Good morning to everyone and thank you for joining us today. Our best wishes to all of you for your continued safety as we progress through the ongoing COVID-nineteen pandemic. During today's review, we will be making forward looking statements, projections and or references to non GAAP measures, and investors are reminded to refer to the caption Forward Looking Statements in our Form 10 ks filed for the year ended December 31, 2020 and in subsequent filings. We have included brief bios on each of today's presenters in your materials and each will be introduced as the program is handed over to them. We have a full agenda for you this morning.
It's been a couple of years since we've had an investor presentation. So we're looking forward to this today and I hope you are as well. We'll first review Global Beverage, and then we'll review Transit. Tom will take us through financials. And early on in the presentation, John Rost is going to discuss our efforts to promote and further discuss the inherent sustainability advantages of metal packaging.
So turning to Slide 9, we have recast the company's sales profile by region and product line to account on a pro form a basis for the recently announced sale of the company's European tinplate businesses. The company will have 45 of its sales base in North America with 65% of global sales and 75% of global EBITDA being generated by our beverage businesses. After the sale of the European assets, we still maintain a very diverse business, both geographically and product wise. Our global beverage can business maintains leading market positions in many global markets, including some of the fastest growing developing markets. And as every Global Crown associate knows, it is always safety first.
We remain committed to safety as well as environmental stewardship and have dedicated significant human assets to the continued development of these initiatives. Doctor. John Rost will provide a thorough review of our sustainability efforts in a few minutes. We like to say We're fortunate to work in the packaging space. Regardless of what's going on in the world, people need to eat and drink and they need to move things around safely and securely.
And it's this consistency of demand that has allowed Crown to operate for 129 years from the invention of the bottle cap in 18/92 through 2 world wars until today. And while there are many challenges to be faced over that longer time period, Crown has made tremendous progress over the last 20 years and we remain confident in our future prospects. Turning to Slide 11, 2020 was a record year for the company. We commercialized significant new global beverage can capacity and we recorded 4% global beverage and 7% global food can unit volume growth during the year. Importantly, we converted this growth into record earnings and free cash flow, allowing us to reduce our leverage to less than 4 times.
None of this would have been possible without the dedicated and highly performing associates throughout our global operations. We again want to our continued appreciation to our employees and partners whose commitment continues to be instrumental to our success. Our outlook for the future is also strong and we're off to a great start. We achieved record results in the 2021 Q1 at $1.83 per share. We initiated and paid our first dividend in more than 20 years during the Q1 and we have announced additional capacity expansion projects for the company's beverage can businesses globally as we continue our multi year program to commercialize new capacity to support our customers' growing brands.
Beverage cans made from infinitely recyclable aluminum are the increasingly preferred package choice of our customers and consumers alike, and we expect Crown will realize 10% unit volume growth this year. Proceeds from the recently announced sale of the European assets will be used to reduce debt levels, continue investing for beverage can growth and to also buy back common shares under a recent board approved $1,500,000,000 share repurchase authorization. Briefly reviewing the financial performance on Slide 13 reflects the positive momentum we have built over the last number of years. Importantly and as we have said before, we have been able to rapidly capture greater earnings and cash flow from the increased demand across our businesses. After the sale of the European assets, we maintain 2 large global franchise businesses, beverage and transit packaging, each of which have scaled and unparalleled global reach.
It certainly is an exciting time to be in packaging. Demand is high and we are growing. Importantly, and we'll say it again, we are converting this growth into higher earnings and free cash flow. Doctor. John Rast will now review Crown's efforts with regards to sustainability and the undeniable benefits of metal packaging.
Doctor. Rost?
Thank you, Tim. Hello, I'm John Rost, Crown's Head of Sustainability, regulatory and health and safety. Today, I'm excited to present to you the journey that Crown has been on with regards to sustainability. Crown was founded on the principles of sustainability with the invention of the Crown Cork, the whole function of which was to offer protection to PACS product. Today, packaging and in particular packaging waste gets a lot of attention, but it's always important to remind everyone that there's a purpose to packaging that is rooted in sustainability, the protection of food and beverage products packed in that packaging.
In almost every case, The food and beverage contained in packaging has a much higher carbon footprint, requires more water and other resources to grow or formulate and generally has a much higher environmental impact. So packaging plays a vital role in sustainability. Now that we've established that packaging is vital to sustainability through its product protection, And which packaging material is best? The answer is undeniably metal. So what makes metal packaging the best?
Metal packaging performs the best in locking out oxygen and light that can degrade the product, But it's also the best at lacking in freshness as well as being shatterproof. But metal also performs the best In most of the traditional sustainability metrics, the aluminum beverage can is the most recycled drink package in the world with a global average recycling rate of 69% and as high as 98% in countries like Brazil. Despite its strength and protection, it is one of the lightest drinks packaged and the cube efficiency of the can allows for them to be stacked high end pallets, reducing impact across the value chain from warehouse storage to transportation. So what do we mean when we say circular? Circularity is defined by the ability to return to the point of origin.
So for packaging, it means the ability of that package to be used, returned, recycled and then return to the market as another package. In that regard, the aluminum beverage can is the model of Crissercularity. First, the aluminum beverage can, once returned in the recycling bin, can be back on the shelf as another can in as little as 60 days. Also, the aluminum beverage can is infinitely recyclable mono material, which means the can can be another can over and over again with no loss of quality. And the can from a recycling perspective It's only made from aluminum.
This is regardless of decoration, embossing or other finishes and cans have a 360 degrees surface for decorations for our customers. And the decoration and finish has no impact on recyclability, which means there's no labels, so the decoration of the can will be removed in the aluminum recycling process. The can also utilizes stay on tab so that all parts of the packaging stays with the can to be recycled. The can is also easy to collect, store and recycle. The aluminum beverage can is recognized as the model for recycling.
Aluminum beverage cans also have the highest value of recyclit of all drinks packaging. My next slide will demonstrate this point as well. Aluminum beverage cans are continuously light weighted with today's typical 12 ounce can weighing around or below 10 grams per can. Cans also have superior outlook as far as supply chain efficiency with great cube efficiency, which is good for both warehouse storage and transportation efficiency. It's also lightweight to transport.
So it reduces transport costs, as well as high stackability due to the immense strength of filled beverage cans for improved storage and transport flexibility. As I said on my previous slides, aluminum cans have by far the highest value per package in the recycling stream. In fact, it's value of aluminum that subsidizes curbside recycling in many communities. What makes UBC's or used beverage cans so valuable is the fact that recycled aluminum is identical to virgin material, meaning that there's no loss of property during recycling and it's instantly recyclable. Secondly, recycled aluminum has a dramatic energy savings compared to manufacturing virgin aluminum.
That makes UBCs a highly sought after recyclit. Recycled PET, for example, is often more expensive than virgin material and it's difficult to work with because of its reduced physical properties. Recycled PET or RPET has no physical or economic value being recycled and used again in drinks containers other than to meet government our customer mandates for certain recycled content in the bottles. The infinitely recyclable nature of aluminum along with the economic value of using recycled material and new aluminum beer and beverage cans is why cans have the highest recycled content of all drinks package. In the U.
S, there's over 70% recycled content in aluminum aluminum cans compared to 23% in glass bottles, less than 6% in plastic bottles and virtually none or 0 in cartons. Metal is the top circular material of choice, with 75% of aluminum ever produced still in use today. So to summarize, cans have the highest recycling rate of all drinks package, cans have the highest recycling content of all Unlike aluminum, most plastic recycling markets are only created to fulfill mandates of governments and brands. Without these drivers, these markets would have no value on their own. Next, I'd like to move on to speaking directly about Crown's sustainability initiatives.
5 years ago, we established our first set of sustainability goals. We set goals of reducing energy and greenhouse gases. Our goal was to reduce GHGs by 10% per 1000000000 standard units and 5% energy reduction goal per 1,000,000,000 standard units, all to be achieved by the end of 2020. I am proud to report that we achieved both of our goals. Not only did we achieve a 5% energy reduction compared to 2015.
We reduced our GHG emissions per 1,000,000,000 standard units by over 24%. Specifically, we achieved greater than 13% absolute reduction in GHG, all while increasing our production by over 13% as well, an accomplishment that we are very proud of. As we transition from our 2020 goals into the next decade, We established our next sustainability initiative called 20 by 30. The 20 by 30 program lays out 20 goals to be achieved by 2,030 or sooner. Crown's 20x30 program is based on our most material issues as identified by our ongoing materiality assessments, which involve all key stakeholders.
20 by 30 also supports many of the sustainable development goals and complement many of our key customers' own sustainability initiatives. All of our divisions and businesses are responsible for meeting the goals of the program through specific KPIs. With 20 by 30, we have expanded our sustainability goals to include material topics that are considered the most relevant to our stakeholders today. 20 by 30 builds upon Crown's ambitious climate strategy and includes a full suite of key sustainability topics, including water efficiency, Our climate strategy has evolved into including reduction targets across scope 1, 2 and 3. Our targets approved by the Science Based Target Initiative are in line with the SBTI's 1.5 degree Celsius global warming goal.
We are also RE100 members and committed to procuring 100% renewable electricity by 2,050, if not sooner. With multiple renewable projects coming online, 33% of our total electricity consumed last year was made from renewable sources, which exceeds our goal of 30% of renewable electricity by the end of 2,030 for our RE100 commitment. Today, our beverage operations use 100% renewable electricity in the U. S. And the U.
K, soon to be followed by Mexico. We hope to announce even more projects for renewables in the very near future. But also our employees and the world overall. We are committed to protecting water as a resource by meeting all local water quality standards and by improving water efficiency in our operations. Our first goal around water is to reduce the water used in our operations 20% by the year 2025.
We will achieve this goal through better monitoring, using water more efficiently and focusing on recycling more water back into our operations. Our second goal Our second goal's importance was only highlighted by the pandemic. We will ensure that every employee has access to safe water for drinking and hygiene while on the job. 3rd, and as noted by our recent NFIRST SASB disclosure, we had no wastewater fines last year and with the strong waste and chemical management program, we expect to maintain this standard. And last, we hope to be able to share Within a year, our first water replenishment project to support our efforts to replenish 100% of the water consumed from high risk watersheds.
Moving on to circularity. The optimum circularity pillar of our 20x30 program is a key way to reduce the impact of our products not only for our own footprint, but also for those of our customers. Crown is working to achieve a 0 waste to landfill goal globally by 2,030. And as of November 2020, I can report that 100 percent of Crown's beverage can plants in Brazil are 0 waste to landfill. We also have global efforts with our suppliers and industry partners to improve the recycling content and recycling rate of our products.
We will be able to report more on those initiatives in the following months years. Crown's strength in engineering and design It's also being put forward towards our 10% lightweighting efforts for all of our can lines to be achieved by 2,030. And lastly, Crown's transit division has committed to improving the recycled content an additional 10% for its global plastic strapping lines. Recycled aluminum material produces 95% less emissions than virgin aluminum on average. So increased recycling rates and thus recycle it available to use in making new cans is crucial to reducing our impact of our products.
Working in partnership with the Can Manufacturers Institute and fellow beverage can manufacturer, ARDA, we made grants available this year to Material Recovery Facilities or MERS for aluminum can capture, which will ensure used beverage cans are accurately sorted, sold and recycled. To date, we have made 2 grants with the expected extra capture of aluminum of over 5.40 tons annually. A second round of grants will soon be announced with an additional 4.50 tons of expected extra aluminum to be captured at those MRFs. We are proud to highlight for you today several of our recent ESG ratings achievement. Those ratings are indicative of the work that we're doing as an organization and underscore our commitment to sustainability.
