Ball Corporation, the world’s largest manufacturer of aluminum beverage cans, reported $1.6 billion in sales in its North and Central America beverage packaging business unit for the first quarter of 2022, a +23% increase over the same period last year.
The North and Central America beverage packaging unit reported earnings of $174 million for the quarter, a 24.2% increase over the same period last year.
“Year-over-year sales reflect higher shipments, the contractual pass through of higher aluminum costs and improved price/mix,” Ball wrote in a press release about its Q1 earnings.
Can shipments increased +3% in North America, and 38% of cans sold in the region were specialty – anything outside the norm of 12 oz. non-slim cans.
“Underlying demand for aluminum beverage cans remains strong,” president and CEO Dan Fisher said during a conference call with investors and analysts. “We exited 2021 with 12 billion units of new installed capacity, and we also have plans in place to exit 2022 with a similar level of new installed capacity available to sell-through in 2023 and beyond.”
The closure of bars and restaurants at the outset of the COVID-19 pandemic in 2020 forced drinkers to move drinking occasions to their homes, which initially placed an enormous demand on cans. However, that demand has not relented, even as the on–premise has reopened, Fisher said.
“In beer, cans have maintained package mix share despite declines in total liquid consumption,” he said. “In North America, following the broader reopening of on-premise, cans continue to outperform all other packaging substrates in aggregate.”
Growth in the ready-to-drink (RTD) canned cocktail and energy segments is driving demand for cans, Fisher said.
“I think ready-to-drink cocktails [and] I think energy always surprises us to the upside in terms of growth,” he said. “We’ve got some really good partners there.”
Also contributing to demand across mostly non-alcoholic beverages is a broader shift away from plastic containers.
“There’s so much pressure on anti-plastic sentiment,” Fisher said, adding that products from companies working on innovation pipelines moving away from plastic will begin lining shelves in 2024 and 2025.
Ball is preparing to weather “notable volatility” as supply chains remain crunched. To ease those stressors and ensure that larger customers have access to inventory, Ball enacted a policy in March that quintupled minimum order quantities for printed cans for non-contract customers and has added multiple new facilities.
Those new plants include can production facilities in Glendale, Arizona, and Pittston, Pennsylvania, which opened in 2021; North Las Vegas, Nevada (slated for 2022); Concord, North Carolina (slated for 2023); and a plant to produce can ends in Bowling Green, Kentucky, which came online this year. The company has also added production lines in existing facilities to increase capacity.
Overall, Ball reported $446 million in net earnings on sales of $3.7 billion for Q1, compared to net earnings of $200 million on sales of $3.1 billion for the same quarter last year. The company is projecting long-term diluted earnings per share growth of 10%-15%, which is dependent on Ball’s ability to sell its business in Russia following the country’s invasion of Ukraine.
Ball announced it was pursuing a buyer for its Russia-based operations in late March. In 2021 its three facilities in the country accounted for 4% of total net sales and 8% of its total comparable operating earnings. The Russian facilities produced 5% of the 112.5 billion cans Ball shipped last year – about 5.625 billion cans.
CFO Scott Morrison said Ball’s business in Russia accounts for between $10 million and $11 million in monthly operating earnings, and noted that there are “a number of entities that are interested in it.”
“It’s an attractive business,” he said. “It’s a profitable business.”