Ball quarterly sales reach $1 billion

Related tags Ball packaging europe

Ball, the global beverage packaging provider, has increased its
sales driven largely by last year's acquisition of Ball Packaging

Ball, the global beverage packaging provider, has increased its sales driven largely by last year's acquisition of Ball Packaging Europe.

The company reported first quarter earnings of $31.5 million (€28.6m) on sales of $1.07 billion, compared to $27.5 million on sales of $876 million in the first quarter of 2002. The 2003 results include an after-tax charge of approximately $900,000 related to the closure of Ball's food can manufacturing plant in Arkansas, US.

The first quarter of 2003 included full period results from Ball Packaging Europe, acquired in December 2002. Sales were records for a Ball first quarter, even though Ball Packaging Europe, the second largest manufacturer of beverage cans in Europe, was up against some tough market conditions, including one-way packaging in Germany. With the European addition, Ball now reports results for three segments instead of the previous two. The former packaging segment has been divided into North American packaging and international packaging. The aerospace and technologies segment remains the same.

R. David Hoover, chairman, president and chief executive officer, said that very strong results from the aerospace and technologies segment contributed significantly to the improved results in 2003 over the first quarter of 2002. Aerospace sales and operating earnings were both records for any quarter, Hoover said.

"We had a challenging quarter for our packaging segments, as we knew we would, and we are pleased with the way our operations are meeting those challenges,"​ Hoover said.

Earnings in the North American packaging segment were $55.6 million, including the charge to close the Blytheville plant, compared to $55.3 million in the first quarter of 2002. Sales were down to $711 million compared to $718 million a year ago.

"Adverse winter weather in several regions of the country contributed to lower beverage can sales for us and the industry in the first three months of 2003, however, operating results were higher,"​ Hoover said. "Our food can sales and operating results were lower due to start-up delays and costs associated with our new two-piece metal food can manufacturing line in Milwaukee and price/cost compression in the marketplace. We continue to work on the line to get it to our operating standards and have had some of our new employees from our European acquisition in Milwaukee helping start up that line. We anticipate steady improvement in its performance. Sales of plastic bottles, primarily to the soft drink and water industries, increased over the same period in 2002, though the growth was less than anticipated due to the harsh winter weather in many areas."

During the quarter Ball acquired Metal Packaging International (MPI), a producer of around two billion beverage can ends, for approximately $28 million and announced that it would consolidate MPI's volumes into existing Ball plants and close MPI's lone manufacturing facility. Ball also announced the closure of the Blytheville plant, its smallest metal food can manufacturing facility. The closure will occur in the second quarter.

The new international packaging reporting segment is made up of Ball Packaging Europe and Ball Asia-Pacific. For the quarter, segment earnings were $14.3 million on sales of $229 million.

International packaging segment results were hurt by the Jan. 1, 2003, imposition of a deposit on all one-way beverage packaging in Germany, where four of Ball Packaging Europe's 12 manufacturing plants are located. The imposition of the deposit before an effective nationwide return system was in place resulted in a sharp decrease in sales of beverages in one-way packages in Germany. The situation is expected to improve once the return system is in place and operating.

"The rest of Ball Packaging Europe had a good first quarter and we expect German results to improve once the deposit transition period is over,"​ Hoover said. "Sales in China were flat compared to a year ago while operating results were higher in the first quarter as we continue to see the benefits of the major restructuring we did to our operations there. It is too early to determine what the consequences of the SARS outbreak will be on our China business, but thus far it appears to have been minimal."

Ball Corporation​ is one of the world's leading suppliers of metal and plastic packaging to the beverage and food industries. The company also owns Ball Aerospace & Technologies Corp. With the addition of Ball Packaging Europe, acquired in December 2002, Ball expects to report 2003 sales of approximately $5 billion, of which approximately $4.5 billion will come from its two packaging segments and $500 million from its aerospace and technologies segment.

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