Packaging acquisitions boost Silgan 2011 results
The acquisition of packaging firms Vogel & Noot, IPEC, and DGS and a price increase, as a result of higher raw material and manufacturing costs, have contributed to an overall net sales boost of 14.3% compared with results for 2010.
Reporting financial results for 2011, the packaging supplier revealed net sales of $3.51bn for 2011 – an increase of $437.7m on 2010.
Operating income for 2011 increased by $70.8m to $354.1m – a 25% year-on-year boost.
Results for the fourth quarter of 2011 were, however, down on results in Q3.
Plastic and metal container boost
Improved net sales for its plastic and metal container businesses and the recent acquisition of can-making operations for Nestle Purina contributed to the growth, the company added.
Metal container sales received a boost of 18.6% with net sales for the business reaching $2.21bn from $1.86bn in 2010.
This was primarily due to the inclusion of net sales from Vogel & Noot and a higher average selling price as a result of higher raw material and manufacturing costs.
“Income from operations in the metal container business increased $23.7m to $256.3m for the year. The increase in operating income was primarily a result of the inclusion of Vogel & Noot, improved manufacturing efficiencies and on-going cost controls, and the benefit of the timing of certain contractual pass-through of changes in manufacturing costs, partly offset by lower volumes and higher rationalisation costs,” said Silgan president and CEO Tony Allott.
Net sales for the plastic containers business were $609.9m in 2011 – a $21.3m increase on the $588.6m achieved in 2010.
“As expected, 2011 benefited from significant investments made in the latter part of 2010 and throughout 2011 as we deployed capital towards acquisitions and organic investments, improved our debt capital structure, repurchased shares and initiated several restructuring plans.”
The company has also begun commercialisation at a new food can manufacturing facility in the Krasnodar region of Russia.
Q4 income decrease
Net sales for Q4 increased by $124.3m to $835.9m compared to the same period in 2010.
“Sales for the quarter increased $124.3m versus the prior year, driven primarily by the inclusion of sales from acquired businesses and higher average selling prices from the pass-through of higher raw material and other manufacturing costs,” said the company’s executive vice president Robert Lewis.
The company reported improved net income for the fourth quarter of 2011 compared with the same period in 2010 – increasing from $16.4m to $37.1m.
However, results for the quarter signify a decrease on Q3 results which reached $78.8m – almost double what was achieved in Q4.
Looking ahead to 2012
The company is expecting 2011 growth to continue into 2012, with its recent acquisitions and investments playing a big part in forecasted profits.
“Reflected in our estimate for 2012 are the following: we’re forecasting further improvements in the metal container business as a result of anticipated volume improvement, continued manufacturing improvements and other benefits from capital investments and the annualised impact of Vogel & Noot and Nestle Purina PetCare acquisitions,” added Lewis.