We are particularly honored to receive top scores from Morningstar's Sustainalytics. In that assessment, we scored in the top 1.5% out of the over 12,000 global operations organizations. In each category, we ranked either negligible or low risk. In our own packaging sector, we ranked 1st as the number one organization with low ESG risk in the metal and glass packaging sector. We earned exceptionally high marks in our management of ESG risk.
That's the part of the score that we control through our management. Another ranking of which we are especially proud is our ranking as the top packaging company in The Wall Street Journal's ranking of top sustainably managed companies. We made The Wall Street Journal's top 10 sustainably managed companies for environmental risk management. Understanding that there is much work to be done by society in the nexus between sustainability and important social issues, we're also pleased to have earned strong marks in social and human capital. And sustainability innovation is the origin of Crown, as we are also confident in our ability to improve as we work to achieve our lightweighting goals.
Just last week, it was announced that we ranked in the 3BL Media's list of 100 Best Corporate Citizens for 2021. In the pillar of climate change, we scored in the top 10 of ranked organizations. We're pleased with these rankings and believe that as we progress in our 20 by 30 program, we can maintain or improve our score. ISS is another ESG rating of which we are proud of our recognition. We significantly improved our environmental and social ratings, while including our strong corporate governance rating.
We understand that transparency is tantamount to our credibility in the sustainability arena, and we're glad to be able to share the work we are doing with ISS and other ESG ratings providers. So to close, I want to summarize. Packaging plays a vital role in sustainability due to its protection of food and beverages and extends the shelf life of those products. Metal packaging is the best material for that protection due to its strength. Metal packaging is also the model circularity with cans being the most recycled, having the highest recycled content and being infinitely recyclable.
And lastly, Crown's 20x30 program is helping us accelerate sustainability into the next decade. Thank you. And I will turn it back over to Tim.
John, thank you very much. So just briefly before we turn it over to the regional presidents who will discuss beverage, we'll do a quick review of our global beverage, our view of the market. So on Slide 34, we have presented for you our view of the size and the projected growth in most global markets for beverage cans. There are other significant markets such as Sub Saharan Africa, Russia, Japan, Korea, Australia. However, as we don't do business in those markets, they're not reflected on the slide.
Prior to 2019, global beverage can growth rates at only 2% to 3% or weighed down by the large North American market where growth was very low or declining. However, with the North American market experiencing a can renaissance, growth is now comfortably forecasted at 5% plus globally for the next several years. And importantly, Crown continues to invest for organic growth as we have done continuously for the last 20 years. Our installed base will approach 97,000,000,000 units by the end of the year 2022, up 21,000,000,000 units or 27% from the end of 2019. This capacity figure is based only on projects announced to date and does include the second lines in Monterrey, Mexico and Hanoi, Vietnam, which Jalma and Mr.
Goh will speak to shortly. For clarity, these figures include the full production rated speeds from the plants once they become operational. Annual actual output capacity is within 5% to 8% of the installed capacity until the new lines or plants are through their respective learning curves. Projecting forward to 2025, we will further increase capacity by 15,000,000,000 units. So in total, 36,000,000,000 units were close to 50% increase in global capacity between the years 2019 2020 A very significant global capacity growth forecasted, although as you will see, much of this already has been announced, is currently operational or is in construction.
The regional beverage presidents will take you through their respective markets in opportunities. But in total, as we stated earlier, Crown expects at least 10% sales unit volume growth on a global basis in 2021. So as we have said, a very exciting time to be in packaging and especially metal packaging. Our customers are growing, they are innovating and we are confident we can serve their growth needs. We have an excellent global platform including large positions in some of the most attractive global growth markets.
We much of the equipment and tooling used in the beverage can making process and our in house project teams not only manage but design engineer the construction of plants and installation of equipment as they've been doing for more than 35 years. So with that, we're going to turn it over for the regional review of beverage cans and we'll begin with the Americas division and Jaimo Novais. Jaimo?
Good morning, everyone. I'm Jaimo Novais, President of Crown Americas. Let me go through my slides here. The first slide shows how America's beverage capacity is growing since 2019. Crown is doing its part in the most responsible way, filling existing capacity, Then debottlenecking plants were possible.
And finally, by adding lines to an existing plant or going for a greenfield location. On the right side, you see the growth of specialty cans. We gained a lot of share there, which made us adjust the balance of standard size to specialty, depending on the market and customer needs, of course. But all crown growth is planned and always underpinned by long term customer contracts. Having its own project and engineering team used to build plants all over the world and the support of CMB, which is a crown company.
The mission of building new plants It's accomplished with the new line always improving from the last one built. This is our North America footprint now showing the Bowling Green plant in Kentucky, which is starting up the first line this week on time and the second line also on time will come in September. We cover Canada with 2 plants, Calgary and Toronto. But depending on the mix, we also ship cans from the U. S.
In the U. S, you can see we cover very well The high demand dispersion in areas like Texas, Southeast, Midwest, Northeast, You see on the right, we have more than 2,000 employees. I must mention our commitment to safety, which is our top priority and part of the company values. I am glad to report that Crown has It's continuously improved in this area. By the way, when you see there are 1 Kannan plant, by the way that this The only can and end plant is in Batesville, Mississippi.
Moving now to the Mexican footprint. You see in the middle Guadalajara plant, which is a crown historic legacy plant, Now producing 12 ounce standard and sleek sizes. And the plants incorporated when we acquired Empaca in 2015, Toluca is the largest close to Mexico City capable of 12 sleek, 16 ounce and the regular 12 standard. In the Northeast in Monterrey state of Novo Leon, Our newest plant that started in 2016 with one line and now is expanding with a second 1,200,000,000 capacity line forecasted to start in Q2 2022 and capable of different diameters and sizes. Different than other countries in Americas, Crown also produces glass bottles in Mexico, Having a large southern plant in the city of Orizaba, very close down here to Veracruz And another in the northern part at Meoki, state of Chihuahua.
We have also a huge Sand mine producing the silica necessary for the glass business, but this is too much detail. Crown concentrates ends production in the headquarters plant, Downtown Monterey, where we also manufacture crown closures and ROPs, the roll on PIF approval. Now we go to South America. It's another area of continuous growth. In Colombia, Crown has one plant producing different sizes and diameters, serving the local market plus towards the Caribbean and Latin America.
And in Brazil, Crown has now 6 can plants Being the newest plant in Rio Verde, the state of Goai that started in Q4 2019. This is one of the best running plants I've seen in my over 30 years of can making. And now We are expanding with a second line, another $1,200,000,000 capacity with start up in Q4 2021. The construction is advanced and equipment delivery on time. Every plant in Brazil produces all can sizes and diameters.
The Brazilians are Actually, in America, the fastest in size conversion process. You see here in the Northern part of the country in the Amazon state capital of Manaus, crown large end manufacturing plant, which capacity will increase to match the can growth. Well, Slide 42 is showing a picture of the consolidated growth action plan happening at this moment in North America. The new third line in Toronto, which started in Q1 2020 is Now reaching full capacity level, while nickel's 3rd line started up Q2 2020, is gaining momentum on the planned learning curves. This is a large capacity line.
It's 1.6 1,000,000,000 can capacity with 12 body makers firepower in the front end and 2 independent back ends. This line is like the others in Mikkel's, they are made to change labels fast. Winchester is our largest end facility with a highly automated Process just added a 4th module increasing capacity by 3,000,000,000 ends, which is now in full operation. Dayton, Ohio is another end center being expanded. A new production module will add 3 point 9,000,000,000 capacity by the end of this year.
Olympia plant is receiving a third line to increase capacity in the West Coast area, including slick sizes on the portfolio of that plant. And now You see in this slide, a new greenfield plant in Virginia, Not shown on the previous footprint slide, in Harry County, Martinsville plant, a multi size cancer facility, It will increase over 125 jobs and have two lines, adding the capacity of 2,400,000,000 cans per year starting at Q2 2022. Well, we already mentioned the second line in Monterey. It's more a city located 140 miles from the U. S.
Border. The volume the capacity is planned for local supply, but as you see, it's also capable to service the U. S. Whenever needed. And now I want to show you Brazil.
In Brazil, a greenfield plant in Uberaba, Minas Gerais state, a strategic location for large Crown customer. And just 20 miles to the border of Sao Paulo, Brazil most developed state and largest consumer of cans. Of course, the Manaus And plants will match this growth, the one in the north. In Estancia, the plant in the northeast of the country, We did what we call the debottlenecking project, as mentioned we mentioned in the first slide. We are increasing there the capacity in about 300,000,000 cans per year.
Slide 45 showing
the Americas region market sizes And the percentage of alcohol products demand. You see Mexico and Brazil are all about the beer market. Crowe is well positioned in all three areas and through capacity growth mentioned in previous slides, It's fine adjusting the balance of specialty products. The list of key end market growth Drivers you see here in bullet points is well known and common to America with some small intensity differences. In general, in Americas, North, Central or South, there is an increase Now this is why you see more specific scenarios.
In North America, while we believe there will be less Prenounced shift in mix of alcohol versus CSD in the long term. There will continue to be innovations in each category. 12 ounce standard cans continue to hold a large share of market, but Many introductions in energy drinks, hard seltzers and ready to drink cocktails will fuel production of various specialty sizes, For example, 12 sleek and 16 standard. In Mexico, in the middle, This is happening in a slower base, but the beer market in Mexico, in cans Shows a steady growth. And in Brazil, on the right hand side, The beer consumption is increasing mostly off premise.
People are buying beer at supermarkets Rather than bars, what they call locally, butaquim. And supermarkets It's the channel for cans. So we saw here 3 different scenarios, but All three very good for can makers. Brands. Brands are supporting the use of cans.
Companies are now able to better access consumers through direct retail channels and influential marketing. The environmental concern is also a reality. You'll see here in this slide, companies like Grupo Petropolis, The largest privately owned brewery group in Brazil together with emerging Companies in North America like VPX, Mark Anthony and also large worldwide brands, all launching in different products, in different sizes, but all in cans. Kinshare in North America beverage launches has increased over 70% in 2020, more than doubling from 30% in just 6 years. The growth trends in aluminum cans will continue.
Innovation in energy drinks, both alcoholic and non alcoholic seltzers among others. And we continue to monitor Emerging topics like still water and cans as well as the growth in canned wine and order ready to drink cocktails. Well, this is our growth strategy. Here you can read important highlights of our strategy. You've seen in previous slide That Crown moves to show a clear action plan to increase capacity when needed in a responsible manner, backed by contract commitments and aligned with customers and market product size demand.
The specialty can capacity is more than doubling from 2018 to 2022, but has further roam as Crown grows market share. And that concludes my presentation on America's beverage. I will now hand back to Tom.
Thank you, Jean, and good morning. Let's take a short, let's say, about 3 minute break. And when we return, we'll hear from Ashwini Kotwal, who will take us through our European beverage operations.
Thank you.
Okay. Welcome back, everyone. We're going to begin again with Ashwini Kotwal, who will review our European beverage operations. Ashwini?
Thank you, Tom. I'm Ashwini Kotwal, SVP, BevCan EMEA, and I'm pleased to share with you an overview of our manufacturing footprint, the business outlook and our plans in Europe, Middle East and Africa region. As you've all experienced, since the last year, the world has changed dramatically. In this short period of time, the unpredictability that the pandemic has caused for businesses, society and human life has been unforeseen. However, despite the immense volatile environment, together with our extremely dedicated team, Committed customers and reliable suppliers, we have been able to work safely, operate efficiently and effectively serve the needs of beverage can consumers.
The tenacity, adaptability and a can do spirit of our team and all our partners has been simply remarkable. I would like to thank our team, customers and suppliers for working cohesively to successfully overcome these challenges. I'll turn over to the first slide. I'll begin the presentation with an overview of our current production footprint in the region. In UK, we have 2 can plants and an end center.
