Buoyant sales offset by higher expenses as Q1 profits dip for Crown

By Rory Harrington

- Last updated on GMT

Related tags: Ho chi minh

Buoyant sales offset by higher expenses as Q1 profits dip for Crown
Inflated costs and adverse foreign exchange conditions saw Crown Holdings post a slight year-on-year profit drop in the three months to the end of March 2012 – despite notching up improved sales figures and increased beverage can volumes.

The US-based metal packaging giant said growth in emerging markets – particularly China and Brazil remained strong. But it noted that economic insecurity in Europe had hit performance in its three-piece food can segment.

Sales up, profits down

The firm reported that net sales grew by 3.5% to $1.95bn, while can volumes for the beverage sector jumped by 7% compared to Q1 2011.

However, selling and administrative expenses reaching $106m – up $4m year-on-year – and a further cost of $4m from unfavourable foreign currency exchange combined to see gross profit for the period drop to $287m compared to $292m a year earlier.

Segment income fell from $190m in 2011 to $181m due to last year’s inventory holding gains that did not recur in 2012, said the company.

Net income soared to $69m compared to just $16m in Q1 2011.

Emerging market growth

Company chief, John W. Conway, said performance in 2012 was “on target”.

“Beverage can volumes were up 7% on top of a 6% increase in the first quarter last year, primarily driven by improved volumes in Europe and from recent capacity expansion projects and strong demand in Brazil, Southeast Asia and China,”​ said the chairman and CEO.

North American Food can business increased volumes over the same period last year with net sales ring from $188m to $200m for the period.

In Europe three-piece steel packaging sales dropped almost 5% to $402m as business was hit by “economic uncertainties”​ in the region, he added.

Conway said figures in emerging market were being driven by the continued emergence of the middle classes in these regions along with a number of plants coming on-stream.

"Our pipeline of emerging market growth projects for beverage cans remains robust and exciting,”​ he said. “During the first quarter, our new plant in Putian, China was commercialized and is on its scheduled learning curve. During the second quarter we expect to begin production at our new plant in Ziyang, China as well as complete the expansion of our plant in Ho Chi Minh City, Vietnam. We expect to commence commercial operations at new plants in Osmaniye, Turkey in the second quarter and Heshan, China in the third quarter. “

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