Ball saw weaker than expected can sales after the Brazil World Cup

Net earnings were attributable to $147.4m, or $1.04 per diluted share, on sales of $2.2bn, compared to $115.2m, or 78 cents per diluted share, on sales of $2.3bn in the third quarter of 2013.

'Managing the slow growth environment'

Third quarter 2014 net earnings include after tax charges of $9.4m, or 7 cents per diluted share, for business consolidation and other activities.

In a live webcast of the conference call with John Hayes, chairman/president/CEO, Ball Corporation, he said as the company closes out 2014 it remains focused on ‘controlling the things we can control, in managing the slow growth environment’.

"As anticipated, volume comparisons in the third quarter were challenging, led by weaker than expected customer demand for our beverage cans in Brazil following the World Cup and for steel food containers in North America​," said Hayes.

"Though we continue to navigate through aluminum premium headwinds in Europe, our focus on global cost containment, exceptional manufacturing performance and a lower effective tax rate led to improved third quarter results​."

Scott Morrison, senior VP/CEO, Ball Corporation, added its customer base wasn’t one of the official sponsors of the World Cup and ‘the other customers saw a bump in the second quarter and that carried into the third quarter’.

“I think it (weaker can demand in Brazil) really was customer specific and nothing to get too alarmed about. We are only one month into the fourth quarter but what we’re seeing is that it is tracking back into normal​,” he said.

World Cup Brazil

“One of the trends we continue to see in most places is the can continues to take a share from other forms of packaging, particularly in the beer category. There was a bit of a slowdown in the third quarter, in Brazil, for example, the overall market was much more muted after the World Cup, there was a mix issue relative to customer base but I don’t think fundamentally things have changed in a material way​.  

“In Europe, the weather wasn’t all that great and the overall economy is a bit softer than expected but again we don’t see any trends that are different than what we saw. In Asia, China and South East Asia we continue to see beer growing faster than the herbal teas, energy drinks and soft drinks and cans continue to take share from competitive packages in that category​.”

Results for the first nine months of 2014 were net earnings attributable to the corporation of $394.0m, or $2.76 per diluted share, on sales of $6.5bn, compared to $282.3m, or $1.88 per diluted share, on sales of $6.5bn in the first nine months of 2013.

Investing in India

Hayes said segment results for metal food and household products packaging were down in the quarter influenced by mid-to-upper single-digit volume declines for steel food containers and ongoing service center manufacturing inefficiencies in the US.

Results in the third quarter were comparable segment operating earnings of $43.0m on sales of $450.6m, compared to $58.4m in 2013 on sales of $463.6m.  

“Strong European extruded aluminum performance continues and Ball is initiating investment in India to meet increasing demand for extruded aluminum packaging in that region​,” he added.

In the metal beverage packaging, Americas and Asia, comparable segment operating earnings were $133.4m in the third quarter on sales of $1.1bn, compared to $134.8m on sales of $1.1bn in the third quarter of 2013.

“Comparable segment results were roughly flat versus third quarter 2013, as solid beer and specialty container demand in North America were unable to fully offset mid-teen volume declines in Brazil post-World Cup and ongoing softness for 12-ounce carbonated soft drink containers in the US Volumes in China were up mid-single digits​,” said Hayes.

“Relentless focus on cost containment across the segment, progress on additional specialty container investments in the US, and improving volume conditions as Brazil enters its summer selling season position the segment for better performance going forward​.”

For metal beverage packaging in Europe, results in the quarter were comparable segment operating earnings of $63.8m on sales of $489.2m, compared to $60.5m on sales of $488.9m in 2013.

Hayes said progress continues on the Oss, Netherlands, facility, which will begin additional specialty can production during the second quarter of 2015.