In Western Europe, 1 can plant, which is in France. In Central Eastern Europe, we have 1 can plant in Slovakia and 1 end center in Poland. In Southern Europe, we have 3 can plants in In Europe, we are the 3rd biggest player with a market share of 18%. However, as you would note from the map, we have a dominant presence in Southern Europe, where we have around 50% market share and have a sizable presence in UK, Ireland with around 29% share of the market. Iberia and U.
K. Are the 2 markets that have shown strong growth in 2021 despite the pandemic. I would also like to highlight that we have a diverse portfolio of cans, with specialty cans contributing to around 57% of our 2020 volume. In Middle East, we have a strong presence with 2 can plants in Saudi Arabia, which you see at the bottom of the map. 1 can plant in Jordan and 1 in United Arab Emirates, which also has an end center.
Besides, we also have a joint venture in Saudi Arabia, which is dedicated end production facility. We are the leaders in Middle East with around 38% share of the can market. In Africa, we have 1 can plant, which is in Tunisia. However, despite that, we are number 2 in North and West Africa region with around 26% market share as we also supply cans into that region in all our plants from Middle East and Southern Europe. In all, we got 17 plants with 3,500 employees.
In the MENA region, we also invested heavily in specialty cans with In the EMEA region, expectation is of a strong growth in can demand. And as the current camp making capacity is rather tight in most of the major markets creates tremendous opportunities for growth through expanding capacity in a judicious manner. We will therefore continue to expand capacity in the existing plants where possible. In 2020, despite the raging pandemic in Seville, Spain, we converted 2 lines from steel to aluminum and did a material speed up. In 2020, we also invested in speeding up the lines in Italy and Turkey.
As these lines ramp up, they will add to our supply capability in 2021. In 2021, we'll also speed up aligning our plant in Slovakia. In Greece, our installed capacity in the two plants is in excess of domestic demand with available capacity used to support can demand in other regional markets that are not large enough for local can production. To ensure that we have adequate supply of ends to meet the growth in can demand, we will be investing in a new end module in Europe in 2021. In North Africa, in 2021, we'll be enhancing our capacity in the Tunis plant to support growth in the domestic market and ForEx ports to West Africa.
As the region We will continue to support that market with supplies from our plants in Middle East where we have spare capacity. I'll now turn over to an overview of the Middle East and Africa market. In the EMEA market overview, in 2020, the can market in Europe and Northwest Africa was around 94,000,000,000 cans and is forecasted to grow at 4% to 5% annually over the next 5 years. During this period, we plan to increase our can capacity in the region from 27,000,000,000 to 31,000,000,000 cans. In Europe in 2020, while the pandemic had an adverse effect on the total consumption of all packaged beverages, Yet, the overall can demand increased with strong growth, especially in beer segment.
This has been due to 2 key factors. Firstly, COVID-nineteen restrictions led to the off trade channels, that is home consumption, growing at the expense of on trade, that is consumption at hotels, restaurants, cafes and pubs. In 2019, around 84% of soft drinks was sold through off grid channels. And in 2020, the off trade share increased to 89%. A similar trend was seen in beer.
Around 70% of beer was sold through off trade in 2019, and in 2020, the share jumps to around 79%. In the off trade channel, the share of cans in the pack mix is growing. In the CSC segment, there is a high demand for single serve multi packs in the off trade channels where cans score over PET. This has been particularly true in U. K.
And Western Europe. While in the off trade channels of the beer segment, cans have a strong consumer preference over glass due to convenience of being lighter and more cube efficient. The other major factor leading to an impetus in can growth has been the increasing awareness of consumers about the adverse environment impact of PET bottle waste and growing recognition about the excellent sustainability of metal beverage can. This has been adequately highlighted by John in his presentation earlier. In Middle East and North Africa and West Africa region.
The pandemic had an adverse impact on can demand in 2020 due to the severity of lockdowns and curfews. In Middle East, the can demand was also negatively affected by the collapse of some of the Levant economies, especially Lebanon. Now looking ahead, In Europe, the expectation is that the trends that emerged in 2020 will continue to positively impact can growth. Over the next 5 years, the can market in Europe is expected to grow at a compound annual growth rate of 4% to 5%, with the total market reaching around 100,000,000,000 cans by 2025. Beyond existing categories, the demand for cans is expected to be provided in impetus due to preference of cans for new drinks that are being introduced.
These beverages, as you're well aware, are hard seltzers, non aloe alcoholic alternatives, flavored enhanced water, RTD, iced tea, coffee, etcetera. In U. S, as we are all aware, the growth of these canned beverages, especially heart has been exponential over the last few years. In Europe, while the introduction of heart cells, the local fillers has been recent, Yet most of the leading beer companies as well as Coca Cola and retailers like M and S and Aldi and launched their variants of heart cells in cans with the expectation of replicating the success seen in the U. S.
Due to the consumer behavior being altered by pandemic towards more at home consumption, it is also expected that in the period ahead as compared to pre pandemic levels, more beverages will be sold through off trade channels. According to Euromonitor, in 2020, 85% of soft drinks will be sold through off trade as compared to 84% in 2019 and in the beer segment, 72% as compared to 70% in 2019. Therefore, as people consume more packaged beverages at home, it will provide a boost to the can demand. The other trend that has accelerated during the pandemic is of online shopping. Seeing this change in the purchasing behavior of the consumers, All the major beverage companies are establishing direct routes to consumers through e commerce.
This development too will provide a further slip to can demand as it is an ideal package for B2C sales. As I highlighted before, the excellent sustainability credentials Cans versus other substrates too will continue to increase can share in the PAC mix. The consumer pull and push by the regulators is expected to drive increased use of aluminum cans in place of PET bottles. Finally, the return of tourism to Europe will provide a further boost to the demand for cans, especially in Southern Europe, where can demand has so far been subdued due to travel restrictions. Seeing the strong team wins Affecting future can demand, beverage companies and co packers are expanding can filling line capacities.
There has been a spate of new investments in can filling in in Southern Europe. In Middle East and North and West Africa region, with easing of the pandemic, GaN demand in 2021 has been rising and is expected to grow at a compound annual growth rate of around 4% over 2020 to 2025. In Middle East, the growth drivers will be the organic growth based on post COVID economic recovery and increase in export of filled cans to Africa. Besides the return of recreational and religious tourism to the region, too will support the growth in can demand. In 2020, 2021, the World Cup Expo in Dubai and 2022 World Cup Football in Qatar is expected to provide further acceleration to can demand.
In North and West Africa, besides the organic growth due to return of normalcy post COVID, the demand of cans will also be positively impacted by new filling lines that are being set up, especially in West Africa. In Middle East and North and West Africa region, A factor that has also contributed to the growth in can demand is the increasing use by beverage companies of specialty cans in the slim format in sizes ranging from 15 cl to 25 cl. This makes the can more affordable to the consumer, thus increasing demand. Moving on to our growth strategy. We are also working on projects some other territories in Europe to increase can capacity backed by long term contracts.
The customers are keen to secure adequate supply of cans to support their growth plans in the years ahead. Therefore, we are seeing contract renewals accelerated and contract duration lengthened to support these projects for additional capacity that we have planned to bring on stream. Announcement of these projects will be made in due course. In addition, we will continue to make operational improvements through speed ups, modernization of our existing plants and increasing the range of specialty cans. Our strategy in the Middle East is to leverage our strength as the most dependable can maker with a wide footprint to extend existing long term contracts to preserve our market share and benefit from expected organic growth.
In the North and West Africa region is an Emerging market for cans, volume growth opportunities exist with new filling lines being installed. Capacity expansion in Tunis will enable us to garner a share of the market growth. We will continue to take cost of the manufacturing process through lightweighting, lower energy consumption and supply chain optimization. Beverage companies are looking for premiumization of the package. We'll work closely with the customers through our technical center in Vantage and Graphics Studio in Leicester in Dubai to enhance can graphics through novelty finishes and offer promotional capabilities.
An innovation that we have done to enhance the promotional allows the use of laser etched DMC unique codes on cannons for marketing campaigns. This innovation, termed Crown Connect, opens the door for traceability and provides brands with a platform to Another area that we are focusing on is digital printing of cans. To conclude, we are looking at a phase of sustained growth in due to several factors that are stacked in favor of scams. We'll be making best use of this opportunity to grow our business profitably through a strategy of making judicious investments to enhance capacity, providing product innovations to customers, focusing on costs and driving the can share of package mix higher by leveraging its sustainability credentials. Thank you.
I will now turn over to Hock Hart for a presentation on our Asia Pacific Beverage Business. Hock, over to you.
Thank you, Ashwini. Welcome everyone across all three continents and to this presentation. This is Hopat Goh here. I'm the President of Crown Asia Pacific. For the next few slides, I will be pleased to take you through Giving you an overview of our footprints in this region, our expansion last year and this year and review of our 2 piece can market in this region as well as our growth strategy.
As you can see in this map, since we have 17 plants in this region, it shows the location of beverage plants in Asia. Now, Crown is the largest beverage can maker in Asia. It has the most extensive footprint in Southeast Asia. We have 14 beverage plants in Southeast Asia with 24 can lines and 3 plants in China with 3 can lines. In Southeast Asia, we have facilities in Vietnam.
As you can see that Crown has 5 plants in the country, covering the whole country. It's a very long country in Vietnam. In the south, we have one plant in Ho Chi Minh City, another one in Dong Nai, and we are constructing a greenfield plant, Huentao. Now for both fronts are near to Ho Chi Minh and they are using the same international airport. So for any person Going into Vietnam, basically we fly into the same international airport for the 3 occasions.
They are next to one another. We have another plant in the center, Da Nang. That's where airbag was held recently and the 5th plant in Hanoi,
I have a
chapter of Vietnam. So in Vietnam, we cover the whole country itself from the North, Central and South. In Cambodia, we have 3 plants, 2 in Phnom Penh, the capital city and 1 at Sihanoukville, the port. In Thailand, you can see that we have 2 plants in Non K. Non K is just outside of Bangkok.
And in Malaysia, our plant is just outside the capital city of Kuala Lumpur. Indonesia, show us Karawang, but Karawang is just outside of Jakarta of the capital city. In Myanmar, we are located in Yangon And in Singapore, we have a plant in Singapore. In China, we have 3 plants. Hechuan plant is in the South Guangdong Province, 1 in the Central China at Hangzhou, which is near to Shanghai And another in Western China, it's Ziyang, which is in Sichuan province.
Our multi plants here in Asia serve as a backup supply to ensure security of supply to our customer. So when a customer buy cans from Crown, it's not only from one company, but it's a different location backup. So this eliminates the risk of supply from only one location and it serves as a contingency plan for our customers. None of our competitors in this region has extensive network and backup supplies as we do. We offer different can sizes to measure requirement from our customers, mainly standard, Specialty cover like slate in different sizes, different of cans or height and sizes.
In Asia Pacific, we have 17 beverage plants and we have roughly 3,000 employees. Now here, we have a deep talents and experience. The Crown has been operating in this region for many years, so almost 80 to 100 years. So continue to the next slide. We are bringing true to what we have done for the last in 2020 as well in 2021.
We review our increase of our capacity in response to the demand in the region. So the ongoing expansion with adding production lines and new facilities in year 2020 as well as this year 2021. So in Q1 2020, we added a new line in Dong Nai, which is in Vietnam. And to serve the growing demand of our customers, we are adding a new line in Hanoi. This line to be operational in Q4 2021.
In Q3 2020, we Put in a greenfield facility, it affects a new plant in Longyear, Thailand, right? And in in Q3 2021 in Vyentang, Vietnam. In collaboration with our customer, we are building 1 greenfield facility. And this construction is ongoing, and we expect the commercial production in Q3 this year. And this will be our most green plant in Asia.
