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Crown Holdings CEO shrugs off full-year profit slump

By Ben Bouckley , 02-Feb-2012

Despite a slump in 2011 net profits, Crown Holdings chairman and CEO John Conway said new beverage can lines in “promising emerging markets” such as Brazil, Vietnam and China boosted the company’s fourth quarter (Q4) and full-year trading performance.

Announcing its results for the year ending December 31, the New York Stock Exchange (NYSE) quoted company said net sales (after deductions) were up 9% on 2010 levels at $8.64bn (€6.54bn), while Q4 net sales grew to $2.058bn compared to $1.949bn in 2010.

 

Fourth quarter gross profits grew to $289m over $288m in Q4, while gross profit for 2011 improved to $1.348bn over $1.25bn in 2010; metal packaging giant Crown said this reflected global sales unit volume growth, ongoing productivity improvements and $27m of favorable foreign currency translation.

 

However, 2011 net profit fell to $282m compared to $324m in 2010, while net company debt (less cash) grew $605m to $3.19bn. This was due to a $328m of US pension prefunding, the $202m purchase of non-controlling partners’ interests in several operations and a $312m share repurchase by Crown.

 

Seasonally smaller fourth quarter

 

Glossing its Q4 performance, Crown said improved sales were driven by the pass-through of higher raw material costs to customers as well as higher volume sales of beverage cans (+9%).

 

But this was upset by lower volume sales of food cans and a decrease of $27m from foreign currency translation (expressed on Crown’s balance sheet in dollars but denominated in other currencies).

 

Crown generated 74% of net sales beyond its US home in Q4, and Conway hailed the balance sheet contribution from new beverage can lines in developing nations.

 

He said: “Despite the challenging business conditions in Europe and North America, the company performed well overall in our seasonally smaller fourth quarter.”

 

Global beverage can volumes up

 

With global beverage can volumes up 9% in Q4 2011, on top of 13% growth in Q4 2010, Conway said this reflected new capacity in emerging markets and continued strong demand in Brazil and Asia.

 

“More specifically, we enjoyed the contribution of three new beverage can lines in Brazil and one new can line in China that were commercialised earlier in the year, and a new beverage can line in Vietnam, which came online in Q4 of 2010,” he said.

 

New beverage can lines in Slovakia and Cambodia also began commercial production in Q2 and Q4, Conway said, and were continuing to progress well through start up.

 

Looking to the future, Conway added: “We are in the process of constructing three new beverage can plants in China, which are expected to be completed by the end of Q3 2012. We have also announced three additional beverage can lines in China for completion in 2013.”

 

In addition, he added that capacity expansion in Vietnam was expected to come online in Q2 of 2012 and a new beverage can plant completed in Turkey in Q3; Conway said that all these investments were being made to meet local demand in “promising emerging markets”.

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