Crown Holdings CEO coy on PepsiCo beverage spin-off rumors
On Wednesday Crown Holdings reported net sales in Q2 2013 of $2.223bn ($2.184bn 2012) but net income dipped slightly to $133m ($134m: 2012) with performance in line with expectations.
Discussing Crown’s Q2 H1 2013 earnings with analysts, chairman John Conway was asked the following question by Ghansham Panjabi from Robert W. Baird & Co.
“John, there’s been some speculation on one of the larger soft drink customers in the industry reshaping their portfolio and potentially separating their beverage business.
“If that were to occur, can you help us think through how this would impact the industry?”
‘More effective global competitor’
Clearly uncomfortable, Conway replied: “I mean, if the outcome were that the company in question became a more effective global competitor, given all, particularly the international growth opportunities, I think it could be, generally speaking, positive.”
“But Ghansham, I really couldn’t say.”
Interviewed by CNBC on Wednesday, Nelson Peltz (who has a $1.5bn stake in PepsiCo and a $1.3bn stake in beverage and snacks giant Mondelez) urged PepsiCo to acquire the snacks giant.
“Plan A is that Pepsi acquires Mondelez. And then they spin-off the entire beverage business,” Peltz said, claiming he was friends with PepsiCo chief Indra Nooyi and had had discussions with PepsiCo management, who nonetheless weren’t keen on his plan.
Targeting promising growth markets
Conway said Crown continued to benefit from beverage can capacity expansions targeted at the most promising growth markets.
“During Q2 we began commercial production at new beverage cans in Danang, Vietnam and Bangkok, Thailand, and last week began production at our new plant in Sihanoukville, Cambodia,” he said.
Crown’s Americas Beverage segment volume fell 0.9%, but segment income improved due to efficiency improvements; North American volumes were down 1% and Latin America sales flat.
The firm’s European performance was brighter with beverage can sales up 4.5% in Q2, with improved manufacturing performance, volumes from a new Turkish plant and higher volumes in Crown’s Mediterranean operations offsetting softness in Northwest Europe.
Beverage can sales in Asia-Pacific also rose 13% in Q2 compared to the same period in 2012.