Now I'm sure you heard about COVID-nineteen as well, colleagues have seen in Europe, in Asia as well. But despite all this Restriction of traveling, I'm very proud to say that we continue to meet target, be it a new plant in Nonkei, With the new lines that we put in, these are all even now right now in Guangdong, Vietnam, We continue to on schedule that we despite the restriction travel restriction they imposed in some of these countries. On the next slide Here's a market review overview. Now Asia Pacific market about close to 69,000,000 in 2020. The breakdown is about Southeast Asia, dollars 25,000,000,000 and China, dollars 44,000,000,000.
The forecast that we have is for 7% for Southeast Asia for the next 5 years, CAGR and 4% for China. The growth in Southeast Asia is driven largely by Green packaging movement, which favor beverage cans over plastic alternative. We are similar to other parts of the world that the Now in some countries, developing countries in Southeast Asia, glass and plastic bottles are also commonly used For other purposes, right? For example, storing kerosene, making this harmful for humans. So you can see that's why it's not summer is not recyclable.
The infrastructure in certain countries Still not good, making returnable packaging difficult. Now in addition, Rising income and the young population obviously enable the increasing consumption trends. Now this in Southeast Asia, for example, the GDP growth is expected to be strong, around 8%. Now Southeast Asia population is relatively young. 60% is below the age of 35 years old.
So we also have a customer who have significant existing fueling capacity to support the growth, particularly in alcohol. So in this part of the world, can is also viewed as a premium packaging. So with the Increasing income and afference in this region, we expect can to be a preferred packaging. So the other thing is that in this region, retail space is usually not big in some countries, And security becomes important, and that's where Element can
has a big
disadvantage. We tailor would not like to waste space on storing returnable bottles. So I think the next slide, I will talk about the growth strategy for Crown in Asia. We are going to maintain our leading leadership in across the region, the Southeast Asia. First is that, I mean, we are part of a global company, and our advanced technology and capability will be much better than our competitors through our continued investment.
We are focused on retaining and growing market share with key existing customers, and we have a strong mix of global, regional and local brands. As we mentioned earlier, we have been in this region for a long time. We have strong relationship with the regional players as well, for local regional players. We will continue to explore potential market for export and also to keep on increasing our capacity and addition of new lines, be it a new line or be it a new plant when feasible. Now, we have strategically pursued any acquisition opportunity in this region because many of our competitors and we provide world class quality in beverage can to all our customers.
And with this, I will conclude my presentation on Asia Pacific. Now I'll hand over the presentation to Robert Burke, President of Transit Packaging. Bob, please.
Thank you, Hawat, and good morning, everyone. I am Bob Borff, the President of Signode, the Transit Packaging Division of Crown. I would also like to echo the sentiments of my colleagues as we thank our employees around the world for their continued efforts and commitment to customers, to the company as we continue to weather the storm of the global pandemic. Signode is a leader in the industrial packaging space. Our scale combined with the breadth of products, services and capabilities we bring to our customers is unique as is the insight and full end of line solutions we can provide to create value for our customers.
Our footprint is global. We operate from over 80 manufacturing sites across 23 countries, which enables our more than 9,000 employees to sell just about every part of the globe. We have a global scale with local presence. I would point you to the profile with revenues approaching $2,400,000,000 a strong EBITDA margin 15.5%, all combined with minimal CapEx requirements coming to 2% or less of revenue in a year. At the bottom of the page, you'll see what we call our solutions matrix.
This is how we go to market. You can see across a host of various segments of business. We can supply many different products, services, integration capabilities and automation. Here's our business splits by product, geography and end market. So you can see we have our automation and packaging technology this business, what we call APT.
The rest we combine into what we call industrial solutions. So these are all of the other, Let's say consumable products and things that exist in our business. Geography, we're about 50% in the Americas, rest of world covering the other parts of those, all areas growing substantially and have very good trajectories as we go forward. You can see in the end markets distribution is our third party distribution is our largest single segment as we call it. Metals about 20%, growing food and beverage and a whole host of other industries and segments is how we compete.
We have a comprehensive portfolio of products and services, which enable us to partner with and offer solutions to our customers. It includes a full range of strapping, wrapping and protective solutions for use in a broad array of applications and end markets. And we're able to combine these products with our extensive portfolio of equipment and tools to deliver significant value to our customers. We're also well positioned to help our customers drive increased operational efficiency through our automated, semi automated and robotic equipment solutions. All of this coupled with our high margin aftermarket services mean we are creating a stickiness with our customers that makes us a valued partner for their business.
The great benefit of our business is that our products are used all over the world by a huge set of customers in very diverse end markets. Note that we've got sales in just about every part of the globe, so this means that our business is very resilient. And I think you've seen that in our results. A couple of points on the slide, highly diversified customer base, over 40,000 individual customers we service. You can see not one of our customers is more than 2% of sales.
In fact, it's far less than that.
Diversity in the end
markets and geographies, no single industry reliance. We are not beholden to any one market and its ups and downs. That helps us mitigate any risks in a country, in a product line, in a segment, any type of category, also helped us perform very well during the pandemic of the last year. You can also see service provided on a global basis, but via close customer proximity, again, a global scale with a local presence. It's this resiliency that fuels our outstanding free cash flow generation and enables us to fund crown growth and return capital to shareholders.
As many of you know, Signode was built through a series of acquisitions, but never integrated and run as a cohesive whole. We've been hard at work since Crown bought the business in 2018 to bring the business together as one Signode in order to harness our combined global scale and portfolio breadth to drive operational efficiency and strategic clarity so that we're able to deliver truly unique value to our customers. We have been in essence integrating 65 plus independent businesses simultaneously. The first major step in driving strategic clarity was rebranding under the Signaled Master Brand name in 2019. This enabled us to build a unifying brand message that resonates with our customers.
Our expertise frees your expertise and allows us to bring our full offerings to market in a cohesive way. Over the past couple of years, we've also been working on transformational market facing and operational improvements. We've streamlined our sales teams around the world and are empowering them to bring the full value of our portfolio to our customers. We've integrated our manufacturing operations to drive consistent processes and quality standards. We've reestablished R and D teams to reinvigorate our innovation pipeline.
We've established product management team to drive coherent product strategy. And we're supporting all of these with changes with IT systems that allows us to work seamlessly across our division and better serve our customers. Global CRM, global HRIS, automated quality systems and ERP consolidations to name a few. Crown's strength in manufacturing, operations and quality is being leveraged globally. Our teams at Signode and Crown are working together to improve our operations And because of this, we're able to significantly reduce the time needed to effect change.
We're positioning our business to be able to react quickly to customer need and to capture value at a global scale and reinforce a leadership position that is unique in our industry. These types of transformational Changes could have only happened under strategic ownership and they don't happen overnight. But the benefits are and will continue to be substantial. And 1 Crown understands this and is partnering with us to make it happen. I mentioned our unique leadership position on previous slides.
Here's how we think about some of the elements of that position. Directed long term industry growth, strong growth tailwinds in select categories, e commerce, pharma, consumer product goods. Comprehensive suite of products and solutions, a full portfolio, we take things from the front to the back end of line. We give our customers an integrated complete transit solution so that product that they produce in their location Arrive safely at its destination and intact full high quality product delivery. Exceptional free cash flow generation.
The diversity of the product and offering gives us a very resilient platform, truly sustainable and our limited maintenance CapEx along with flexible growth CapEx allows us to continue generating significant cash flow that we return back to the company. Our organic growth plan. We have many organic growth through recent investments in our core businesses. We're focused on innovation And we continue to have the product and market diversity to give us continued avenues for growth and we frankly because of our positioning can see things that others do not see coming. So I think it's best summed up as saying no one else does everything we do everywhere we do it.
With the steps we're taking to transform our business, we're able to hit on all growth cylinders. Growth options are another source of our resiliency. By bringing our commercial teams together, we're better able to drive focus on growing segments and optimize our efforts to serve our customers across those segments. We call it our bull's eye chart and it aligns how we allocate resources and manage our growth efforts. What is bullseye?
It's the categories we just spoke about, e commerce, pharmaceutical, CPG, automation, aftermarket services, all very high value growing businesses. We think innovation is critical to continuing to create value. Always been an innovator in the transit space. We have over 1400 patents with another 250 currently pending around the world. Within our APT platform, we have an industry leading vitality index of over 20% defined as sales from products launched in the last 5 years.
We take an outside in approach when we're developing new products, meaning we listen to the voice of customer. We have teams established through our R and D group, through our APT engineering group, through our product management groups where we are collecting the needs and wants of customers and bringing those to fruition. This approach has allowed us to create a one sign note approach to market where our teams are cohesive and we have one voice to customer as well. We find that this is giving us the best way to approach our market and to deliver value. Our unified go to market strategy allows us to better harness deep customer insights that have been translated into our innovation pipeline by our product managers and R and D teams as I stated.
This is another area where Crown is helping to set the stage for success. We're plugging into and leveraging Crown's world class technology and R and D team. This has positioned us to dramatically increase the pace of innovation across our portfolio. Just like the rest of the company, we view sustainability as a critical component of our success. We're excited about what we're bringing to the Crown 20x30 program.
As you can see, almost 95% of raw materials in signal are made from 1 100 post consumer or post industrial recycled resources. Our plant in Florence uses over £40,000,000 of PET packaging recycled to produce strap, most of it being curbside from the local community. The paper products that we use These are all materials that would otherwise go to waste if we weren't turning those into angle board products, into honeycomb products and all the other multitude of things that we make. Our protective packaging edge products uses 100% recycled plastic. You can see we're taking credit cards, We're taking detergent bottles, we're taking shampoo bottles, we're taking toothpaste tubes, post consumer resins, we're taking all of these things and turning it into useful, valuable products for our customers.
We're also working very strongly on closed loop recycling programs. In North America, we have a program to return plastic strat, grind it up, reuse it, put it back out into the product. We're working on those same areas in Europe and Asia as well to help improve our sustainability and continue to help drive the bottom line. So we're convinced Signode has an outstanding value proposition. We have a unique global scale and portfolio breadth that no one else in the industry has.
We have extremely resilient business, exceptional free cash flow with multifaceted growth options. We're well positioned across multiple segments, our bold
We
are creating, identifying and continuing to find new and meaningful two way synergies with the Crown. I think it's best summed up by saying at the end of the day, it's all packaging. So with that, I'd like to turn it over to Tom Kelly, our CFO.
Thank you, Bob. Good morning. I'll take a few minutes before our Q and A session to review some historical and projected financial information. So 2021 is off to an excellent start as we continue to deliver strong results across all segments and execute on our strategic and capital allocation review. To recap, in April, We signed an agreement to sell our European tinplate business at a full and attractive valuation.
We expect the transaction to close in the Q3 this year and reduce pro form a leverage to just below 3 times before considering any buybacks. Our LTM EBITDA through the end of the first quarter at $1,920,000,000 was up $245,000,000 or 15 from the comparable prior period. At the midpoint of our 2021 full year guidance, our full year EPS CAGR is 12% and that is without buybacks. And we've averaged about $1,200,000,000 in cash from operations over the last 4 years. Our first priority for capital allocation is to invest and grow the business where we have opportunities to realize appropriate returns.
