Ball reports strong Q1 2024 results
Image: Ball Corporation
Ball Corporation has reported its first quarter results.
On a US GAAP basis, the company reported, first quarter 2024 net earnings attributable to the corporation of $3.69 billion (including a net after-tax gain of $3.47 billion, or $10.93 per diluted share for the aerospace business sale, business consolidation and other non-comparable items) or total diluted earnings per share of $11.61, on sales of $2.87 billion, compared to $177 million net earnings attributable to the corporation, or total diluted earnings per share of 56 cents (including a net after-tax loss of $40 million, or 13 cents per diluted share for business consolidation and other non-comparable items) on sales of $2.98 billion in 2023. Ball’s first quarter 2024 comparable net earnings were $217 million, or 68 cents per diluted share compared to $217 million, or 69 cents per diluted share in 2023.
“We delivered strong first quarter results. Following the successful sale of the aerospace business in mid-February, we have executed on our plans to immediately deleverage, initiate a large multi-year share repurchase program and position the company to enable our purpose of advancing the greater use of sustainable aluminium packaging. We continue to complement our purpose by driving innovation and sustainability on a global scale, unlocking additional manufacturing efficiencies and activating an operating model to enable high-quality, long-term shareholder value creation,” said Daniel W Fisher, chairman and chief executive officer.
Beverage packaging, North and Central America
Beverage packaging, North and Central America, segment comparable operating earnings for first quarter 2024 were $192 million on sales of $1.40 billion compared to $183 million on sales of $1.50 billion during the same period in 2023. First quarter sales reflect lower shipments and the contractual pass through of lower aluminium costs favourably offset by the annual pass-through of inflationary costs.
First quarter segment comparable operating earnings increased year-over-year largely due to the annual pass-through of inflationary costs net of current year inflation, benefits from fixed and variable cost out actions and improved operational performance despite year-over-year headwinds driven largely by Ball customer exposure to a US mass beer brand disruption and a benefit associated with a US virtual power agreement termination in the first quarter of 2023.
Aluminium beverage cans continue to outperform other substrates. Ball says it remains dedicated to enabling the greater use of low-carbon, best-value innovative aluminium packaging solutions across Ball’s customer mix over the long term. Quarterly sequential volume improvement returned earlier than anticipated in Ball’s North and Central American business due to the incremental pull forward of contracted volume by certain customers in advance of the summer selling season and following customers’ notable destocking in the fourth quarter of 2023. Segment volumes decreased 2.4% year-over-year in the first quarter of 2024 versus a decrease of 3.7% in the fourth quarter of 2023. Going forward, growth supported by business development efforts and innovation across diverse beverage categories, additional benefits from fixed and variable cost-out initiatives and improved operational efficiencies are expected to improve results throughout 2024 and beyond.
Beverage packaging, EMEA
Beverage packaging, EMEA, segment comparable operating earnings for first quarter 2024 were $85 million on sales of $810 million compared to $73 million on sales of $834 million during the same period in 2023. First quarter sales reflect higher year-over-year shipments offset by the contractual pass through of lower aluminium costs.
First quarter comparable operating earnings reflect higher volumes, favourable cost management and improved operational efficiencies. Packaging mix shift to aluminium cans supported by ongoing packaging legislation in certain countries continues to be a driver of aluminium beverage packaging growth despite recent inflation-induced consumer demand pressure. Year-over-year first quarter segment volumes increased 1.1% reflecting growth in the United Kingdom, Nordics and Turkey offset by lower than anticipated demand in Egypt. Going forward, sustainability tailwinds and seasonal trends are anticipated to improve demand throughout the year.
Beverage packaging, South America
Beverage packaging, South America, segment comparable operating earnings for first quarter 2024 were $55 million on sales of $482 million compared to $50 million on sales of $450 million during the same period in 2023. Year-over-year sales reflect higher volumes partially offset by the contractual pass through of lower aluminium costs. First quarter segment comparable operating earnings increased year-over-year driven by higher segment volumes and favourable customer mix in Brazil offset by the impact of product mix and continuing disruptive economic and operating conditions in Argentina.
Demand trends across the company’s South American operations improved significantly year-over-year. Segment volumes increased 26.3% in the first quarter driven by customer mix and substrate mix shift to aluminium cans versus other substrates, particularly in Brazil. In Argentina, the company continues to serve customers and assess risks given the dynamic economic and policy environment.
Non-reportable
Included within undistributed corporate expenses are corporate interest income, incremental compensation cost from the successful sale of the aerospace business, the results of the company’s global aluminium aerosol business, beverage can manufacturing facilities in India, Saudi Arabia and Myanmar and the company’s aluminium cup business.
First quarter 2024 results reflect higher year-over-year undistributed corporate expenses offset by improved comparable operating earnings for the aluminium packaging businesses in other non-reportable. Amid challenging year-over-year comparisons and seasonal customer filling downtime, volume across the company’s global extruded aluminium bottles and aerosol containers decreased 3.0% during the quarter. The company’s global aluminium aerosol, aluminium bottle and cups customers continue to collaborate with Ball to activate growth opportunities and tailored offerings for personal and home care brands, refill and reuse packaging for water, other beverages and venue specific needs to advance the circular economy.
Outlook
“During the quarter, incremental volume growth, favourable cost management and the immediate use of aerospace business sale proceeds combined with cash on hand resulted in strong results, $2.8 billion of debt retirement and the initiation of our multi-year share repurchase program. Throughout the remainder of the year, our strong cash flow and cash on hand will support prudent business investments, pay quarterly taxes due on the aerospace sale totaling approximately $1.0 billion, and expand share repurchases to in the range of $1.3 billion by year end,” said Howard Yu, executive vice president and chief financial officer.
“The strategic actions we have taken have strengthened our company in the short- to medium-term and position us for opportunity over the long-term. The team is operating at a high level and is focused on executing our enterprise-wide strategy with purpose and pace to advance aluminium packaging and consistently deliver high-quality results, products and returns. In 2024, we are positioned to achieve comparable diluted earnings per share growth, generate strong free cash flow and return in excess of $1.5 billion to shareholders through a combination of share repurchases and dividends,” Fisher said.
