Will soft drinks cost standard cans a fortune? Ball Packaging ponders
The company’s full-year 2013 results announcement yesterday revealed sales down 2.35% at $8.5bn, but net earnings rose slightly to $406.8m compared to $403.5m in 2012.
John Hayes, CEO of Ball Packaging, said: “Specialty can growth in the Americas, improved cost management in our global packaging operations and solid program execution in our aerospace operations led to results that exceeded our expectations.”
2014: Key year for standard cans
Hayes blamed carbonated soft drinks (CSDs) for softness across Ball’s “liquid consumption business”.
George Staphos, an analyst at Bank of America, Merrill Lynch, asked Hayes on a later call if there was a volume decline in standard cans in the next couple of years “that would…create diseconomies for you in terms of managing the remaining 12oz demand in the market?”
Noting that Ball had converted some 12oz capacity to custom cans, Staphos asked if there were a risk of the firm saturating the custom can market from a capacity standpoint.
“I think 2014 is going to be real important to help answer that question because you’re going to see natural sweeteners start to come out,” Hayes said.
“And the question is – can the soft drink industry really strive to arrest these declines they’ve been having,” he added.
Ramping-up specialty supply
Hayes said Ball Packaging had been disciplined over the past few years, closing sites in Columbus, Gainesvillle (where can ends were made) and Milwaukee.
“But at the same time, we also took some existing 12oz and converted…we’re very cognizant of maintaining a tight supply/demand, at least in our system,” he added.
During Q4 2013 Ball said it saw double-digit growth for specialty cans in the Americas.
Its metal beverages Americas and Asia segment grew earnings $9m year on year but full-year earnings fell $11m, with sluggish standard can sales volumes in the CSD category.