As an example of how our growth capital has paid off, we summarize the Americas Beverage segment results for 2018 through projected 2020 Over that period, we project EBITDA for the segment to increase by more than $300,000,000 or close to 60%. This improvement is due to a combination of focused capital spending, excellent project execution led by our in house teams, rapid start up to minimize efficiencies and quickly get cans to the market and disciplined negotiations with customers to ensure we are fairly stated for these investments. Our experience with plant startups and the fact that we build much of the equipment used to manufacture beverage cans allows us to quickly and efficiently capitalize on opportunities as they arise and you can see the results of that in America's beverage. After investing in the business and as we have communicated, we are committed to returning capital. The combination of free cash flow and increasing EBITDA provides ample capacity to repurchase shares and maintain leverage within target range of 3x to 3.5x.
In February of this year, we announced the authorization to repurchase up to $1,500,000,000 of shares through 2023. And also in the Q1, we initiated a quarterly dividend. So looking forward, we plan to continue to invest in beverage can growth. We expect to benefit from the recovery of the transit business as industrial production increases, volumes return and cost reduction efforts materialize, and we plan to return capital now that our leverage has been reduced. With these opportunities ahead of us and our confidence in our ability to execute, We are targeting to achieve adjusted EBITDA of approximately $2,500,000,000 by the end of 2025.
And that concludes our slide presentation for today. Let's take about a 3 to 5 minute break and return for a Q and A session. Thank you. Welcome back, everyone. We are ready to begin the question and answer session.
For those asking questions, we ask that you limit yourself to 2 questions, so we can get in it get to as many of you as possible. Operator?
Thank you. Our first question today comes from the line of Luke Stafford of Bank Eric, your line is open. Please go ahead.
Hi, everyone. Thanks for the presentation today. Thanks for taking my question. I just wanted to, as a point of reference, make sure that we captured whatever was new in your capacity Relative to prior announcements, it sounds like Hanoi number 3 was a new line, but were there any other previously unannounced capacity expansions in this presentation relative to the past, if you could enumerate them. And then
So George, the only new capacity that we've announced today is the 2nd line in Monterrey And it's the 2nd line in Hanoi.
Okay. Thank you. And then my other question would be, You went through a number of things that you think differentiate Crown versus your peers. You mentioned The ability to bring capacity online, on time, on budget, looking forward, what do You think is going to most differentiate Crown and allow you to continue to drop through ability equivalent to or at a greater rate than in the past. And if you're in our seat, kind of the gorilla in the room, over the last Couple of days, the stock reacted pretty violently to a new entrance announcement of a can plant in the U.
S. If you were in our seats, would there be a certain number of new entrants, new capacity expansion that would, in your view, change the model as you think about Crown on a going forward basis. Thanks very much.
Okay. So the first part of that question, George, listen, I think If you look at our performance over the last several years, we've at some point somebody or you must recognize that as we've commercialized new capacity, we've been able to bring it up on time, certainly within budget. We haven't exceeded the capital budgets and we've been able to convert that to earnings and cash flow fairly rapidly. We're not asking you to believe that it's going to come in 18 months or 24 months and we're not giving you reasons for why it hasn't happened. So I think from that standpoint.
I think a lot of that has to do with the in house teams that we have, But again, a lot of it has to do with the markets that we're in and how careful we have been to put the capacity in when we have commitments from customers. So I think How do I address the second part of your question? I think the role Of sell side equity analysts is to take a position and certainly one fellow took a position yesterday. I don't think I agree with him, But he's entitled to his opinion. I have a lot of respect for him.
He's hopefully on the call. We can talk about it when he comes up. But I think when you look at the prospect of this new entrant adding perhaps 3,000,000,000 cans, which is not fully commercialized until the end of 'twenty 3 or into 'twenty 4. And by that time, that 3,000,000,000 cans makes up 2% to 2.5% of the overall market in a market that is significantly undersupplied now. It's remarkable to me that between Crown and the other 2 large publicly traded beverage can companies.
You all decided to wipe a few $1,000,000,000 of market cap off of us. So I think it's a pretty much a large overreaction if you had to ask me.
Yes. And Tim, I wasn't trying to single out anybody and I was really asking more from a theoretical standpoint. Does there come a point when you're in our seat, forgetting about buy side, sell side, where we need to start thinking about the model for Brown changing, that's all I was getting at. I wasn't
George, I understand that. I guess That's hard to answer, but what I could tell you is that as we have and I think we've been fairly consistent to say that we feel really good about our prospects looking out over the next 3 years. We don't see anything that's going to change the upward momentum of our prospects over the next 3 years. And I think from where you sit, unless you start to see some miraculous Product introduction from the other substrate, which takes away its deserved negative green view that cans are going to continue to be preferred by the customers and consumers and we're going to continue to grow. Absent the continuation of growth, if you start to see growth flatten out or you start to see growth at rates that are far below the capacity that's projected to come online then maybe you take a different view, But you've heard from us and you've heard from others that the market is significantly undersupplied, especially in North America right now to the tune of perhaps somewhere between 6,000,000,000 and 10,000,000,000 units and that's going to take a long time for the industry to commercialize 6,000,000,000 and 10,000,000,000 units and then on off of that you've got growth each year.
And the other thing I'd point out is you're dealing with only one market that we're in. We're dealing with North America. We still have many other markets, Southeast Asia, Southern Europe, South America that are growing. And then the last thing I would say is the company that announced new capacity the other day, well, they've Enter Brazil and they've built another plant in Brazil. So they have 2 plants in Brazil and they've had no impact on demand nor impact on pricing in the Brazilian market for the 3 incumbent producers.
We're all desperately trying to get as much capacity in to serve customers in Brazil despite their entry in Brazil. I think it's as I said, I think you guys have a role. I respect your role. I just and disagree with the position that was taken the other day.
All right. Well, I'll turn it over. Thank you, Tim.
Thank you, George.
Thank you. Our next question comes from the line of Anthony Pettin of Citi. Your line is open. Please go ahead.
Good morning and thanks for all the detail. For the production capacity forecast that you shared that go out to 2025, Is it possible to say how much of that is based on conversations or hard contracts with customers versus more of kind of a general growth forecast that you might make. And then if you could just talk about sort of the visibility that you have into Can demand maybe in the sort of 'twenty four, 'twenty five period in those out years?
So what I will say is that Capacity that we're showing through the end of 'twenty two is tied to firm contracts. For 'twenty three through 'twenty five, I'm going to be a little careful what I say here, but much of that will be tied to detailed discussions or recent contracts sold that we're not yet ready to disclose for competitive reasons. So I think we feel very confident. The growth rate from 'twenty three to 'twenty five as lower our capacity growth rate as you can see is lower from 'twenty three to 'twenty five then 2019 to 2022, which to your second part of your question, you think about 2024, 2025 timeframe, We're just not there yet. And I think as we get closer to that, I think that capacity growth rate has room to grow perhaps.
Will it grow to the same rate as the 2019 to 2022? I don't know, but it certainly has room to grow.
Okay. That's very helpful. And then just following up on George's question, in terms of the two lines that were kind of announced today or are new to us, Does that impact CapEx at all in 2021? No.
Okay,
great. I'll turn it over.
Thank you.
Thank you. Our next question comes from the line of Ghansham Panjabi of R. W. Baird. Your line is open.
Please go ahead.
Yes. Thanks so much. Hey, guys. I guess back to North America, which is where all the acceleration in growth is relative to the 2018 baseline. Clearly, hard seltzers have been part of that along with a couple of other categories.
But as you kind of think out through 2025 just based on conversations with your customers. What new categories do you think will drive the incremental growth of the industry over that time
So I think hard seltzers are going to continue to expand. Even when we get back to on premise consumption, You can imagine if you're in a bar, most of the beer and bar is either bottle or draft and mixed drinks are clearly not in a package. And any replacement of those in the bar scenario is going to be with a can for seltzers. And then I think if you look at the sparkling water, I think over time we're going to see sparkling water in cans take share from flat water in PET for a couple of reasons. 1, people like flavor, people like carbonation and people don't like pollution.
And then beyond that, I think you're going to see a continuation of new products being introduced in the ready to drink coffee and tea area to mention a couple.
Okay. And then back to your comment, Tim, on the other substrates. I mean, There's been a fair amount of focus on the chemical side to propagate chemical recycling. You see commercialization of capacity across from the major suppliers. You're seeing the glass container industry look at creating basically specialty glass containers just like the success you saw with specialty cans.
How do you think Those two dynamics kind of play out over the next few years relative to this window you've had with exceptional commercialization opportunities and part of it is also And then just a question for Tom Kelly on specific to the Q2, any update on relative to previous guidance on EPS for the quarter. Thanks.
So, got you. It's a good question. I think the answer is whether it's chemical recycling and or other specialty containers, whether it be in glass or other packages. I do think The glass guys have an opportunity to perhaps maintain or grow their unit volume. They may lose share, but there is a shortage of containers generally in certain markets.
So they will have an opportunity to at least fill their lines. I don't think that for the next, what, 3 or 4 years that we're overly concerned with chemical recycling or specialty glass impeding on the can's ability to gain share because somebody has to pay for all that and all of which you described or alluded to is exceptionally expensive. They're not to the point where they can make it economically feasible unless customers and consumers are willing to subsidize that for a long time in the future. So I don't think we're too concerned with the window that you described that opened up for us. I don't think we see that closing in the near term.
And John Chama on EPS, we are not providing any updates to the Q2 today.
Got it. Thank you.
Thank you. Our next question comes from the line of Arun Viswanathan from RBC Capital Markets.
I guess, First off, maybe I can just try to ask this question a little bit differently. So obviously, there has been a lot of capacity announcements. You mentioned the deficit of the shortfall, maybe 6,000,000,000 to 10,000,000,000 cans in North America. Could you just describe how that evolves And maybe over the next 3, 4 years, when do you expect that we'll be in a balanced position in North America? And how are we actually providing those shipments today?
Do you see the import side kind of reducing over the next couple of years as new And how does that impact your profitability in March towards that $2,500,000,000 of EBITDA? Thanks.
Yes.
We built a factory, a 2 line factory in Nichols, New York, a lot in 2016. And I think as we said at the time, that was probably the first new beverage can factory built in North America in over 20 years. And over that time with declining or flat volumes, the industry had taken out significant capacity. Fast forward to the back end of 2018 beginning 2019, you start getting this incredible tailwind of new product introductions in a number of the categories we've talked about coupled with a very large customer response to their consumers with regards to sustainability in the environment and really fueling new product introductions being heavily weighted towards the can as opposed to other substrates. I think we are Boy, even with all the capacity announced, I think we're still a couple of years away into 'twenty three, at least into 24 before we think the North American market is in balance.
If we even catch up to be in balance by then, it depends on the rate of growth in North America. But our customers, even with the new capacity we're putting in and the agreements we're making tied to those that new capacity, our customers still believe They want more cans than we can provide. We're going to have fewer opportunities for imports into North America from other markets. We've talked about last year there was a the COVID situation and especially in the Q2 in Mexico and Brazil allowed a lot of those cans to come north. That doesn't exist this year.
We have a little bit of excess capacity in our Middle Eastern footprint. Although some of the Middle Eastern plants cannot make alcohol cans, so they're only able to support the North American market with non alcohol cans. So there is There's still going to be a shortage of cans in North America and it leaves the customers wanting more. So Arun, I think we're at least 2, 2.5, 3 years away before I would consider we're going to get back to balance.
Okay, thanks. And then as a follow-up, maybe I could just ask on capital allocation. So you laid out a plan to get to $2,500,000,000 of EBITDA. How should we think about free cash flow in that period. Where do you see CapEx kind of trending over the next several years?
And when you are making these capital allocation decisions. What's kind of the optimal leverage that you have in mind? And would you be able to flex that lower or higher? If you would maybe you can just give us your priorities on how you're looking at capital allocation, Sameer? Thanks.
Yes. So I think We're going to what are we targeted $900,000,000 this year. It could be the number could be similar next year. We've got a lot of tremendous growth opportunities. We will announce new capacity globally sometime later this year that will begin to be built late this year or next year.
