Silgan expects recent acquisitions to promote profit turnaround
Reporting financial results for the full year, the packaging supplier said it expects an increase in net income per share of between 16 and 21 per cent in 2011. This comes after a dip of around 8 per cent over the past year that was due largely to rationalisation charges.
Net sales in 2010 remained more or less stable increasing just 0.2 per cent to $3.07bn.
Looking ahead, Silgan expects results to be driven forward by the acquisition of dairy closure specialist IPEC Global in November last year and the purchase of the Eastern European supplier of food cans Vogel & Noot in December.
In the metal food container business, 2010 net sales dropped 2.7 per cent to $1.86bn as a result of lower average selling prices, linked to pass-though of lower raw material costs.
Impact of acquisitions
With the addition of Vogel & Noot, Silgan expects net sales in the metal container business to be higher in 2011. The company also anticipates an increase in income from operations.
In the closures business, the acquisition of IPEC Global is expected to contribute strongly to an increase in net sales and income from operations that is expected despite the anticipated pass through of higher resin costs.
And in the plastic containers business, 2010 net sales rose 8.7 per cent because of higher selling prices and volumes, but restructuring charges resulted in a dip in income from operations. In 2011 top line growth is expected to continue and the rationalisation work is expected to deliver its fruits in the form of significantly higher income from operations.
Summarising the performance in 2010 and outlook for the coming year, Silgan CEO Tony Abbot said: “While 2010 was another record year for Silgan, we anticipate continued improvements in each of our businesses and accelerated earnings growth for 2011.
“We positioned the company for double-digit growth in earnings per share through the deployment of capital for strategic acquisitions, share buybacks, organic investments and the redemption of higher cost debt.”
