크라운 홀딩스(CCK) 2026년 3분기 실적 컨퍼런스 콜: 출하량 6% 증가 가능할까, EPS 가이던스 유지

핵심 요약

• 크라운 홀딩스는 2026년 3분기 조정 희석 주당순이익(EPS)이 $2.39를 기록해 전년 동기의 $2.24에서 7% 증가했다고 발표했습니다. 보고 희석 EPS는 $1.85에서 $2.08로 증가했습니다.
• 순매출은 음료 캔 출하량 증가와 원자재 비용 상승분의 가격 전가에 힘입어 32억 달러에서 37억 달러로 늘었습니다. 환율 변동 효과는 매출을 800만 달러 감소시켰습니다.
• 글로벌 음료 캔 출하량은 6% 증가했으며, 여기에는 아시아의 두 자릿수 성장, 북미의 6% 성장, 유럽의 4% 성장이 포함됩니다.
• 사업부문 이익은 4억 9,000만 달러에서 4억 8,400만 달러로 감소했습니다. 음료 캔 출하량 증가 효과는 인플레이션과 수송용 포장(Transit Packaging) 부문의 실적 약세로 상쇄되었습니다.
• 중동 분쟁 관련 인플레이션으로 인해 3분기 사업부문 이익이 약 1,700만 달러, 조정 희석 EPS가 $0.12 감소했습니다. 경영진은 4분기 전망에도 비슷한 수준의 역풍을 반영했습니다.
• 크라운은 2026년 연간 조정 희석 EPS 가이던스로 $8.35~$8.45, 조정 잉여현금흐름으로 최소 9억 5,000만 달러를 제시했습니다.

주요 재무 데이터

사업 및 운영 성과

음료 캔

글로벌 음료 캔 출하량은 1, 2분기 각각 5% 증가한 데 이어 3분기에는 6% 증가했습니다. 연초 대비 성장률은 6%에 근접했으며, 경영진은 연간 글로벌 성장률 목표치인 4%~5%를 유지했습니다.

아메리카 음료 사업부문의 매출은 주로 2억 4,000만 달러 규모의 금속 원가 상승분 가격 전가와 출하량 증가에 힘입어 20% 증가했습니다. 북미 출하량은 6% 증가, 브라질은 4% 증가한 반면 멕시코는 약 1% 감소했습니다. 원자재 비용 가격 전가를 제외한 사업부문 이익률은 17.7%였습니다.

경영진은 북미 지역 연간 출하량이 3%~4% 증가할 것으로 예상합니다. 또한 2027년에는 북미 생산 능력이 가동률 100%에 달할 수 있어 잠재적 성장이 가용한 생산 능력 범위 내로 제한될 수 있다고 언급했습니다.

유럽 출하량은 4% 증가했습니다. 유럽 대륙 전체의 7% 성장은 걸프 국가들의 4% 감소로 일부 상쇄되었습니다. 사업부문 이익은 출하량 증가 효과가 인플레이션, 사업 믹스, 약 400만~500만 달러의 초기 가동 비용으로 상쇄되면서 전년 동기와 비슷한 수준을 유지했습니다.

그리스와 스페인의 증설 프로젝트는 계획대로 진행 중이며, 크라운은 영국 피터버러 공장에 세 번째 라인을 증설하고 있습니다. 경영진은 유럽 지역의 초기 가동 비용 발생이 4분기를 거쳐 2027년 1분기 일부까지 이어질 것으로 예상하고 있습니다.

동남아시아의 10%대 중반 출하량 성장이 높은 에너지 및 운송 비용을 상쇄하면서 아시아-태평양 지역 이익이 증가했습니다. 경영진은 2027년에도 아시아 지역이 성장을 이어가겠지만, 성장률은 1%대 초중반 정도로 둔화될 것으로 예상하고 있습니다.

인도 사업 확장

크라운은 인도 내 첫 음료 캔 공장 착공에 들어갔습니다. 2개 라인을 갖춘 이 공장은 이미 90% 이상 계약이 완료되었으며, 경영진은 계약 물량의 믹스가 맥주 약 60%, 탄산음료/청량음료 약 40%로 구성되어 있다고 밝혔습니다. 회사는 이번 투자에 대한 투자금 회수가 지난 6년간 완료된 다른 주요 프로젝트와 유사하거나 더 나은 수준일 것으로 기대하고 있습니다.

수송용 포장 및 기타 사업

수송용 포장(Transit Packaging) 부문의 출하량과 이익은 경영진의 예상치를 밑돌았습니다. 제품 전반의 수요 부진에 특히 운임 등 투입 원가 상승이 겹쳤습니다. 견적 요청 활동은 개선되었으나, 경영진은 회복세를 확신하기 전에 확정된 설비 주문을 확인할 필요가 있다고 언급했습니다.

경영진은 4분기 수송용 포장 부문의 전년 동기 대비 실적 양상이 3분기와 유사하게 이익이 소폭 감소하는 수준일 것으로 예상합니다.