I think the hope is that I have no problem saying this. The hope is that we spend $900,000,000 next year and the year after. The hope is that the growth opportunities remain as tremendous as they are right now and we spend money. What happens is the base of EBITDA gets bigger And so the cash flow naturally grows even with similar capital numbers. I think looking at capital allocation.
I think given the current portfolio of assets we have now and the cash flow we generate from the portfolio, 3x to 3.5x is a reasonable leverage target. I think If you shrink the portfolio and you shrink the cash flow that's generated in an organization because the portfolio is different, then you have to reconsider a different comfort level for a range of leverage.
Okay. Thanks.
Thank you.
Thank you. Our next question comes from the line of Mark Wilde of Bank of in Montreal. Your line is open. Please go ahead.
Thanks. Good morning, Tim. Good morning, Tom.
Here he is, the black hat. How are you doing, Mark?
I'm all right. How are things in Philly?
Excellent.
Okay. I have a couple of questions.
One, if we go back
several years ago, Tim, you used to talk about sort of wanting like a 3 legged stool. So I'm just curious, you and the peers are seeming to move toward more just a dedicated focus on beverage cans. Can you just talk with us about how you think about the portfolio, the kind of maybe the tensions between being very specialized and continuing to maintain some type of packaging diversity?
So listen, I think you go back to late 2016, 2017, early 2018, I don't think as we sat there then, somebody might want to say that they saw this coming. Well, good for them. I don't think anybody saw this coming as rapidly and as deep as it came. But I think When we talk about a 3 legged stool, we understood we had 3 large businesses which generated a lot of cash flow. Now the beverage business was generating much more cash flow at that point because it had much lower capital requirements.
We now have a on a 2 legged stool with 1 business generating a tremendous amount of cash flow, the beverage business generating a tremendous amount of growth and chewing up a lot of the cash that's generated in its capital expansion. We're okay with that. Growth is fine as long as you get earnings and cash flow growth, which we are getting from the business. So I can't speak to what the others are doing. You know The thesis among many investors and some of the analysts is that the greatest product ever hit the shelf as the beverage can and we should be all focused on beverage cans only.
Beverage cans are a great product. They've always have been a great product and And I think they always will be a great product. The mix in all of that is demand and the demand capacity curve and what it does to pricing. And right now it's quite healthy for the beverage can producers. I do believe There's always room in a portfolio for a business which generates a tremendous amount of cash flow that requires very little capital.
It makes mid teens EBITDA margins and it fuels the return of capital to shareholders. So We've got some smaller tinplate businesses now in North America post the sale of Europe, but I'd describe it as a 2 legged stool at this point.
Okay, that's fair. For a follow on, Tim, I wondered if you could just talk with us about the North American beverage can recycling rate, which I think is about 50%. And just how you think about your role, if any, in trying to boost that recycling rate? Is there anything that Crown can be doing proactively or do you really need to leave that to the beverage companies in your view?
Listen, I think the aluminum companies, I think the can companies and I think the beverage fillers Would love to see that be a higher number. Now we can all and we all have from time to time made investments in recycling in various communities. What we need is the population of the United States to be more responsible as it relates to the environment and that means you don't throw cans away. I don't know how many times I've been on an airplane, they come through and they collect all the cans and they throw them in the normal trash So if you're only recycling 50% of the cans and you know at least 100% can be recycled, What you have in between is apathy or laziness. The one answer is we could do this like Switzerland.
We could have 6 recycling containers outside of your on the curb and we could have the recycling police go through and they could fine you if they go through and they find recyclable materials in the trash and that's what they do in a place like Switzerland. Now we're probably not going to get to a rate like Brazil. We don't have a poverty situation like Brazil in most parts of our country and we have a social safety net which allows people not to have to go through other people's trash and landfills to find things that have value such as aluminum can. So We're going to continue to try with the CMI and with our fellow beverage can companies and we work with the aluminum companies. It is a disappointing number.
Short of taking away people's personal freedoms, How do you go about it? It's pretty disappointing. I agree with you.
Okay. I'll turn it over. Thanks, Tim.
Thanks, Mark.
Thank you. Our next question comes from the line of Kyle White of Deutsche Bank. Your line is open. Please go ahead.
Hey, good morning. Thanks for taking my questions. Thanks for the presentation. On Transit Packaging, I believe initially one of the rationales for the acquisition to leverage it as a platform for growth in M and A. Now that you have integrated that business under 1 brand, Signode, do you still view it as a platform for inorganic growth?
Or will the capital be more dedicated to beverage cans going forward?
So we spend as Bob said in his presentation Kyle, we spend about 2% a year 2% of sales a year in capital. And with that, we can target those markets where we want to grow organically. If we wanted to spend another $20,000,000 in capital, we could do that. But we are targeting the large majority of the CapEx that we spend a year in beverage right now because that's where the most immediate need is of our customers. Having said that, by not spending the money in transit, we are missing some opportunities, but I don't think we're missing opportunities that we won't be able to take advantage of in a couple of years, whether that's organically or inorganically.
I think Bob's presentation, hopefully, What you see is a business that has global scale and global reach and we have a lot of technology and it's very well diversified. Really there's not another transit company globally that can compete with us. I think we may miss an opportunity here or there. Some of those opportunities go to private equity, so we would always have those available to us in the future and even if they're not, there's another opportunity that's out there. So we don't feel any pressing need to have to do anything right now in transit other than run the business better than it was run by the owners before us, continue to generate cash and service the customers.
Got it. And then Tom, on the 2,500,000,000 EBITDA target for 2025. I know it might be difficult to answer, but how much of that earnings growth is kind of already known in terms of contracts signed or about to with capacity coming online versus some other growth that may be a little bit more unknown at this point. And should we expect that earnings growth to be kind of gradual or probably are back loaded. Thanks.
Yes. As Tim said earlier, obviously, the further you get out, 24 and 25, we We don't necessarily have contracts for all that because the volume isn't here yet, but we have more confidence in the earlier years. And It's a pretty steady buildup. You can only put in so much capacity at a time. In the market is only going to grow so much at a time.
So it's fairly steady to get through to the 25 numbers.
Thanks. I'll turn it over.
Thanks, Joe.
Thank you. Our next question comes from the line of Neel Kumar of Morgan Stanley. Your line is open. Please go ahead.
Great. Thanks for taking my question and thanks for the presentation. In terms of the customer commitments you're locking up for your new capacity, do you see risk that customers could potentially over project demand to secure supply just given the sold out environment. And in that type of scenario, can you just discuss what type of contractual provisions you have in place to protect your downside? I mean, in general, if you find the demand is not materializing as you currently expect, how far in advance should you delay or cancel capacity plans?
So I think the first part of your question or the statement you were making is That's always possible and that has happened from time to time, where customers having been shorted cans or having been on allocation or not getting all the cans they needed at one point start to over project. We're pretty careful a lot of the well, I don't actually I don't want to get into the contract specifics, I'm sorry. I would say that we are careful to ensure 2 things that we don't over allocate cans to somebody who's giving us a forecast that's much higher than we believe it should be at the detriment of other customers. I'll say it like that. And then as we build capacity, we always look you make a number of decisions whenever you're managing a business or a particular line of business and all your decisions can be right for all the right reasons.
And then you take then you step back and you look at it and you say, Does it make sense and is that the right overall decision? So we do, do that. And there are times and we'll have a real frank discussion among ourselves and we say do we really believe that forecast. And if we don't believe that forecast, regardless of what the customer is telling us. While we may want to build capacity because we know we're going to need capacity in a region or we're going to need some capability for specialty or otherwise, we may delay the installation and or the ordering of the equipment just to push the capacity out.
So the answer is yes. Although uniquely to Crown, which I think is a positive, We do know we're underweight specialty cans, especially in North America. In the rest of the world, we're at the market or we're overweight the market in all the other markets. But in North America, we know we're underweight. So we have the good fortune to add capacity to get our weighting back in line to the market and to what our customers want.
Great. That's helpful. And then in terms of your 4% to 6% demand assumption from North America, it seems that you expect that to largely come from newer categories. But I was curious what that assumes for the more core categories like beer and carbonated soft drinks, especially given the gains from COVID. Can you just help us understand how much of those share gains you would expect to reverse in a potentially more normalized environment and the resulting impact to can demand?
There's
going to be some of that. I think Ashwini in his presentation on Europe, I think our view of Europe and the Middle East is that it's going to have no impact. We do believe in Europe, We sold the food can business, but certainly in food cans and in beverage cans, we believe that it has permanently changed consumer behavior. And so we don't see that having an impact in Europe. In the United States, it's going to have an impact because So many people in Europe want to get back out and go to restaurants and bars and things like that.
But I think that is It's going to be offset by the general growth in the market. So while I don't have a number for you, I'll agree there's an impact. But when you net it all out, we're still going to grow.
All right. Thank you.
Thank you.
Thank you. Our next question comes from the line of Adam Josephson of KeyBanc. Your line is open. Please go ahead.
Tim and Tom, good morning.
Good morning, Adam.
Good morning, Tim. Tim, just sticking to North America for a second, you mentioned earlier That we, the analysts, have a job to do. The investors have a job to do. If you're in our seat, At what point would you say, okay, this amount of capacity that's been announced over the next, say, 5 years is probably too much and it's going to eventually tip the market into oversupply. I mean, Presumably, there's a point at which you would reach that conclusion, right?
Whatever your demand forecasts now happen to be. So How would you if you were to ask how would you think about that, that at some point in any commodity business there will be oversupply If a sufficient amount of supply is announced. So how would you frame that for us?
Well, I think I would ask you, you'd first have to tell me how many years out you want to look and how many years out you want to model. If you're looking out 2 to 3 years, I would tell you don't worry about it. If you want to look out 5 to 7 years. Well, it's anybody's guess, but 5 to 7 years is a lifetime in the investing world, right? I'd be surprised if most investors are looking at something with a 5 year to 7 year view.
But if you look at it from a 2 year to 3 year view, I'm not worried at all. We've said this repeatedly for the last 18 months that we feel really good for the next 2 to 3 to 4 years. So I do take your point. What I can tell you is that growth is really healthy. The contracts are a bit more balanced than they have been in the past.
Our customers are doing well. We're doing well. We're in a pretty consistent business when it comes to demand. Even the transit business has fairly consistent demand even with a massive pandemic. We were down a little last year, but not that much and we're going to bounce back even more this year.
And it's not like we're operating a cruise line or an airline, right? We know what demand is going to be. So let's assume we all overbuild. What's the worst that happens among 4 companies, we all have one plant too many. Then it gets to the responsibility of each of the companies.
Can you manage your one plant's excess capacity in the market? Or you were so greedy to fill your one plant up, you're willing to destroy the margins on your base business. And so that I can't answer for you as to how other people look at it, But Crown is very focused on converting what we do on a daily basis to earnings and cash flow. We're not here for practice, right?
No, no. Understood, Tim. And just in terms of your guidance, I think it implies about 7% EBITDA CAGR Based on consensus for this year through the next 4 years, what kind of capital do you envision having to and over that period to generate that growth. And consequently, what are you expecting your returns on that incremental capital to be compared to your existing returns, compared to what you might earn on M and A or what you have earned on M and A in the past, etcetera?
Well, I think in a growing market, if you're spending organic capital, you're going to get much better returns, especially in the initial years than you will with M and A. It takes on M and A, you drop a pile of money. Basically, you trade a pile of money now for a future cash flow stream. And it takes a period of time to let's say earn back the goodwill that you paid for. I would expect Not everything we do has returns.
