Ball, a provider of sustainable packaging solutions, has reported financial results for the second quarter 2018.
Image: Ball has reported positive second quarter results. Photo: courtesy of Svilen Milev.
The company has reported, on a US GAAP basis, second quarter 2018 net earnings attributable to the corporation of $119m (including the net effect of after-tax charges of $88m, or 24 cents per diluted share for business consolidation and other non-comparable costs) or 34 cents per diluted share, on sales of $3.1 billion, compared to $99 million net earnings attributable to the corporation, or 28 cents per diluted share (including the net effect of after-tax charges of $91 million, or 25 cents per diluted share for business consolidation, debt refinancing and other non-comparable costs), on sales of $2.9 billion in 2017.
Results for the first six months of 2018 were net earnings attributable to the corporation of $244 million, or 68 cents per diluted share, on sales of $5.89 billion compared to $167 million, or 47 cents per diluted share, on sales of $5.33 billion for the first six months of 2017.
Ball’s second quarter and year-to-date 2018 comparable earnings per diluted share were 58 cents and $1.09, respectively versus second quarter and year-to-date 2017 comparable earnings per diluted share of 53 cents and 91 cents, respectively.
Earnings per share figures include the impact of the company’s two-for-one stock split effective May 16, 2017. References to volume data represent units shipped in respective periods. Details of comparable segment earnings, business consolidation activities and other non-comparable costs can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release.
“Positive momentum in our businesses continues. Our improved second quarter results were driven by excellent operational performance, solid global demand for environmentally friendly aluminum packaging, achieving more value for our innovative packages and lower corporate costs.
Anticipated start-up costs, out-of-pattern freight and declines in our U.S. beverage can volumes, as well as the short-term impact from the Brazilian truckers’ strike, were effectively managed by the respective businesses during the quarter and we expect that these issues should moderate in the second half,” said John A. Hayes, chairman, president and chief executive officer.
“Our global team continues to execute. We successfully ramped up production at two new beverage can facilities during the quarter, advanced progress on network optimization projects to align our beverage can portfolio in the U.S. and Brazil, and our aerospace business continued to secure additional contracts to further grow our contracted backlog.
“With this momentum and the proceeds from the U.S. steel food and steel aerosol asset sale, we are expanding the 2018 return of capital to our shareholders via share repurchases and dividends to be in excess of $800 million. In addition, we continue to reaffirm our financial goals of $2 billion of comparable EBITDA and in excess of $1 billion of free cash flow in 2019.”
Beverage packaging, North and Central America, comparable segment operating earnings in the second quarter of 2018 were $157 million on sales of $1.2 billion, compared to $156 million on sales of $1.2 billion in the second quarter of 2017. For the first six months, comparable segment operating earnings were $270 million on sales of $2.3 billion compared to $279 million on sales of $2.1 billion during the same period in 2017.
Year-over-year results grew slightly on better operational performance and improved value received for our products despite start-up costs related to our new Goodyear, Arizona, facility, lower domestic beer volumes and higher freight associated with the multi-plant network optimization program.
Overall segment volume was down 3 percent, with growth in Mexican beer imports, craft, carbonated soft drinks, energy and sparkling water offset by anticipated U.S. megabeer declines and our continuing value over volume approach to standard 12-ounce packaging in select U.S. locations. We expect these trends to improve in the second half of the year.
During the quarter, our new specialty beverage can manufacturing facility in Goodyear, Arizona, began production on time and on budget and the Birmingham, Alabama, beverage can end making facility ceased operations. The net $50 million of annual fixed cost savings associated with the North American optimization program is anticipated to benefit fourth quarter 2018 and beyond.
Beverage packaging, South America, comparable segment operating earnings in the second quarter of 2018 were $66 million on sales of $379 million, compared to $69 million on sales of $349 million in the second quarter of 2017. For the first six months, comparable segment operating earnings were $164 million on sales of $838 million compared to $127 million on sales of $720 million during the same period in 2017.
Second quarter segment volumes were up more than 4 percent with favorable Brazilian beer consumption momentum continuing in 2018 combined with the packaging mix shift from two-way glass to beverage cans continuing across South America.
Announced can line expansions in Argentina and Paraguay and the relocation of equipment from the recently announced closure of our Cuiabá, Brazil, beverage can facility will serve the growing demand for aluminum beverage packaging across our customer base. During the quarter, segment results were negatively impacted by an 11-day Brazilian truckers’ strike. In the second half, the expected transition away from third-party end sales as part of the Rexam acquisition will affect comparability.
Beverage packaging, Europe, comparable segment operating earnings in the second quarter of 2018 were $75 million on sales of $703 million, compared to $63 million on sales of $665 million in the second quarter of 2017. For the first six months, comparable segment operating earnings were $135 million on sales of $1.3 billion compared to $110 million on sales of $1.2 billion during the same period in 2017.
Comparable second quarter segment earnings reflect the favorable impact of continental Europe and Russian beverage can demand and ongoing operational efficiencies related to optimizing our plant network. Segment volume was up 6 percent in the quarter. The company’s new aluminum beverage can facility near Madrid, Spain, started production late in the quarter.
Food and aerosol packaging comparable segment operating earnings in the second quarter of 2018 were $32 million on sales of $304 million, compared to $25 million on sales of $274 million in the second quarter of 2017. For the first six months, comparable segment operating earnings were $55 million on sales of $579 million and $46 million on sales of $546 million during the same period in 2017.
Second quarter results include the year-over-year improved manufacturing performance across our U.S. tinplate packaging business and higher food can demand in advance of recently implemented tinplate steel surcharges. Global aluminum aerosol volumes increased 5 percent in the quarter with favorable market trends in North America, Europe and India for high quality, innovative packaging serving the personal care market.
Aerospace comparable segment operating earnings in the second quarter of 2018 were $24 million on sales of $290 million, compared to $26 million on sales of $257 million in the second quarter of 2017. For the first six months, comparable operating earnings were $49 million on sales of $554 million and $47 million on sales of $493 million during the same period in 2017.
The aerospace segment finished the second quarter with increased contracted backlog of $1.85 billion following the recent contract award of the Wide Field Instrument (WFI) Optical Mechanical Assembly (WOMA) for WFIRST, NASA’s next observatory designed to answer essential questions in the areas of dark energy, exoplanets and infrared astrophysics using the WFI.
Year-to-date, the company has hired approximately 540 people into this business with an additional 200 to 400 employees required within the next twelve months. Colorado facility expansions in Westminster and Boulder, Colorado, are on track for completion in the fourth quarter of 2018.
Outstanding requests for bids and proposals still remain high and contracts already won, but not yet booked into current backlog, are approximately $4.3 billion. Program ramp ups are on schedule though labor base costs impacted the quarter slightly. Quarter-over-quarter and year-over-year segment earnings improvement are anticipated in the second half of 2018 and in 2019 and beyond.
Ball Corporation supplies innovative, sustainable packaging solutions for beverage, personal care and household products customers, as well as aerospace and other technologies and services primarily for the U.S. government.
Source: Company Press Release