Global beverage can volumes up 6%, says Ball
Ball Corporation has released its Q1 2021 report, with strong beverage can volume, a successful Aluminium Cup roll-out, and demand for sustainable aluminium packaging, all factors in a strong set of figures for Q1.
Ball’s first quarter 2021 comparable net earnings were $240 million, or 72 cents per diluted share, compared to $202 million, or 61 cents per diluted share in 2020.
During the quarter, the company increased comparable earnings per diluted share by 18% on 8% global beverage volume growth and maintained strong aerospace backlog. In addition to focusing on team safety, the company’s EMEA and South American beverage can businesses experienced notably stronger comparable earnings, the new beverage can manufacturing facility in Glendale, Arizona, started production and the Ball Aluminum Cup began national rollout distribution at retail late in the quarter. Significant demand growth for sustainable aluminium packaging continues to outstrip global supply and the cadence of capital investments to address contracted customer demand is accelerating.
“Positive momentum continues across our company despite anticipated startup costs and isolated operational impacts in our North American beverage can business due to winter storms and aerospace customer supply-chain disruptions experienced during the quarter. Global projects in North America, South America and EMEA are expected to add at least 25 billion units of contracted beverage can capacity by year-end 2023 (off a 2019 base of 100 billion units), projects are on track and will contribute meaningfully to 2021 and beyond,” said John A. Hayes, chairman and chief executive officer.
“Our focus remains on our employees’ safety, training and development, the efficient startups of EVA-enhancing capital projects to serve our customers’ growth, the successful retail launch of the Ball Aluminium Cup and delivering value to our stakeholders in 2021 and beyond,”
Beverage Packaging, North and Central America
Beverage packaging, North and Central America, comparable segment operating earnings for the first quarter 2021 were $140 million on sales of $1.3 billion compared to $146 million on sales of $1.2 billion in 2020.
Comparable segment earnings reflect 6% volume growth, the benefits from new contractual terms and higher specialty mix being more than offset by startup costs associated with three new manufacturing plants and the impact of lost production from winter storms.
Demand for aluminum beverage cans and bottles continues to outstrip supply across North America. The company’s new Glendale, Arizona, facility successfully started up during the first quarter, and the company anticipates the new Pittston, Pennsylvania, facility to start beverage can production by the end of second quarter. The company further anticipates Glendale and Pittston to exit 2021 with four lines operational in each facility. As needed, both facilities are scalable to add incremental capacity throughout 2022 and beyond to serve consumer’s growth for sustainable packaging, new product introductions and to offset cans currently being imported.
The timeline for the company’s recently announced construction of a new aluminum end manufacturing facility in Bowling Green, Kentucky, has been accelerated to align end capacity with even higher can demand. Bowling Green end manufacturing is now scheduled to begin in late 2021. Full-year 2021 startup costs are still anticipated to be in the range of $50 million.
Beverage Packaging, EMEA
Beverage packaging, EMEA, comparable segment operating earnings for first quarter were $100 million on sales of $796 million compared to $68 million on sales of $669 million in 2020.
First quarter comparable segment earnings reflect 5% segment volume growth, improving specialty mix and strong consumption trends in the U.K., Nordics, Egypt and Russia. Packaging mix shift to sustainable aluminum cans for traditional and non-traditional beverages continues to accelerate, and demand is outstripping supply. Despite protracted country-by-country COVID-19 lockdowns, additional beverage can line investments in the U.K., Czech Republic and Russia are largely on track to support regional contracted demand in 2021 and beyond.
During the quarter, the segment launched the world’s first ASI (Aluminum Stewardship Initiative) certified can with a major customer in Spain. The cans are certified according to ASI’s standards for responsible production, sourcing and stewardship.
Beverage Packaging, South America
Beverage packaging, South America, comparable segment operating earnings for first quarter were $93 million on sales of $487 million compared to $63 million on sales of $405 million in 2020.
Segment volume ended the quarter up 14% and speciality mix also increased to more than 65%. First quarter earnings reflect favourable price/mix and exceptional operating performance despite COVID-19 recurrences across South America. In Brazil, demand remains very strong and continues to outstrip supply as recyclable aluminium beverage packaging is favoured over other substrates.
To support contracted volume growth and can-filling investments across South America, multiple can manufacturing investments are anticipated across our existing footprint in 2021 and beyond. The previously announced multi-line facility in Frutal, Brazil, is on schedule to begin production in the second half of 2021.
In addition to undistributed corporate expenses, the results for the company’s global aluminum aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and investments in the company’s new aluminum cup business continue to be reported in other non-reportable.
First quarter results reflect higher year-over-year undistributed corporate expenses and marketing costs associated with the aluminum cup national retail launch. During the quarter, the company’s global aluminum aerosol volumes increased low-single-digits and customers continue to pursue sustainable packaging solutions including the company’s new Infinity aluminum bottle.
“Global demand for aluminum packaging continues to grow. In 2021, we are allocating in excess of $1.5 billion in capital to support EVA-enhancing projects at returns higher than our 9% after-tax hurdle. As our cash from operations continues to increase and we maintain optimal net debt to comparable EBITDA ratios, we will accelerate return of value to shareholders via dividends and share repurchases,” said Scott C. Morrison, executive vice president and chief financial officer.
“We continue to achieve at a high level due to our team’s ability to adapt and work safely together. Our Drive for 10 vision and enduring culture allow us to successfully navigate short-term challenges and invest in long-term opportunities to enable growth for sustainable aluminum packaging and aerospace technologies. In 2021 and beyond, we look forward to growing our cash from operations and EVA dollars on an even larger capital base while returning capital to our shareholders and exceeding our long-term diluted earnings per share growth goal of at least 10 to 15%,” Hayes said.