‘Terrible’ weather hits Ball’s beverage can sales
The US metal packaging giant recorded pre-tax earnings of $231.9m (€165.9m) during Q3 (up almost 5 per cent on Q3 2010), while global beverage can volumes grew 5 per cent.
Turnover from Q3 operations hit $2.3bn (€1.65bn) up from $2bn (€1.43bn) in 2010; the company has posted sales of $6.6bn (€4.73bn) in the first 9 months of 2011.
Head of packaging Raymond Seabrook revealed during an investor and analyst call that European beverage can volumes suffered an 8 per cent slump during Q3, due to bad weather.
Seabrook explained that Europe was Ball’s most seasonal business – with 70 per cent of trade in the second and third quarters.
He said: “Since we’re… more heavily weighted to beer, it was more beer than soft drinks. And…most of our business is in the North [of Europe].”
‘Really impacted us…’
While countries such as Spain were not affected quite so badly, in England and Northern Europe “they had a terrible July and August for weather, and it really impacted us”, Seabrook added.
CEO John Hayes added that European economic woes were not to blame for poor beer sales in particular: “It really was a weather issue. It was, in Fahrenheit terms, 55/65 degrees and raining the whole time. And that is just not conducive to beer drinking.”
However, in the US the firm grew volumes slightly, while the real success story for Ball was in Brazil (mid-single-digit growth) and China (mid-teen growth).
Nonetheless, the company said that operating earnings in beverage cans were hit during the quarter, due to “out of pattern freight” movements that the firm used to support its “manufacturing realignment products”. An unfavorable sales mix in Brazil also caused problems.
“Out of patterns freight should now subside with the completion of these projects in the US,” Seabrook said.
Ball’s major US capital expenditure projects were virtually complete, Seabrook said. “The new Whitby and Fort Worth can lines have been installed and are running well.
“The new Alumi-Tek bottle can line being installed in our Golden, Colorado plant will be making commercial cans in early November.”
Further new can lines being built in Brazil and Vietnam were also on schedule and budget, Seabrook said, while Ball anticipates its new can plant in Qingdao, China will be online by January 2012.
“We look forward to continuing strong volume growth in China in 2012, and expect to be able to sell every can we make in China again next year,” he added.
Ball predicts brighter performance
Poor weather also impacted Ball’s sales volumes in US metal foods, according to Seabrook.
“The South was too hot and dry and the Midwest too wet. Overall, our volumes in the quarter were off mid-single digits, and manufacturing costs were a little higher due to production curtailments,” he said.
Despite Ball’s disappointing European performance within food packaging, the company remained upbeat regarding its end of year forecast.
Seabrook said: “As we start the fourth quarter (Q4), the weather has been much better in North America and Europe, and so far beverage can sales are ahead of expectations.
He added: “Our plants are performing very well, and we look forward to finishing this year with positive traction as we get set for another very busy year in 2012.”