They're not all high returns. I would say the new capacity projects are all high returns and we need those to offset projects that you do, do that may not have returns at all like environmental or safety and other things that are absolutely required. But I do think To get to $2,500,000,000 we're at $900,000,000 this year. You're going to have to spend at least $600,000,000 a year for the next 2022, 2023, 2024 to get to that. How much more over that, I couldn't tell you right now.
Got it. Thank you, Tim.
You're welcome.
Thank you. Our next question comes from the line of Mike Leitied
I guess returning to the outlook, If we use the 2025 EBITDA projection and your target leverage ratio, you should have a fair amount of cash available to deploy the next 5 years. So I guess, How should investors think about the balance between reinvesting that business into growth internally versus returning that cash to shareholders. And related to that, how should we think about how much faster EPS should grow relative to EBITDA over that period?
Yes. Listen, it's you start with Tom mentioned earlier that I think we've averaged $1,200,000,000 or $1,300,000,000 of cash from ops over the last couple of years. Let's assume We stay in that range going forward or that number grows and then you from that you subtract CapEx and you get your more or less your free cash flow. And then from there, if you're satisfied with your leverage and theoretically your leverage declines as your EBITDA grows if you don't change the debt number, It's return of capital, right? It's dividend and or share buybacks.
I'll leave M and A to the side because we don't have any plans right now for any significant M and A. There might be some smaller things on the edge, but very small. So it's dividend and share buyback. And with that, with share buyback, you should get greater EPS accretion than you have EBITDA accretion.
Great. That's helpful. And then second one, I think you made a comment An earlier question around target leverage ratio and that could change a bit if the portfolio was smaller. I guess Maybe tying into your earlier strategic review, would you still actively are you still actively looking at the portfolio construct? Or is that kind of Frankly, lower priority now with the European food can completed.
Well, So there we still operate a few businesses other than beverage fans globally. I will say that Where we sit today, it gives us the ability to return significant value to the shareholders by having the transit business. The transit business is a very solid business that has very stable demand and growing demand, generates tremendous cash flow, requires very little capital, and it has an EBITDA margin with very little capital invested that's as good or better than most other packaging businesses that I see out there. We're going to see that you're going to see a second quarter operating income number in transit that's 55% or 60% higher than it was in the Q2 last year and it's going to do quite well this year. So I think for the time being we're going to continue to operate and run the transit business and utilize the cash flow that it throws off to return to shareholders and fund the beverage cans expansion.
Great. Thanks, Tim.
Thank you.
Thank you. Our next question comes from the line of Bill Ng of Jefferies. Your line is open. Please go ahead.
Hey, guys. Tim, what type of return do you expect to achieve from some of these growth investments you're making in North America? And do you have a view What type of return profile a new entrant could achieve with this type of investment? Just want to get some color on your thoughts in terms of competitive advantages for an Establish guy like yourself versus a new venture as well.
Yes. So
I think
There's 3 merchant can suppliers. There's a self supplier. We all have a network. The advantage we have is we have a network we can supply nationally and importantly we can move people around and train people from plant to plant to bring our lines up quickly. I would say the new entrant that you're alluding to has no advantage in North America like they have in Eastern Europe.
They've had no advantage in South America. They've had no advantage in the Middle East. And You don't see that, but we see that. So we're not particularly worried about If they've had a so called advantage in Eastern Europe, we don't see that translating to North America. They're not going to be hiring Eastern European labor and other subsidies that they get in Eastern Europe to fund their North American expansion.
They're going to have the same utility contracts and same labor contracts and they're going to have to struggle with startup here because they don't have as many local can manufacturers to help from plant to plant. I would expect that a new entrant has lower return hurdles than an existing entrant only because they're trying to get into the market, but also because their startups perhaps take a little longer than ours. I'll leave it at that.
Yes, that's great color, Tim. And then in your presentation, you show you're adding about 15% capacity by 2025 in Europe. Is that largely from projects that's And then are you getting the type of pricing in economic terms you kind of alluded to that you needed to See before you make a bigger capital investment in the region. Thanks a lot guys.
You're talking about Europe, Phil?
Yes, Europe specifically, I think in the presentation you kind of lay out the capacity.
Yes, so you guys are
talking about the
capacity growth through 2025 is more back end loaded in Europe. It may come quicker than what we've laid out for you, but we're not prepared to talk about it yet. As Ashwini said in his prepared remarks, We'll disclose that to you in due course, which is Ashwini being polite. And As you know, I'm not very polite. We'll let you know when we want to let you know.
Okay. But those investments would hinge on that type of return profile and pricing that you kind of alluded to before you would commit, right? Is that
the question? Phil, the goal is to make money, right?
I appreciate that. Thank you.
Thank you.
Thank you. Our next question comes from the line of Adam Tanielson of Goldman Sachs. Your line is open. Please go ahead.
Hi, thank you. Good morning, everyone. Good morning. Good morning. I guess, my first question is on the long term kind of North American market growth expectation of about 5%.
And I'm just trying to make sure I'm properly kind of framing understanding what you are including in that growth outlook versus what would remain an opportunity in terms of Expected categories that are growing versus substrate shifts that could occur but are not in the plan, especially bottled and sparkling water in cans in the out years is a category that today Very little happens in cans, but will remain a pretty big opportunity for you and the industry.
Well, I think sparkling water does happen in cans now and I that will continue to grow. There's still significant sparkling water in PET. I do believe that that transitions more to can over time. There's very little flat water in cans. I have a perhaps a much more conservative view on the conversion of flat water from PET to cans than perhaps some others do, but I don't think we need that to grow 5% a year over the next couple of years.
And just so we're clear, 5% means about 6,000,000,000 units per year, which is 5 high speed can lines per year at full rated production. So When you look at it that way, you can see why it will take us 2 to 3 to 4 years to make up the shortfall in the United States.
That's helpful. And maybe can I
ask why you'd be more conservative on that opportunity?
Just trying to make we understand your lens to market.
On Flatwater? Yes. Well, I think when it comes to flat water, people like the resealability of the plastic bottle and they like the clarity of the bottle. They like to look through the bottle and see that they're drinking clean, pure or what appears to be clean and pure water. I don't think while we do have resealable options in cans, I don't think we have one where somebody might feel comfortable enough to put it in their Louis Vuitton purse.
The other thing is you're talking about flat water here, which has no flavor and has no carbonation. You can While you may not need a PET bottle, you don't need to buy it in a can. You could buy a container as so many people now have little aluminum containers or other types of containers and fill it with your tap water at home. So It may happen. It probably will happen.
I just my view is it happens a little slower than everybody else would like to believe. But as I said, we're not counting on that. We see enough growth in the other markets and the conversion from other materials for some of those other products that we still get the 5% without that.
Okay. That's really helpful. And then I just
in the $2,500,000,000 of EBITDA in 20, 25, I wasn't clear, just the contribution in that that's anticipated from maybe the non bev can businesses Signode and the food aerosol businesses that are left. And for Signode specifically, kind of I didn't think I heard a medium term kind of organic revenue growth our expectations for that business.
Yes. So let's say post 2021 for Signode, Let's just assume GDP type growth levels. I think 2021 is going to have a huge bounce back from COVID last year. So it's You're going to go from let's say roughly 2,000,000,000 in revenue in 2020 to maybe we're like 2.4 or a little bit higher this year. So that's 20%, but it's not a 20% business, that's a recovery from COVID.
But I think beyond that Think about GDP with better drop down to the bottom line. I think that between Signode and the non beverage businesses between the end of 2021 2025, at least a couple of 100,000,000 improvement in EBITDA, if not more. But I don't think we're prepared to give you that detail here. Okay.
All right. I appreciate the color. Thank you.
Thank you.
Thank you. Our next question comes from the line of Gabe
Thanks for the presentation and details. A quick question, I guess, Tim, on I guess clarifying the utilization comment that you made at the beginning of the presentation, was it that those lines you typically kind of run 5% to 8% lower than sort of nameplate capacity. And then the second part of that question is in 2020, I suspect that due to COVID, obviously, Your running line is pretty hard, as well as some of your customers just trying to get stuff on the shelf. Any guess as to kind of how that Did that boost, I guess, production in 2020 that might leak out of the system over the next, I don't know, 18 months.
So on your first question, it's not that we run the lines lower than nameplate rated speeds. It's What I was trying to say that once the plant is built and it is in commercial operation, that is our rated capacity. It will take 12 to 18 months to fully get through learning curve. So until the plant is through learning curve, the annual output is somewhere between 5% 8% lower than the rated capacity that we have installed. So think of it another way.
Let's assume that if by the end of 2025, we don't build any more factories. Within 12 to 18 months, the annual output will equal that rated number that we've shown you on the slide, if you understand what I just said.
I do. I guess the question is if nameplate is $1,200,000,000 and you've got changeovers and label changes, etcetera, Are you making 1,200,000,000 units per line or is it something less than that?
We can depending on how we schedule. It's up to us to do the right production plan and schedule the changeover, so we minimize the loss of capacity. But the answer is yes, we can get pretty close.
Understood. That's helpful. And then the second part of the
question, yes.
Remind me of the second question. I'm getting old.
No worries. Just the fact that again maybe some customers chose to go to 12 ounces.
Yes, yes, yes. Yes. So I think well, we supported as we said, we supported North America with Mexico and Brazil. That's not going to be available this year. The only market maybe as you look forward 12 months to 24 months that We might have a little excess capacity would be the Middle East, but it's not a lot.
So the answer I think is no.
It was actually the other way. It was that if you had a certain amount of capacity in the U. S. And you were churning out as many cans as possible, less label changes, etcetera, That you actually got more production than you otherwise would out of your system.
Yes, okay. I'll agree to that because we did have customers that took their SKUs from 50 down to 5. I don't think we're going to see that change this year. And I think by the time that does change, we'll get enough capacity installed that won't have an impact on what we're able to supply. I don't our capacity numbers that we showed you rated capacity.
So we're not It's marginal. Let's just say it's marginal, the difference.
Fair enough. Something thing that popped out to me in the presentation was the growth rate of China. It used to be, I think, low double digit and I believe you Showed 4%. Has something changed there? And do you envision that as a risk to other Southeast Asian countries?
I'm going to let Ho Qua, if you're still on, why don't you take that question?
I think China is, as you know, the This is Huo Hua here. The population is based on 1,400,000,000. So the thing here is that our Projection is that going forward, domestic growth is about 4%. It's much lower than what we had before. Likewise, Southeast Asia is much more developing country compared to China in terms of that.
That's the reason why the growth potential in Southeast Asia is higher.
Thank you.
So maybe the way to just to add on to that is There's 4% on 45% or whatever the number is, is still significant. And it's as significant as 10% on 2020, right? So it's still the absolute growth is the same. It's just lower on a percentage basis. And I think what Ho Kwa was trying to say is that the Chinese populace and the disposable income can only absorb a certain number of absolute cans in terms of growth every year.
Thank you, Tim.
You're welcome.
Thank you. Our next question comes from the line of Salvator De Oro of Seaport. Your line is open. Please go ahead.
Yes. Thanks for taking my questions. The first one is on beverage cans. You did talk a little bit about how you're thinking about potentially customers overstating capacity, etcetera. I just wanted to get a little bit of your understanding with regard to any projects that any new product introductions that may actually not because I think recently we saw Coca Cola after a very sustained pulling synergy drink out of the market this year, It lasted less than 2 years, and I think it's essentially in beverage cans.
So have you seen any other products that We're pulled from the market shortly after they were introduced. And are you taking these type of potential headwinds into consideration for your Capacity projections and demand projections?
