Ball Corp. Beats Estimates - Analyst Blog

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Ball Corporation 's ( BLL ) first-quarter 2012 adjusted earnings were 63 cents per share, which exceeded the Zacks Consensus Estimate of 59 cents per share, as well as the year-ago adjusted earnings of 58 cents.

Including business consolidation charges and other one-time items, the company reported earnings of 55 cents compared with the year-ago earnings of 53 cents per share.

Total revenues increased 1.6% year over year to $2.043 billion, beating the Zacks Consensus Estimate of $2.038 billion.

Cost of sales increased 3.5% year over year to $1.687 billion. Selling, general and administrative expenses increased marginally to $99.6 million in the reported quarter from $99.4 million in the year-ago quarter.

Segment Performance

Metal Beverage Packaging, Americas & Asia segment's sales increased 1.7% year over year to $1.049 billion in the quarter. The growth was attributable to higher demand for specialty packaging in the U.S., offsetting the negative impact of volume declines in Brazil and the slower start in China. Operating earnings, however, declined 9.6% to $105.5 million in the quarter.

Sales for Metal Beverage Packaging, Europe increased 4.5% year over year to $463 million in the quarter. The improvement in sales was due to higher demand in western and eastern Europe, which contributed to the volume growth of beverage cans and extruded aluminum packaging. Operating earnings improved 1.1% to $53.7 million in the quarter.

Sales in Metal Food & Household Products Packaging, America declined 4.3% to $330.4 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 42% to $28 million.

In the Aerospace and Technologies segment, sales increased 5.4% to $201.6 million. Operating earnings increased 5.3% to $19.7 million in the quarter. The segment had a backlog of $855.8 million at the end of the quarter.

Financial Performance

Cash and cash equivalents were $106.8 million as of April 1, 2012, compared with $193.1 million as of April 1, 2011. Long-term debt amounted to $3,130.5 million as of April 1, 2012, compared with $3,197.3 million as of April 1, 2011.

Cash used in operating activities was $218.3 million during the first-quarter 2012 versus $74.4 million during first-quarter 2011. Capital expenditure was $76 million in the reported quarter compared with $95 million in the year-ago quarter.

Outlook

The company expects free cash flows of approximately $450 million after investing nearly $400 million required for maintenance and growth of the business. It plans to continue its focus on the Drive for 10 strategy in order to deliver better performance and achieve earnings growth in the range of 10%-15% in 2012 and beyond.

Our Take

The Drive for 10 strategy is expected to deliver better results over the next decade. The company completed constructing new plants in the emerging markets of Brazil, China and Vietnam, expanding its global footprint.

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 ).

Currently, we have a long-term Neutral recommendation on Ball Corp.. The stock retains a short-term Zacks #2 Rank ("Buy" rating).


 
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
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BLL , CCK , REXMY , SLGN

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