, you would expect that we're larger we have a much better footprint.

I firmly believe we operate better, that is more efficiently with less spoilage. We should have opportunities as the competition looks to raise price. And we saw a little bit of that in China this year for the first time in a long time, the Chinese competition raised price in China.

I think we're going to expect to see that as we go forward, that as prices -- or as contracts reprice on an annual basis, we'll see the competition becoming more responsible.

Joshua Spector

That's helpful. If I could shift gears quickly here. Just on M&A. I mean, there's plenty of noise going around on 1 of the smaller competitors about potential restructuring. Can you just talk about your appetite for doing any large-scale M&A in cans today?

Timothy Donahue

Well, I think as Kevin said, we are well positioned to continue organic -- organic growth opportunities and returning cash to shareholders. Organic growth may contain can acquisitions. It's hard to see how we could do a large-scale can acquisition, just given the concentration across so many of the markets.

Would we or do we have opportunity to pick up a plant here or there? Yes. And we'll see what happens. It's too early to say what might become available from any of the 2 or 3 situations that are out there or recently announced.

But as we sit here today, no large-scale M&A because we just don't think it's available in cans and certainly no large-scale M&A outside of cans.

Operator

Our next question is from Edlain Rodriguez from Isu.

Edlain Rodriguez

A quick 1 on Transit. I mean as you noted, a little disappointment there -- so what does 4Q look like? Given seasonality and the cost inflation, does it get much worse before it gets better? Like should we expect like a big step down in 4Q's earnings for Transit?

Timothy Donahue

Well, I think that we would expect Q4 in transit to have a similar comparison to the prior year as Q3 did. So it will be down a little bit, but similar to -- maybe similar to the third quarter.

Edlain Rodriguez

Makes sense. And also in the other segment, -- should we expect similar trends in 4Q on that $45 million to $50 million in terms of earnings because it's been pretty steady this year, but not last year, like should we expect something similar to what we've been seeing the past couple of quarters?

Kevin Clothier

Yes, I think you could expect. We were flat year-on-year in the third quarter. I think we're flat to maybe slightly down in the fourth quarter is what I would expect, but definitely not in the $40 million to $50 million range. .

Edlain Rodriguez

Okay. So compared to last year, you say a flat to slightly low, okay.

Operator

Our next question is from Ketan Mamtora from BMO Capital Markets. .

Unknown Analyst

Just coming back to North America volumes. Tim, any additional color you can provide as to kind of how some of the products within product categories, whether it's energy drinks, CSD beer?

Timothy Donahue

Well, energy -- energy has been exceptionally strong, as you know, what has been positively surprising this year is CSD. And for us, sparkling water is a big category and we've done well in sparkling water and I always hate to say this, but it feels like beer is stabilizing.

But no, listen, it's been a -- it's been a really good campaign. I think if we look at the last 52 weeks, at least the data I saw recently, it looks like every category was up over the last 52 weeks. Beer might have been slightly down, but it might only have been down like 1% or 2%. It wasn't down much bigger than that, but certainly offset by all the other categories.

Unknown Analyst

Understood. No, that's helpful. And then or in Brazil, last quarter, you mentioned that the team was targeting sort of flat volume for the year. Is that still sort of how you all are thinking about it?

Timothy Donahue

Yes. I think what we said is the team was targeting flat volume. We weren't sure we believed it. We're still targeting on the top side, maybe we're going to be down 2% for the full year. .

Operator

Our last question is from George Staphos from Bank of America.

George Staphos

Tim, you were candid and we appreciate the comments on transit. And you also talked earlier about your philosophy on managing and incentivizing. What do you think will improve? What changes might you make in terms of the incentives or anything else so that you do get better performance out of transit over the next year or 2?

And then separate question. If you look out over the next year or so, assuming we continue along this path, right, there are no guarantees in life. But nonetheless, the company and the industry generates a lot of cash. Large acquisitions are seemingly less likely for obvious reasons. Can you help us think about what your goals might be on capital allocation, really share repurchase over the next year or so?

Timothy Donahue

So on the first thing, George, I'll be further candid on the transit. And I'll tell you, the team does a very good job in transit with respect to cash. If you want to blame somebody blame the CEO of the company, that's me for not giving them capital and/or bolt-on acquisition dollars that they would otherwise like.

We made a decision several years ago, we were going to run this business for cash and use that cash to support our beverage can growth strategy globally as well as our opportunity to return cash to shareholders.

Now we probably do need to look to spend a little bit more capital per year in that business, but nothing on the order of more than $20 million a year. So not massive numbers, but maybe we need to give them a little bit more money.

And so if we want to say where the blame lies, you can blame me. The team would like a little bit more money. We've said, no, we've generated a lot of cash. And we've used it for what we believe have been good reasons, delever the balance sheet rapidly, return a lot of capital to shareholders and grow the beverage business.

As we look at the future, again, as you rightly point out, hard to understand how we can do large-scale metal M&A, unlikely we're going to do large-scale nonmetal M&A, going to generate on the order of $900 million to $1 billion of free cash flow every year.

I think Kevin would probably tell you, it feels pretty confident about that. And we pay a dividend right now in the order of $1.40, maybe that increases a little, but that leaves a lot of money to repurchasing shares. And in the absence of something that we believe returns more value to shareholders, we're going to continue to buy back shares.

George Staphos

Would you put any goals out there, Tim, at this juncture or not at this juncture?

Timothy Donahue

Well, we bought back $600 million year-to-date this year, and maybe Kevin would like to buy a little bit more than $100 million throughout the rest of the year. So that would be like $700 million. And if you thought about $600 million, $700 million, $800 million a year for the next several years. I don't think that's too far out of the question.

I think the share count is quickly approach. I think we're at 108 million right now. I would say by mid next year, could we get down to $100 million on share count. That's 8 million shares that would be roughly another $800 million, $900 million. There's no reason to believe we couldn't do that, and then we'll see where we go from there.

But -- but listen, $600 million, $700 million, $800 million a year in share buyback going to get the denominator down pretty quick.

Thank you, George. Rich, I think you said that was the last question. So thank you very much. And as that was the last question, we, again, thank you all for joining us, and we'll speak to you again in early 2027. Bye now. .

Operator

And that concludes today's conference. Thank you, everyone, for participating. You may now disconnect.