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Crown cautious in ‘sluggish’ times

By Joe Whitworth , 18-Oct-2012
Last updated on 18-Oct-2012 at 11:52 GMT

Crown Holdings has postponed plans to build two new plants in China as it continues to face sluggish economic conditions and unfavourable weather in its key markets.

The beverage can giant said they had indefinitely postponed the plans to build two new sites in Nanning and Xinxiang, China “consistent with our prudent approach to investing capital.”

However, the plant in Heshan, China commenced commercial beverage can production in the third quarter on plan and on budget.

The announcement came as the firm reported that net sales and gross profit fell compared to 2011 levels in their third quarter results.

Sales for the Americas Beverage, North America Food, European Food and European Speciality Packaging all fell while European Beverage stayed the same.

The firm cited unfavourable currency translation as the reason net sales fell from $2.4bn in Q3 2011 to $2.3bn in the quarter for the three months ending 30 September 2012.

Segment income for North America Food, European Food and European Speciality Packaging all fell but Americas Beverage and European Beverage recorded growth.

Beverage can volumes up

John W. Conway, chairman and chief executive officer, said: "Globally, beverage can volumes were up 5% in the quarter with the Americas, Europe and Asia all contributing to the growth.

"Over the next twelve months we expect to commercialize another 3.6 billion in annual beverage can production capabilities in still growing markets in Cambodia, China, Malaysia, Thailand and Vietnam.”

Q3 gross profit was $369m to $396m, reflecting $16m in unfavourable foreign currency translation.

Conway added the firm faced continuing sluggish economic conditions and unfavourable weather in many of their markets.

“The company continued to benefit from the strength of the developing markets in which we prudently expanded over the last several years, the diversification of our product offerings and geographic footprint and our constant focus on cost containment.”

Nine month report

Global sales unit volumes offset unfavourable foreign currency translation for the first nine months of 2012 at $6.4bn compared to $6.6bn for the same period in 2011.

Crown said inventory holdings gains that did not recur this year led to a fall in gross profit to $996m compared to $1.1bn last year.

European segment income fell in Beverage, Food and Speciality Packaging while North Americas Beverage and North America Food recorded growth but overall income fell $53m to $708m.

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