Ball reports drop in earnings, new plant for Poland

By Dominique Patton

- Last updated on GMT

Related tags: Cent, Income, Production line, Tin can

US packaging firm Ball will spend more than $300 million on
expanding its beverage can capacity in Europe and Asia this year,
as it closes loss-making operations in the Americas.

The company said yesterday it was seeing strong demand for cans across the globe, and announced plans to build a new beverage can plant in Poland. It has recently announced plans for new beverage can capacity in India too. But earnings were down at its Americas units, with chief executive David Hoover promising to improve performance in plastic packaging and food cans. "While we generally are pleased with our results from 2007, we have identified and are executing on numerous initiatives that we believe will lead to further improvements in 2008 and better position us for the longer term,"​ said chief executive David Hoover. Consolidation led to a more than 30 per cent drop in earnings for the fourth quarter of 2007. Overall the company reported full-year 2007 net earnings of $281.3 million, down 15 per cent from $329.6 million. Full year sales were up 11.6 per cent to $7.39 billion. Sales of metal beverage packaging in Europe and Asia were strong during 2007, with improved results throughout Europe and in China. The segment generated a 13.9 per cent rise in income in the fourth quarter, on a 29 per cent increase in sales. Earnings for the year were down 5 per cent to $256.1 million as the prior year included a pre-tax property insurance gain of $75.5 million related to a fire in a German plant, said Ball. "We currently are speeding up certain production lines inGermanyandPolandin advance of the busy 2008 summer selling season,"​ said Hoover. The new Poland plant will be built in Lublin, near the borders of Belarus and Ukraine. It will initially have one production line with an annual capacity of approximately 750 million cans per year and is expected to begin production in the first half of 2009. It follows investment from other leading can makers in the region, where rising incomes are driving demand for convenient packaging. Sales of cans in the Americas were also up, rising 6 per cent over the year to $2.76 billion thanks to strong demand for specialty size cans, said Ball. Earnings were hit by a $85.6 million charge for a customer settlement, falling 20 per cent to $213.6 million. Work is on schedule at a new 24-ounce can production line in the Monticello, Indiana beverage can plant to keep up with the growing demand for the container in energy drinks and beer, said Hoover. The firm's metal food and household products packaging unit for Americas reported a loss of $8 million for the year, owing to business consolidation costs of $44.2 million, while losses reached $33.4 million for the fourth quarter. Hoover said further restructuring of this unit, announced early in the fourth quarter, had begun and would include closing aerosol can production plants in California and Georgia and exiting the custom and decorative tinplate can business. In plastic packaging in the US, earnings fell 8.5 per cent to $25.9 million despite a rise of 8.5 per cent in sales to $752.4 million. Income was down by 12 per cent in the fourth quarter at this segment. Hoover said the segment results were at "unacceptable levels"."We will continue to emphasize our heat set and other higher margin plastic containers while pursuing price increases for commodity plastic containers for water and carbonated soft drinks, where returns are well below our cost of capital and must improve." ​ The company expects capital spending in 2008 to exceed $300 million, partly due to lower than expected expenditures in 2007 and new projects in the global beverage can business where about three quarters of the spending will take place. "We have attractive opportunities for growth in our beverage can operations worldwide, and much of our capital spending will be directed at these opportunities,"​ Hoover said.

Related topics: Processing & Packaging

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