The answer would be no, because I think the reason why those products get pulled is because they don't do well and because they're being superseded or beaten out by a different product that that customer may have in its portfolio or some other product that another customer or another potential customer might have in the market. So These are not huge until they've been in the market for a while, The demand for those products or the demand for the cans for those labels are not very high to us or to the can companies until the customer is confident that they're going to do well. The customer doesn't want to buy labels that they don't think they can sell. So All it means is that product didn't do as well as they thought and they'll replace it with a different product or they lost out to somebody else in the market, but it doesn't change the overall trajectory of the market in the near term.
Okay, perfect. And the other thing I want to come back to the Transit Packaging business and the automation in opportunity. I think a few years ago, you had that sub segment called equipment and tools. It was around 18% of your sales. And now, I think you've renamed it and it's 24%.
So can you give us a little bit more color what has changed there? How has this segment gotten so much higher market share? And what is the automation opportunity, especially now with COVID? We've heard from other suppliers of automation equipment that there's Yes.
So I'll let Bob answer the second part of the question, but How did it get from 18% to 24%. Firstly, the automation is just a rebranding of the equipment and tool business we had, but We didn't do anything special to get it from 18% to 24%, maybe 1% or 1.5% organically, but it's really capturing the automation products and services that we provide in the consumer business and making sure we capture them properly in the automation category. And then Bob can deal with specific automation things.
So I think let me piggyback on what Tim is saying and help answer both the questions at the same time. So that growth that you've seen is part of it is again us taking the very independently operating businesses and unifying them under one umbrella with a common management structure, organizational structure etcetera. So we've kind of That particular part of the growth was just about getting out of our own way, stopping competing against ourselves on projects. We would have customers call us in 3 different parts of the world for the same solution and get 3 different answers. So We've been able to clean up a lot of those things and that just fell straight through to the bottom line.
As far as for the future, What we've seen with the pandemic is we've seen a tremendous interest in an automated warehouse solution, a light valve solution where we can take product off the end of the line on pallets, store it in a warehouse of 40,000 positions And it's totally lights out. So there's been a tremendous interest in that lower contact. And again, we make various individual pieces of equipment that are industry leading and the automation piece is now where we're focused on integrating those things into to one cohesive solution for a customer where quite frankly again with limited visibility of individual businesses It just couldn't have been done. So we're getting much, much better at identifying those and taking advantage of those opportunities.
Okay, perfect. Thank you very much.
Thank you.
Thank you. Our next question comes from the line of Alton Stump of Longbow. Your line is open. Go ahead.
Good morning, Tim and Tom. How are you? It's been a while.
Welcome back.
Thank you. Good to be back. I just want to ask about the new product, but there's obviously been a huge shift towards cans in North America over the last couple of years. Is there any signs of that slowing down or could that percentage is going to cans grow even further in your view in coming years?
Well, I think when you talk about new product introductions, I'm not a marketer. So I can sit here and dream up products that might be introduced, but I'm not a marketer. I don't really know what consumers' tastes are and what consumers are clamoring for. I do believe that more of them are going to come to cans directly out of the box as to in the past where they might have gone fifty-fifty or 20.80 cans in another substrate. I think we're going to get large share of those coming forward.
And I do think that for products that are out there already that we're going to continue to gain share in those products, be it sparkling water or otherwise as people it looks like People have really embraced sustainability and they're giving it much more than lip services at this point. So I I don't know if I answered your question, but that's probably the best I'm going to do right now.
Yes.
No, thanks. You were helpful to him. As far as about Europe, it's interesting to me kind of a shift in Seemed to me kind of a shift in dynamics where, of course, Europe had always been more And I was focused on the environment versus North America and that seems to have kind of flipped in the pet industry over the last couple of years. Is there any signs or evidence that consumers in Europe are starting to adapt Same type of attitudes towards the can over plastic in particular that we've seen here with the massive shift over the last couple of years in North
America. Yes, I think we're starting to see that. I mean the other thing remember Europe still has a very large returnable glass market for soft drinks and bottled water. And I think that that will change over time as well as more of the market is off premise as Ashwini discussed. And more and more Pub and shop owners and retailers don't want to deal with returnables.
The recycling system It's actually quite good in Europe and so there is a system in place and there is value for the aluminum as John discussed. I think we're going I think all of what you described has great opportunity in Europe.
Great. Thanks so
much. Thank you.
Thank you. Our next question comes from the line of Silke Hackett of JP
I was wondering if you can tell me how many line speed ups can you recently do in a year and like how much capacity can that add? And What is involved to do a line speed up like? Like what does it cost? Do you have to take a plant down to do it? And like how long You have to take it down for.
And my second question is, if I heard it correctly, like the 3rd Nichols line is, I think, is at 1.6 1,000,000,000 units, which is really large. Can any of the new plans have lines that like that size, like what does it entail to Those plans in line today are big. Thank you.
You're welcome. So the Nichols line is a big line. It has, as John said, 12 body makers. You can make a line well, I don't want to say you can make it as big as you wanted, but To make them bigger, you just put more equipment in. And we actually what we do is we split the back end.
We create 2 back ends. So you might want to call it 1 high speed line or 2 medium speed lines depending on how you look at the back end. The front end of the line through the decorator is basically one line and then when you get past the decorator to the back end, you have 2 back ends, so you run a lot quicker through palletization. What does it take to speed up a line? It depends on the line.
It depends on the age of the line. It on the equipment in the line. Sometimes we have lines that the washer or the decorator, the ovens are such that all we have to do is add some more front end equipment to put more units into the line and we can handle that. Sometimes We don't. Sometimes you've got to think about changing out the washer or changing out the oven or putting another decorator in to speed up the line.
And when it only entails putting in an extra couple of wall ironers that's not very expensive. If you have to put in a decorator or change out the oven, that's a little higher. And then if you have to change out the washer, that's a bit more entailed and Changing out the washer means you do take the line down until the washer is brought back up. So it's all over the map, but it's certainly to bring on an extra 200,000,000 or 300,000,000 cans of capacity a year in a line is not very in a situation where you don't have to change out equipment, you're just adding equipment. It's not very expensive to do that compared to a new line.
Okay. Thank you.
Thank you.
Thank you. Our next question is a follow-up from the line of Steve Staphos of Bank of Kirkland, your line is open. Please go ahead.
Hi, thanks for taking the follow on questions. I want to come back to Signode, Tim, and you had mentioned that And I'm paraphrasing here. There might be some growth opportunities that you can't necessarily get at right now, but you're not worried about losing them and recognizing there's probably competitive issues here and sort of going through the laundry list of what you're not chasing and what you're not worried. Can you give us a little bit of comfort in terms of why you think you to get at those. And if the business accelerated, Obviously, you're off of a depressed base last year, but tell us if we saw 4% or 5% or 6% growth out of Cigna, Given we are seeing a synchronized global recovery, maybe we do see that.
Would the capital have to go beyond what you're projecting or you think So manage that on a going forward basis. And then I had a quick follow on.
Yes. So George, let's just frame I'm going to give you some numbers, but I think we had about $255,000,000 of operating income last year and Sig noted maybe this year it's let's pick a number, 310 to 320. So as we think about the future, let's talk about the percentage growth rate you want off of the 2021 number. Clearly, if the opportunities were there to have growth in the 5% to 6% range from our customers and not a GDP type growth rate, then it would require a little bit more capital than $40,000,000 a year. It might require a 65 or 70.
But we do believe we could target that appropriately to get the quickest returns possible where our customers need them with a greater focus on consumer products and health and beauty than perhaps the business had in past years.
Okay. And then back to Signode, are you seeing much impact from the trend we've seen over the last 12 months with COVID, a direct to consumer purchasing pattern, e commerce, is that materially changing the business for Signode or not really just given the diversity. And just factual question and I'll turn it over. The $2,500,000,000 of EBITDA that I think you put at the end of your forecast, that is I assume pro form a for the food can For the European template divestiture, right? That's a big number, but just want to make sure that we were apples to apples.
Thanks. Okay.
Hi, George. And on e commerce? I'll take your question on e commerce. So, yes, so I mean there's we look at e commerce in 2 ways. So you can talk e commerce where we sell our products directly to consumers.
That is that could be a future thing that we get involved with if it seems to make sense for us. And it helps us streamline our channels and the way we go to market. I think maybe what you're referring to is something like the warehouses, the logistics and those things.
I can tell you More so and product offering.
Right. So we have case erectors and sealers in one of our businesses that are I can tell you one of the largest e commerce retailers out there, we are the supplier of choice for that machine. We are supplying those machines around the world, Europe, Asia, the Americas as they continue to grow because these are very specialized, very easy to interchange, Easy to manipulate as you can imagine e commerce has a wide range of packages, boxes, all of those things that you see on people's porches, We can accommodate all those things. So we have become a supplier of choice for them. You talk about the distribution of COVID vaccines.
I mean if You've seen these in the distribution centers are in small boxes. Again, our machines are helping to put those things out into the world and the big distributors, someone like McKesson, where they're number one supplier for doing these things. So we've had to step up our responses in our product offerings and the delivery of the products, existing products in order to meet that demand. So yes, we are heavily focused on that. Our stretch wrapping product stretch film that we're developing and different, let's say smaller, more individualized pieces of equipment or even hand tools that help those fast moving e commerce markets that have such a wide range of packaging types.
And that's exactly where we're focused.
Thanks very much. Good luck in the quarter, guys.
Thanks, George.
Thank you. And our final question comes from the line of Arun Viswanathan of RBC Capital Markets. Your line is open.
Great. Thanks. Thanks for taking my follow-up here. Just wanted to ask one more question on beverage cans. So When you think about the portfolio, you obviously are making large scale investments here in North America.
You've had some line conversions in Europe And where else do you see kind of opportunities outside of North America? If you were to think about the portfolio as it stands today, Are there any areas where you feel that you're under penetrated that you envision good growth? Yes, maybe you can just stress that first. Thanks.
Well, I think you have our footprints in the three regions, EMEA,
Asia Pacific
and the Americas. I think that we firmly believe that Brazil is going to continue to grow. We've got 3 lines in construction now right now in Brazil. We'll see what the future brings. You can look at the maps in Europe and North America.
And you can see where we have regional holes, if you will. And obviously, we're not just going to build a plant there, so we can say we cover that region. We need an anchor customer and we need a base level of volume to make it make sense to go in a region. But I don't I discussed earlier there were several markets we didn't show on the one slide, be it Sub Saharan Africa, Korea, Japan. I don't think we right now have any designs ongoing into those markets if that's what you're asking.
Great. Thanks. And maybe just one more last one, which is M and A, it's not something that we've really discussed here today. But When you purchased Signode, part of the thinking was that maybe could be a platform for future inorganic growth. Is that still a possibility or how are you thinking about potential inorganic growth opportunities from here?
Yes. So I think That was the statement that was made then. I think the statement is still applicable. I don't think we're going to do anything for the next couple of years in that regard. The focus is on organic growth in beverage and doing everything we can do to generate as much cash flow from the Signode business to return capital to shareholders and pay for that organic growth in beverage.
Having said that, If the environment changes around over the next several years and we're able to demonstrate to you and continue to generate good earnings and cash flow growth in Signode. There always will be opportunities to add to the Signode platform. As I said earlier, if we miss something today, okay, we miss something. But there's a whole host of opportunities. We don't feel encumbered by very few opportunities that we have to take whatever comes along.
There So many opportunities and we have such a great leading position in all of those markets that if we miss something now, that's okay. We'll either get a chance at it later on if it's PE owned or we'll buy something else in the future if that's where it takes us in the future. But for the time being, there's no plans on any M and A in that regards.
Great. Thanks for all the detail and good luck.
Thanks. Thank you very much, Arun. So I think that was the last question. And before we break, I want to thank everybody for joining us. We will come back to you in July to discuss the 2nd quarter results.
And until then, everybody stay safe. Bye now.