Ball Corporation
's (
BLL
) second-quarter 2012 adjusted earnings were 89 cents per share,
which exceeded the Zacks Consensus Estimate of 87 cents, as well as
the year-ago adjusted earnings of 85 cents.
Including business consolidation charges and other one-time
items, the company reported earnings of 88 cents per share compared
with the year-ago earnings of 84 cents.
Total revenues decreased 0.6% year over year to $2.296 billion,
missing the Zacks Consensus Estimate of $2.347 billion.
Cost of sales increased marginally by 0.3% year over year to
$1.89 billion. Selling, general and administrative expenses
increased 5.9% to $98.6 million in the reported quarter.
Segment Performance
Metal Beverage Packaging, Americas & Asia
segment's sales increased 3.7% year over year to $1.208 billion in
the quarter. The growth was attributable to higher demand for
specialty packaging in the U.S., offsetting the negative impact of
weak demand for cans in North America. Operating earnings increased
8.5% to $136.8 million in the quarter.
Sales for
Metal Beverage Packaging, Europe
segment decreased 9.3% year over year to $556.2 million in the
quarter. The decline in sales was due unfavorable currency
exchange. Operating earnings declined 28.9% to $65.7 million in the
quarter.
Sales in
Metal Food & Household Products Packaging,
America
segment declined 5.5% to $327.6 million. The decline in sales was
due to the absence of inventory holding gains and the decrease in
food can volumes, partially offsetting the improved manufacturing
and extruded aluminum slug business performance. Consequently,
operating earnings dropped 29.5% to $31.9 million.
In the
Aerospace and Technologies
segment, sales increased 5.2% to $210.3 million. Operating earnings
dropped 7.4% to $20.2 million in the quarter. The segment had a
backlog of $780.4 million at the end of the quarter.
Financial Performance
Cash and cash equivalents were $123.5 million as of July 1,
2012, compared with $144.8 million as of July 3, 2011. Long-term
debt amounted to $2.96 billion as of July 1, 2012, compared with
$3.12 billion as of July 3, 2011.
Cash used in operating activities was $75.1 million during the
second-quarter 2012 versus $163.1 million during second-quarter
2011. Capital expenditure was $138.5 million in the reported
quarter compared with $213.5 million in the year-ago quarter.
Outlook
The company expects free cash flows of approximately half
billion dollars. It plans to reduce investment in order to sustain
during the weak global economic conditions. The company expects to
achieve earnings growth in the range of 10%-15% in 2012 and
beyond.
Our Take
We expect that The Drive for 10 strategy will help in delivering
better results over the next decade. The company is focusing on
expanding its global footprint by constructing new plants in the
emerging markets.
However, the company faces intense competition in the packaging
business from other established players, such as
Crown Holdings Inc.
(
CCK
),
Rexam Plc.
(
REXMY
) and
Silgan Holdings Inc.
(
SLGN
). Moreover, the weak global economic conditions will also prove to
be difficult for its performance moving ahead.
Ball Corp. retains a short-term Zacks #4 Rank (Sell rating).
Currently, we have a long-term Neutral recommendation on the
stock.
BALL CORP (BLL): Free Stock Analysis Report
CROWN HLDGS INC (CCK): Free Stock Analysis
Report
REXAM PLC-ADR (REXMY): Free Stock Analysis
Report
SILGAN HOLDINGS (SLGN): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research