Crown close beverage can and aerosol plants in Q4
Crown Holdings, Inc. announced its financial results for the fourth quarter and full year ended December 31, 2023.
The announcement included confirmation of a number of plant closures across the world in Q4.
Fourth Quarter Results
Net sales in the fourth quarter were $2,858 million compared to $3,012 million in the fourth quarter of 2022 reflecting higher beverage can volumes in Americas Beverage and favourable foreign currency translation of $42 million, offset by the pass through of $145 million in lower material costs and lower volumes across most other businesses.
Income from operations was $259 million in the fourth quarter compared to $229 million in the fourth quarter of 2022. Segment income in the fourth quarter of 2023 was $382 million compared to $292 million in the prior year fourth quarter reflecting higher beverage can volumes in Americas Beverage and the contractual recovery of prior years’ inflationary cost increases in European Beverage, both more than offsetting the under-absorption of fixed costs.
Timothy J. Donahue, Chairman, President and Chief Executive Officer, said: ”Fourth Quarter segment income improved by more than 30% over the prior year fuelled by margin performance in the Americas Beverage business which benefited from 5% volume growth in North America and 2% growth in Brazil.
“Production schedules were further adjusted during the fourth quarter with significant working capital reduction achieved across the businesses. While fixed cost absorption was considerably lower during the fourth quarter, these efforts contributed to free cash flow well above prior expectations, despite a cash flow reduction of approximately $200 million in off-balance sheet financing arrangements.”
During the fourth quarter, the company made the decision to cease operations at its Batesville, Mississippi beverage can plant and Decatur, Illinois aerosol can plant. Additionally, and as part of a manufacturing modernisation program, the company has ceased operations at its beverage can facilities in Ho Chi Minh City, Vietnam and Singapore with capacity relocated to the company’s new high-speed plant in Vung Tau, Vietnam. These actions will improve operational efficiencies, utilisation rates and fixed cost absorption.
Net income attributable to Crown Holdings in the fourth quarter was $32 million compared to $89 million in the fourth quarter of 2022. Reported diluted earnings per share were $0.27 in the fourth quarter of 2023 compared to $0.74 in 2022. Adjusted diluted earnings per share were $1.24 compared to $1.17 in 2022, below our prior estimates owing principally to under-absorption of fixed costs and lower equity earnings.
Full Year Results
Net sales for 2023 were $12,010 million compared to $12,943 million in 2022, reflecting higher beverage can volumes in Americas Beverage and favourable foreign currency translation of $77 million, offset by the pass through of $720 million in lower material costs and lower overall net volumes.
Income from operations was $1,269 million in 2023, which included $114 million of restructuring charges, compared to $1,336 million in 2022, which included a net restructuring gain of $52 million.
Segment income for the full year of 2023 was $1,546 million versus $1,443 million in the prior year period, reflecting the benefits from higher beverage can volumes in Americas Beverage, the contractual recovery of prior years’ inflationary cost increases in European Beverage and cost reduction initiatives in Transit Packaging, partially offset by lower overall net volumes across most other businesses and a $60 million year over year inventory impact of steel repricing in the Other segment.
Mr. Donahue further commented: “The Company achieved record adjusted EBITDA with an 8% improvement over the prior year, despite challenging macroeconomic conditions in most markets. Operating performance remained strong in 2023, driven by solid results in our three largest businesses: Americas Beverage, European Beverage and Transit Packaging.
“Both Americas Beverage and Transit Packaging achieved record levels of income in 2023, with each gaining 18% versus prior year. European Beverage significantly improved income performance, despite volume softness, primarily through more comprehensive raw material and other inflationary pass-through provisions within contracts.
“Beverage can volumes in North America advanced 6% during the year with Brazil up 4% while shipments in both Europe and Asia-Pacific continued to be soft reflecting weak consumer demand.”
Interest expense was $436 million for the full year of 2023 compared to $284 million in 2022, primarily due to higher interest rates.
Net income attributable to Crown Holdings in 2023 was $450 million compared to $727 million in 2022. Reported diluted earnings per share were $3.76 compared to $5.99 in 2022 and adjusted diluted earnings per share were $5.86 compared to $6.75 in 2022.