Ball Corp Q1 net earnings plummet 60% on sale of Russian beverage packaging biz

Ball Corporation, the global leader in innovative and sustainable aluminum packaging for beverage, personal care and household products, reported a y-o-y drop in sales in the first quarter of January-March, 2023 (Q1CY23) by 6.18% to $3.49 billion from $3.72 billion in Q1CY22. This decrease was attributed to lower demand and shipments during the period. As a result, the company's net earnings plummeted 60.31%, dropping to $177 million in Q1CY23 from $446 million in Q1CY22, due to lower demand and shipments.

The company's comparable net earnings were $217 million or 69 cents per diluted share compared to $252 million or 77% per diluted share in Q1CY22.

The fall could be attributed to the Russian beverage packaging business sale. However, the North and Central America beverage packaging unit generated $183 million of comparable operating earnings on $1.5 billion of sales, showing higher earnings on fewer sales due to lower shipments offset by incremental inflation recovery.

Daniel W. Fisher, CEO of Ball Corporation, acknowledged the challenging y-o-y comparisons due to divestments in 2022 but expressed satisfaction with the company's strong first quarter performance. He attributed this to effective cost management, improved operational efficiencies, and successful aerospace programme execution. Fisher expressed confidence that these factors, along with inflationary cost recovery, will drive better full-year results and compensate for higher interest expenses and uncertain consumer demand trends in the first half of the year.

Ball Corporation's comparable operating earnings from the beverage packaging segment in the Middle East, Europe, and Africa were $73 million on $834 million sales in Q1CY23, a decline from $100 million on $942 million sales in the same period last year.

In South America, the segment generated $50 million of comparable operating earnings on $450 million sales, down from $78 million on $494 million sales in Q1CY22, attributed to weak demand across the South American operations.

Ball Corporation's aerospace segment posted operating earnings of $60 million on sales of $508 million in Q1CY23, with a y-o-y growth of 0.79% and 39.53% on sales and earnings, respectively.

The company ended the first quarter with cash and available liquidity exceeding $1.5 billion, aided by its seasonal working capital build-up. Leveraging cost-out actions, inflationary cost recovery, and reduced capital expenditures in the second half of 2022, Ball Corporation aims to deliver its long-term diluted earnings per share goal and free cash flow of around $750 million in 2023, while also returning value to shareholders.