Growth capital projects include; an Oss, Netherlands specialty beverage can line and the addition of end manufacturing capacity in an existing Lublin, Poland facility.
Construction of a beverage can plant in Myanmar
The construction of its Monterrey, Mexico two line aluminum beverage can facility, will become operational in early 2016.
Other projects include the construction of a beverage can plant in Myanmar, opening in early 2016; the expansion of its aluminum impact extruded container business in Europe and the construction of an aluminum impact extruded aluminum facility in India which is expected to come online by year-end 2015.
“The company growth capital projects will benefit 2016 and beyond including the next-generation aluminum bottle shaping technology in North America, which is in the midst of ramping up to commercial speeds although it has been a bit behind schedule due to the learning curve of this new technology,” said John Hayes, CEO, Ball Corporation, during a Second Quarter Earnings Conference call.
“In our North American beverage can business we're excited about our new facility starting up in Mexico. Our specialty volumes continue to grow and the announcement regarding our Bristol, Tennessee end manufacturing facility positions us well from a cost point of view going forward.”
Hayes said in terms of construction of its facility in Mexico it expects the first line to be up in early 2016, then the second line, three or four months later.
“We are just starting to cede those things - cede cans from some of our North American facilities into there,” he added.
“We're really focused on getting that plant up and running as soon as possible because we get a lot of operating leverage not only for making cans locally and getting up the learning curve quickly but then also saving from the freight side of the business.”
Four main factors contributed to lower results in the quarter
Ball's comparable diluted earnings per share for second-quarter 2015 were $0.89 versus last year's $1.13.
Four main factors contributed to lower results in the quarter: $0.12 of unfavorable currency effects largely due to a weaker euro, $0.05 for deferred compensation costs associated with two long-standing Board members' retirements, an aluminum premium headwind of $0.04, and $0.02 of start-up cost associated with capital projects coming online in the second half of 2015 and early 2016.
In addition metal food and Americas beverage volumes remain challenging in the second quarter due to a previously disclosed loss of a major food can customer in North America, anticipated lower year-over-year beverage can demand in Brazil following last year's World Cup and continued weakness in US carbonated soft drink.
In terms of its European beverage comparable earnings, figures were down just over $14m in the second quarter; however, on a constant currency basis they were flat year over year.
“In European beverage we're facing a very tight supply-demand situation but we expect tailwinds related to aluminum premium to occur and our cost-out work continues to make progress,” said Hayes.
“In Brazil we're cycling off some very difficult comps and the economy remains weak with GDP expected to decline this year and inflation over 9%.”
Asia difficult pricing environment
He said in Asia, the company has had good cost management ongoing in a difficult pricing environment and is fundamentally sold out.
“However, we have no expectations of investing in additional capacity unless we can generate appropriate returns,” said Hayes.
“On the food side of the business, the loss of a large customer and a very challenging pricing environment due to a new competitor is forcing us to batten down the hatches and it will be challenging for the foreseeable future.
“However, as we look to 2016 we do have easier comparisons to look forward to and we have the Olympics in this region which should be a positive.”