Ball Corporation Misses Estimates - Analyst Blog

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Ball Corporation ( BLL ) reported net earnings of $77.5 million or 47 cents per share in the fourth quarter of 2011, decreasing from $92.2 million or 52 cents per share in the year-ago quarter.

Excluding business consolidation costs and other charges and benefits, the company's adjusted income in the quarter was at $78.1 million or 48 cents per share, compared with $94.4 million or 53 cents per share a year ago. Adjusted income per share fell below the Zacks Consensus Estimate of 54 cents per share.

Weaker beverage can volumes in North America and Europe, in addition to six fewer accounting days were attributable to the poor performance. However, this was partially offset by strong operating performance and growth in specialty packaging.

Total revenue, however, increased 3% year over year to $2.1 billion and was in line with the Zacks Consensus Estimate.

Cost of sales increased to $1.70 billion in the fourth quarter from $1.64 billion in the year-ago quarter. Selling, general and administrative expenses decreased to $99.2 million in the reported quarter from the year-ago quarter of $106.9 million.

Fiscal 2011 Performance

In the full year 2011, net earnings increased to $444.0 million or $2.63 per share from $468.0 million or $2.55 per share in fiscal 2010.

Adjusted earnings were $459.6 million or $2.73 per share compared with $433.0 million or $2.36 per share in fiscal 2010. Adjusted earnings per share fell short of the Zacks Consensus Estimate of $2.78 per share.

Total revenue increased to $8.63 billion compared with $7.63 million in 2010. Total revenue was almost in line with the Zacks Consensus Estimate of $8.64 billion.

Segmental Performance      

Metal Beverage Packaging, Americas & Asia : Sales in the segment increased just 6% year over year to $1.1 billion in the reported quarter. The segment was benefited by the successful starting of the new Alumi-Tek®. Operating earnings were $119.9 million compared with $117 million in the fourth quarter of 2010.

Metal Beverage Packaging, Europe : This segment reported sales of $451.0 million up 10% year over year. Continued soft beverage can volumes were partially offset by strong demand for extruded aluminum packaging. Operating earnings were $41.0 million compared with $42.3 million in the fourth quarter of 2010.

Metal Food & Household Products Packaging, Americas : Sales in the segment dipped 9% year over year to $322.8 million. The weak result was attributable to the weaker volumes due to poor vegetable pack in the fall, increased plant curtailments and absence of customer pre-buys. Operating earnings also fell to $13.1 million from $24.6 million in the fourth quarter of 2010.

Aerospace and Technologies : Sales in the segment declined 8% year over year to $185.1 million in the quarter. Operating earnings also decreased to $18.0 million from $19.3 million in the fourth quarter of 2010. The segment had a backlog of $897 million at quarter end.

Financial Performance

As of December 31, 2011, cash and cash equivalents increased to $165.8 million from $152.0 million as of December 31, 2010. Long-term debt decreased marginally to $2.69 billion as of December 31, 2011 from $2.70 billion as of December 31, 2010. Inventories amounted to $1.07 billion at the end of fourth quarter of 2011 from $1.08 billion at the end of fourth quarter of 2010.

Cash flow from operating activities was $956.7 million in the fiscal 2011 compared with $500.3 million in the full year 2010. Capital expenditure was $443.8 million in 2011 versus $250.2 million in 2010.

Outlook

Management expects to generate approximately $450 million in free cash flow. The majority of the cash flow would be used to repurchase stocks. Moreover, the company plans to achieve 10% to 15% earnings growth in 2012 and beyond.

Our Take

The company's focus on "Drive for 10 Actions" is set to deliver better results over the next decade. The company's efforts in maintaining continuous growth in 2011 has built the momentum for a strong start towards its goals set for the coming years.

However, sales in both Metal Packaging & Household Products Packaging, Americas and Aerospace segment declined in this quarter. Earnings also dipped down from the year ago quarter. Moreover, Ball Corporation faces tough competition from Crown Holdings Inc. ( CCK ), Rexam Plc ( REXMY ) and Silgan Holdings Inc. ( SLGN ).

Headquartered in Broomfield, Colorado, Ball Corp. is a manufacturer of metal and plastic packaging, primarily for beverages and foods. It also supplies aerospace and other technologies and services to government as well as commercial customers.

Currently, the shares of Ball Corporation maintain a Zacks #3 Rank (Hold rating) over the short term.


 
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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