Lightweighting, growth in soft drink market a boon for Ball Corp

Aluminium packaging producer Ball Corporation is poised to have an advantage due to producing bottles with a higher recycled aluminium content and having the highest recycled aluminium content in its alloys, Dan Fisher, chairman and chief executive officer, said during the company's earnings call on Thursday August 1

The post Lightweighting, growth in soft drink market a boon for Ball Corp appeared first on Fastmarkets.

Lightweighting bottles using more aluminium continues to be a positive trend and Ball is well-positioned with strategic and innovative partners in this area to take advantage of this shift, according to Fisher.

“We’re bullish about that business moving forward, because of the moat that we’ve created there,” he said.

Ball’s net sales in the second quarter of 2024 were $2.96 million, down from $3.07 million in the second quarter of 2023, but up from $2.87 million in the first quarter.

“Second-quarter sales were influenced by the pass-through of lower aluminum prices as well as lower [sales] volumes in South America, offset by increased [sales] volumes in North America and EMEA [Europe, Middle East and Africa] as well as favorable price/mix in South America,” chief financial officer Howard Yu said on the call.

North America, EMEA

Sales volumes in North America and EMEA exceeded the Ball’s internal expectations.

Operating earnings for beverage packaging net sales in North and Central America were $210 million in the second quarter, up from $175 million the same quarter in 2023.

The US market was the main driver of the company’s North and Central American volumes, with 80% of the production from its operations in Mexico flowing into the US, Fisher said.

Ball’s participation in a number of different markets came as an advantage, with higher sales in carbonated soft drink (CSD) and imported beer balancing out the volume decline in domestic beer, according to Fisher.

Operating earnings were $113 million in EMEA, up from $98 million in second quarter of 2023.

“In EMEA, overall segment volumes were up stronger than anticipated. Recent demand trends remain favorable, and the business continues to be poised for year-over-year comparable operating earnings growth throughout the remainder of 2024,” Yu said.

South America

The company saw a 3.2% decrease in overall volumes in South America in the quarter, after a 26.3% increase in the first quarter due to deteriorating consumer conditions in Argentina, despite strong demand and mid-single-digit volume growth in Brazil, Yu said.

While the government of Argentina achieved a primary fiscal surplus of 1.1% in the first five months of 2024, economic activity deepened its recession in the first quarter, due to the measures aimed at addressing macro-economic imbalances, according to the Bilbao, Spain-based financial services company Banco Bilbao Vizcaya Argentaria (BBVA).

The International Monetary Fund (IMF) downgraded its 2024 economic outlook for Argentina in June, forecasting that the economy will contract by 3.5% in 2024.

The end consumers in Argentina have weakened but the government has managed to decrease the inflation and they are expecting a pick-up in end-consumer demand going forward, Fisher said.

“We continue to monitor the dynamic economic situation in Argentina and potential scenarios that could impact results. We remain optimistic about Brazil and our ability to deliver sequential earnings and volume improvement as we enter the summer selling season in South America,” Yu said.

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The post Lightweighting, growth in soft drink market a boon for Ball Corp appeared first on Fastmarkets.