Canpack reports Q2 2022 results

Canpack has announced its results for the three and six months ended 30 June 2022 (“Q2 2022”) and its trading update for Q2 and H1 2022.

During the three and six months ended 30 June 2022, beverage can bodies volumes grew 10% and 7%, respectively, in comparison to corresponding periods in 2021.

Canpack’s strong volume performance is due to production from our US facility, which began operations in the second half of 2021, as well as capacity expansion in Colombia and several plants in Europe. However, volumes were partially off-set mainly by the temporary shutdown of our production facility in Ukraine from 24 February 2022 through 11 May 2022.

Net sales increased 31% and 30% for the three and six months ended 30 June 2022, respectively.

This strong performance was mainly driven by 10% and 7% volume growth in the Beverage Can and Ends division in the respective periods, higher LME levels passed through to our customers, increased selling prices per unit and higher transportation charges invoiced to our customers.

Net sales performance was partially offset by unfavourable foreign currency movements during the three and six months ended 30 June 2022 compared to the corresponding periods in 2021.

Cost of sales increased by 42% and 39% for the three and six months ended 30 June 2022, respectively, due to increased beverage can volumes, higher aluminium prices due to higher LME, premium and ingot to sheet conversion, higher labour costs primarily due to inflation, ramp-up costs in the US and increased transportation costs during both periods compared to the prior year.

Adjusted EBITDA decreased to $143 million for the three months ended 30 June 2022 compared to $158 million for the same period in 2021, a decline of 9%, driven by a $10 million unfavourable impact from the depreciation of the euro against the U.S. dollar and a $2 million impact of ramp-up costs at our plant in Olyphant, PA.

Adjusted EBITDA decreased to $274 million for the six months ended 30 June 2022 compared to $284 million for the same period in 2021, a decline of 3%, driven by a $15 million unfavourable impact from the depreciation of the euro against the US dollar and a $10 million impact from ramp-up costs at Olyphant, PA.

Excluding these items, adjusted EBITDA increased to $299 million for the six months ended 30 June 2022 as compared to $284 million for the same period in 2021.

Capital expenditures increased to $147 million and $239 million for the three and six months ended 30 June 2022, respectively, compared to $100 million and $144 million in the corresponding periods in 2021.

These higher levels of capital expenditures in both periods were mainly due to spending for Canpack’S US greenfield projects in Olyphant, Pennsylvania and Muncie, Indiana.

Net cash provided by operating activities decreased by $207 million to a net outflow of $140 million for the three months ended 30 June 2022 from a net inflow of $67 million for the three months ended 30 June 2021.

Net cash provided by operating activities decreased by $176 million to a net outflow of $43 million for the six months ended 30 June 2022 from a net inflow of $133 million for the six months ended 30 June 2021. 

These decreases in cash provided by operating activities were caused by higher working capital employed, mainly as a result of higher trade receivables balances as well as higher raw material and finished goods inventories (due to higher LME and volume levels) during the three and six months ended 30 June 2022 compared to the corresponding period in the prior year.

Free cash flow decreased by $279 million from a $13 million cash inflow for the three months ended 30 June 2021 to a $266 million cash outflow for the three months ended 30 June 2022.

Free cash flow decreased by $270 million from a $48 million cash inflow for the six months ended 30 June 2021 to a $222 million cash outflow for the six months ended 30 June 2022.

This performance was due to lower adjusted EBITDA, increased CAPEX spending and higher working capital employed mainly as result of higher trade receivables balances, higher raw material and finished goods inventories (due to higher LME and volume levels) during the three and six months ended 30 June 2022 compared to the corresponding periods in 2021.

Chief executive officer, Roberto Villaquirán, commented: “I am pleased to report solid first half performance, with revenue growth of 30% and EBITDA of $274 million, an improvement of 5% versus the prior year excluding the adverse impact of foreign exchange rates and ramp-up costs at our Olyphant, Pennsylvania facility.

“In the first half of 2022, we have been able to successfully navigate many challenges, including rapidly increasing inflationary costs, tight supply chains and the impact of the conflict in Ukraine. Canpack’s geographic diversity continued focus on efficiency, margin recovery and leading innovation have enabled us to offset many of these adverse impacts.

“I am especially proud of the tremendous efforts of our teams, who continue to deliver above and beyond in these challenging times. I also want to thank our key partners for their support, as they have enabled us to navigate forward successfully and continue to build on our combined strengths.”

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