Ball and Silgan push through weak Europe in Q3

By Joe Whitworth

- Last updated on GMT

Related tags Business Packaging Sales

Silgan and Ball report results up to 30 September
Ball Corporation and Silgan Holdings reported solid Q3 results for the three months ending 30 September but both were affected by weak European conditions.

Ball Corporation saw a decrease in operating earnings and sales in the metal beverage packaging in Europe in what the firm described as ‘muted economic growth’​.

Silgan cited sluggish European economic conditions in their overall results but said it was confident it would continue to experience ‘solid​’ returns.

Differing volumes

In Ball’s Metal beverage packaging, Europe, segment operating earnings were $61.8m on sales of $493.4m, compared to $64.9m on sales of $515.7m in 2011.

Beverage can volumes were up mid-single digits through the first nine months and the extruded aluminum packaging volumes in Europe were up 10%.

Metal beverage packaging, Americas and Asia, comparable segment operating earnings were $142.2m in the third quarter compared to $120.1m year-on-year.

Sales volumes in North America were relatively flat year to date compared to last year, the firm said controlling costs and growth in specialty packaging contributed to higher comparable segment operating earnings in the third quarter compared to 2011.

Year-to-date sales volumes in Brazil and China grew by approximately 15%, with new plants in Alagoinhas, Brazil, and Qingdao, China, contributing to improved results.

During the quarter, Ball announced plans to close 12-ounce beverage can and end manufacturing plants in Columbus, Ohio, and Gainesville, Florida.

Silgan's mixed fortunes

Silgan's net sales of the metal container business were $814.1m for Q3 2012, an increase of $15.4m yearoon-year due to unit volumes and higher average selling prices as a result of the pass through of higher raw material costs.

Unit volumes increased in the third quarter primarily as a result of an improved fresh vegetable pack and net sales contributed from the recent acquisition of Öntaş in Turkey.

Income from operations of the metal container business decreased $8.2m to $103.5m, and operating margin decreased to 12.7% from 14%.

Silgan recorded rationalization charges of $1.7m in Q3 2012 from the closing of the Kingsburg, California manufacturing facility and costs of $1.4m associated with the start-up of production facilities in eastern Europe and one facility in the Middle East.

“Our metal container business benefited slightly from domestic fresh pack volumes that were better than the prior year, but were well short of our initial expectations.

“Unit volumes in our closures business benefited from the continuation of strong single-serve beverage volumes in the US, but our European closures operations continued to experience weaker demand patterns which we attribute to general economic conditions.”

Net sales of the plastic container business were $142.7m in Q3 2012, a decrease of $17.1m, or 10.7%, compared to $159.8m in 2011.

This decrease was a result of lower unit volumes due to planned third quarter shut downs by certain customers and lower average selling prices as a result of the pass through of lower resin costs, partially offset by the inclusion of net sales from the plastic food container business acquired from Rexam on 30 August.

Income from operations of the plastic container business for the third quarter of 2012 was $6.2m compared to $3.8m in 2011.

These increases were attributable to continued improvement in operating performance, the favorable comparison of the year-over-year resin pass through lag effect which benefited the third quarter of 2012 and lower rationalization charges, partially offset by a decrease in unit volumes.

“Our plastic container business benefited from improved operating performance and effect of the timing of resin pass throughs, which more than overcame expected volume shortfalls.

“Our recent acquisition of the plastic food container business from Rexam PLC has been integrated into our plastic container segment and we are very pleased with its performance thus far.”

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