북미 식품 캔 부문에서는 야채 및 반려동물 사료 수요 호조에 힘입어 한 자릿수 후반의 출하량 성장을 기록했으나, 에어로졸 캔 판매 부진으로 일부 상쇄되었습니다. 또한 크라운은 음료 생산업체들이 글로벌 생산 능력 확충에 나섬에 따라 음료 캔 설비 사업의 수주 잔고가 견조하다고 보고했습니다.

경영진 가이던스

이번 전망은 유로/달러 환율 약 $1.12를 포함해 환율이 현재 수준을 유지한다고 가정합니다. 경영진은 예상보다 높은 인플레이션을 견조한 출하량이 상쇄해 EPS 가이던스의 중간값을 유지할 수 있었다고 밝혔습니다. 운전자본 관리 성과 개선에 힘입어 잉여현금흐름 전망치가 최소 9억 달러에서 최소 9억 5,000만 달러로 상향되었습니다.

리스크 및 관전 포인트

• 인플레이션: 에너지, 산업용 가스 및 운임 비용이 분쟁 이전 수준을 상회하고 있습니다. 경영진은 현재 중동 분쟁 관련 인플레이션으로 인한 하반기 EPS 역풍을 약 $0.20~$0.25로 추정하고 있으며, 이는 3분기와 4분기에 거의 비슷하게 나누어 반영됩니다.
• 비용 회수 지연: 특정 비금속 비용의 계약상 회수는 정산(look-back) 공식을 통해 2027년에 이루어질 예정입니다. 이러한 정산 메커니즘은 주로 북미와 유럽 대부분 지역에 적용되며, 중동이나 아시아에는 동일한 수준으로 적용되지 않습니다.
• 중동 수요: 3분기 걸프 지역 출하량이 4% 감소했습니다. 크라운의 4분기 전망은 호르무즈 해협 주변의 제약이 지속되는 동안 일부 중동 사업장의 실적 감소세가 계속될 것으로 가정합니다.
• 수송용 포장: 견적 요청 활동 증가가 아직 확정 주문으로 이어지지 않아 수요 회복 시점이 불확실합니다.
• 생산 능력 제약: 경영진은 2027년 북미 사업장의 가동률이 100%에 달할 것으로 예상하며, 이에 따라 추가 생산 능력 확보 없이는 출하량 성장이 제한될 수 있습니다.
• 프로젝트 가동 개시: 다수의 증설 프로젝트로 인해 2027년 초까지 초기 가동 비용이 지속적으로 발생할 예정입니다.

애널리스트 Q&A 주요 내용

2027년 가격 책정 및 비용 회수

경영진은 관련 생산자물가지수(PPI) 상승률이 약 9% 수준을 기록하고 있다고 밝혔습니다. 북미 지역 계약 재계약의 대부분은 2027년 4월 1일경으로 예정되어 있어 2026년 인플레이션 역풍의 상당 부분을 회수할 수 있을 것으로 예상됩니다. 그러나 지역별로 가격 책정 메커니즘이 달라 글로벌 영향 전체를 회수하지는 못할 것입니다.

2027년 음료 캔 수요

크라운은 2027년에도 글로벌 출하량 성장이 지속될 것으로 기대합니다. 경영진은 북미 지역이 거의 풀가동 상태를 유지하고, 유럽은 전반적인 시장 성장세에 발맞춰 성장하며, 아시아는 1%대 초중반 비율로 확장할 것으로 예상하고 있습니다. 또한 브라질에서 고객 믹스가 개선될 가능성이 있으며, 지역적 여건이 완화될 경우 중동 수요가 개선되기를 기대하고 있습니다.

경영진은 현재의 수요 모멘텀이 음료 소비 증가 및 알루미늄 캔으로의 지속적인 포장 전환 덕분이라고 설명했습니다. 또한 런던금속거래소(LME)의 알루미늄 가격 하락이 고객의 가격 부담을 완화하고 판촉 활동을 지원할 수 있다고 덧붙였습니다.

자본 배치 전략

크라운은 연간 약 9억 달러~10억 달러의 잉여현금흐름을 창출할 것으로 예상하고 있습니다. 경영진은 시장 집중도 문제로 인해 대규모 캔 업체 인수는 어려워 보이며, 대규모 비금속 업체 인수 가능성도 희소하다고 밝혔습니다.

더 높은 수익률을 제공하는 대안이 없는 상황에서 크라운은 자사주 매입을 지속할 계획입니다. 경영진은 향후 수년간 연간 약 6억 달러~8억 달러 규모의 자사주 매입이 무리가 아닐 것이라며, 2027년 중반까지 총 주식 수가 약 1억 8,000만 주에서 약 1억 주로 감소할 수 있음을 시사했습니다.

M&A 및 자체 투자

경영진은 음료 캔 사업의 자체 성장에 계속 집중하고 있으나, 적절한 자산이 매물로 나올 경우 소규모 공장 인수를 검토할 수 있습니다. 크라운은 현재 여러 대규모 생산 능력 확충 프로젝트를 진행 중이며, 자본을 투입하기 전에 미래 물량을 얼마나 계약으로 확정할 수 있는지를 기준으로 추가 투자를 평가할 것입니다.

실적 발표 컨퍼런스 콜 전문

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전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

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.

질의응답

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.