Crown Holdings sees Q2 profits dip due to weak European demand

By Joe Whitworth

- Last updated on GMT

Related tags: Ho chi minh

Crown Holdings CEO and chairman John Conway
Crown Holdings CEO and chairman John Conway
Crown Holdings was hit by weak demand in Europe as Q2 gross profit fell $31m to $340m (€277m) and revenue dropped 4% to $2.18bn.

The firm said the figures were down compared to Q2 2011 due to lower European profits, reduced production activity for three-piece steel products and unfavourable currency translation. 

Segment income was 11.4% of net sales compared to 11.9% in the second quarter of 2011. 

The company’s net Q2 income rose by $5m to $134m in the three months to 30 June and global beverage can volumes rose 5% in the quarter.

Americas Beverage was the only reportable segment to increase net sales year-on-year as North America Food, European Beverage, European Food and European Speciality Packaging all fell. 

In terms of income, Americas Beverage and North America Food rose slightly but Beverage, Food and Speciality Packaging operations in Europe all dropped, resulting in total segment income falling $21m to $250m.

Site upgrades

During the quarter, plants in Ziyang, China and Osmaniye, Turkey were commercialised, the expansion was completed at Ho Chi Minh City, Vietnam and commercial production of beverage can ends began in Heshan, China.

John W. Conway, Crown Holdings chairman and chief executive officer, said: "We are pleased with overall performance in the second quarter in the context of challenging European economic and weather conditions​.  

In the Americas and Asia we continued to perform well. Importantly, the results demonstrate the benefit of our product and geographic diversity. 

“Globally, beverage can volumes grew 5%, driven by our emerging market capacity expansion program over the last few years​.”

Conway added that the commercial production of beverage cans in Heshan will commence in the third quarter. 

“In May, we announced a new beverage can plant in Sihanoukville, Cambodia which is expected to be operational in the 2013 third quarter.  All of these projects are to meet customer demand in these growing markets. 

“Equally important, we are committed to the conservative deployment of capital and remain focused on the opportunities and challenges in our markets around the world​.”

Six month results

In the six months to 30 June, gross profit fell $36m to $627m reflecting inventory holdings gains from the first quarter of 2011 that did not recur in 2012 and unfavourable foreign currency translation.

Segment income decreased $30m to $431m which Crown attributed to inventory holding gains and $11m of unfavourable foreign currency translation.

Net income attributable to Crown Holdings for the first six months of 2012 rose to $203m compared to $145m in the first six months of 2011.

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