Ball reports on Q2 results
Ball Corporation published its second quarter 2016 net earnings attributable to the corporation of $369 million. Comparable earnings per diluted share for the second quarter and year to date 2016 were $1.05 and $1.63, respectively, versus second quarter and year to date 2015 comparable earnings per diluted share of 89 cents and $1.57, respectively.
“Our strong second quarter results, the completion of legacy metal packaging growth projects, a robust aerospace backlog and the recent Rexam acquisition provide a very solid foundation for a multi-year, value compounding growth period for our company and our shareholders,” said John Hayes, chairman, president and chief executive officer. “One month into the acquisition integration, business related services and manufacturing operations are running smoothly. The past 17 months of planning have evolved into action, and the synergy execution process is well underway in all value capture work streams.”
Metal beverage packaging, Americas and Asia, comparable segment earnings in the second quarter 2016 were $137 million on sales of $1.1 billion, compared to $126 million on sales of $1.1 billion in the second quarter 2015. For the first six months, comparable segment operating earnings were $239 million on sales of $2.0 billion, compared to $252 million on sales of $2.2 billion during the same period in 2015.
In the Americas, second quarter volumes improved with continued strength in specialty can demand in North America and Brazil. Successful cost out initiatives in China were unable to fully offset the second quarter impact of high single digit volume declines and lower pricing in the region. Year to date Americas and Asia revenues were impacted by the pass through of lower year over year aluminum prices and price compression in China.
In June, the company started up the second beverage can line at its Monterrey, Mexico, facility, as well as production at its new facility in Myanmar. These projects represent the remaining legacy capital projects that Ball began prior to the initiation of the company’s offer for Rexam.
Metal beverage packaging, Europe, comparable segment earnings in the second quarter 2016 were $74 million on sales of $479 million, compared to $59 million on sales of $481 million in the second quarter 2015. For the first six months, comparable segment operating earnings were $113 million on sales of $835 million, compared to $88 million on sales of $860 million during the same period in 2015.
Comparable segment earnings were higher in the second quarter and year to date due to lower year over year aluminum premiums and solid demand for specialty containers.
Food and aerosol packaging comparable segment earnings in the second quarter 2016 were $33 million on sales of $298 million, compared to $29 million on sales of $332 million in the second quarter 2015. For the first six months, comparable segment operating earnings were $53 million on sales of $583 million, compared to $59 million on sales of $640 million during the same period in 2015.
During the second quarter, strong global demand for aerosol containers outpaced single digit declines for food cans in North America.
“While we are still in the midst of our 90-day business review, our early estimate is for full year 2017 free cash flow to be in the range of $750 million to $850 million, excluding one-time items related to the Rexam acquisition. Though not precluded from repurchasing our shares in the near term, our current plan is to reduce our leverage as quickly as possible, continue our dividend and then return value to shareholders via notable share repurchases as soon as our targeted capital structure is in the range of 3.0 to 3.5 times net debt to comparable EBITDA,” said Scott Morrison, senior vice president and chief financial officer.
“This acquisition is truly a step change for our company, and we take this responsibility seriously, both operationally and strategically. We have hit the ground running with respect to our synergy realisation around the Rexam transaction. The second half of 2016 will be a time to implement many of these efforts, with the benefits beginning to be realized in 2017,” added Hayes. “We look forward to the many opportunities that lie ahead to grow EVA, earnings and cash flow. Given the strength of our underlying businesses and the value potential of the Rexam acquisition, we see a path to doubling Ball’s long term goal of 10 to 15% comparable diluted earnings per share growth over each of the next three years.”