Silgan’s metal container business grows by 3.4%
Silgan Holdings has reported full year 2020 net income of $308.7 million, compared to full year 2019 net income of $193.8 million.
“While 2020 presented us all with so many challenges, it also provided the Company with the opportunity to showcase the essential nature of our products, the strength and commitment of our team and the power of our performance-based culture, as the Company delivered record adjusted net income per diluted share of $3.06, a 41.7% increase over prior year adjusted earnings, and record free cash flow of $383.5 million,” said Tony Allott, Chairman and CEO. “Strong demand for our shelf-stable metal food packaging and our health and hygiene products sustained throughout the year, leading us to expect continued strong volumes in 2021.
“Therefore, we estimate adjusted net income per diluted share for 2021 for the Company to be in a range of $3.30 to $3.45, a 10.3% improvement over the record prior year period at the midpoint of this range.
“We also expect to continue to generate significant free cash flow of approximately $380 million in 2021, making acquisitions or other value creating uses of our cash an additional near-term opportunity,” concluded Allott.
Net sales for the full year of 2020 were $4.92 billion, an increase of $432.0 million, or 9.6%, as compared to $4.49 billion in 2019. This increase was the result of higher net sales in all of the businesses.
Net sales of the metal container business were $2.56 billion in 2020, an increase of $84.8 million, or 3.4%, as compared to $2.47 billion in 2019. This increase was primarily the result of higher unit volumes of approximately 14% and favourable foreign currency translation, partially offset by the pass through of lower raw material costs, a continued shift towards smaller metal packages sold and the impact from the renewal of certain significant customer contracts at the end of 2019. Record unit volumes in 2020 resulted primarily from the higher demand in at-home food consumption.
Segment income of the metal container business in 2020 was $246.6 million, an increase of $86.6 million as compared to $160.0 million in 2019, and segment income margin increased to 9.6 percent from 6.5 percent in the prior year. The increase in segment income was primarily attributable to higher unit volumes, $39.5 million of lower rationalisation charges, strong operating performance and higher pension income.
These increases were partially offset by the impact from a continued shift towards smaller metal packages sold and the renewal of certain significant customer contracts at the end of 2019.
Net sales of the closures business were $1.71 billion in 2020, an increase of $306.8 million, or 21.8 percent, as compared to $1.41 billion in 2019. This increase was primarily the result of higher unit volumes of approximately 8 percent and a more favourable mix of products sold.
Net sales of the plastic container business were $651.5 million in 2020, an increase of $40.4 million, or 6.6 percent, as compared to $611.1 million in 2019. This increase was principally due to higher volumes of approximately 11 percent, partially offset by the pass through of lower raw material costs, a less favourable mix of products sold and unfavourable foreign currency translation.
The metal container business is expected to modestly improve in 2021 as compared to 2020 as a result of anticipated continued strong demand levels and strong operating performance.
Segment income in the closures business in 2021 is expected to increase significantly over the prior year primarily due to the inclusion of a full year from the dispensing operations of Albéa acquired in June 2020, as well as the anticipated partial recovery in the second half of the year in the beauty and fragrance markets. Segment income in the plastic container business is expected to benefit from anticipated higher volumes.
The Company expects higher interest expense in 2021 primarily due to higher average outstanding borrowings, partially offset by lower weighted average interest rates.
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