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Silgan revises earnings estimates as volumes hit

By Joe Whitworth , 19-Dec-2012
Last updated the 19-Dec-2012 at 13:32 GMT

Silgan Holdings has revised its earnings estimates for the year due to lower volumes for metal food containers.

The US-based firm has also extended the expiration date of its tender offer to purchase up to $250m of its common stock to 5 February 2013.

It revised its estimate of adjusted net income per diluted share for the full year of 2012 to a range of $2.65 to $2.75 from a range of $2.80 to $2.85. The estimate compares to adjusted net income per diluted share of $2.63 in 2011.

The company also revised its estimate of adjusted net income per diluted share for the fourth quarter of 2012 to a range of $0.43 to $0.53 from a range of $0.58 to $0.63.

Low volumes

Tony Allott, president and CEO of Silgan Holdings, said that volumes of metal food containers in Q4 will be lower than expected but higher year-on-year.

“Additionally, product mix and manufacturing costs have lagged our expectations during the fourth quarter, partly as a result of costs associated with hurricane Sandy which caused the extended shutdown of two facilities.

“Since the fourth quarter is one of our slowest seasonal periods, lower than anticipated volumes have a significant impact on the ability to absorb manufacturing overhead costs.

“As a consequence of our revised earnings estimates, we are extending the expiration date of our tender offer to February 5, 2013, five business days after our year end earnings announcement.”

Tender offers for shares

The company also announced that it is extending the expiration date of its tender offer to purchase up to $250m of its common stock, at a price not less than $40.75 per share or greater than $45.25 per share.

The tender offer was previously due to expire at 5:00pm., New York time, on 18 December but will be extended until 5:00pm., New York time, on 5 February.

Mixed performance

The firm had seen mixed fortunes throughout the year, highlighted with net sales for Q3 in the metal container business of $814.1m, an increase of $15.4m year on year, while the plastic container business sales were $142.7m, which was a 10.7% decrease year on year.

Silgan acquired Rexam’s plastic thermoformed business for $250m in July this year and at the time of announcing the Q3 results, the company said it was ‘very pleased’ with its performance so far.

Silgan will release its fourth quarter and full year 2012 earnings results on 29 January 2013.

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