CCK Q3 Earnings Unhurt by Soft Demand - Analyst Blog


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Crown Holdings, Inc. ( CCK ) reported third-quarter 2013 adjusted earnings of $1.13 per share, up 13% from the year-ago quarter. The results beat the Zacks Consensus Estimate of $1.08.

Last month, management reduced its third quarter earnings guidance from $1.15-$1.25 to $1.05-$1.10 per share citing weaker-than-expected demand in European food cans and North American beverage can markets. However, earnings surpassed the company's revised guidance on strong sales.

On a reported basis, earnings came in at 81 cents per share compared with $2.20 in the prior-year quarter. Both quarters' earnings include restructuring charges, gains on asset sales and tax adjustments.

Operational Update

Net sales rose 2.8% year over year to $2.39 billion. The year-over-year rise was mainly attributable to an increase in global beverage can volumes (6%) and favorable foreign currency translation, partly offset by the pass-through of lower raw material costs. New beverage can plants and capacity in Turkey, Brazil, China and Southeast Asia resulted in volume growth. The results managed to surpass the Zacks Consensus Estimate of $2.37 billion.

Cost of products sold increased 4% year over year to $1.96 billion. Gross profit surged 6.8% year over year to $394 million. Gross margin expanded 50 basis points to 16.5% in the quarter. Selling, general and administrative expenses increased 3% to $95 million. Adjusted operating income jumped 8% to $299 million from the year-ago quarter. Operating margin increased 50 basis points to 12.5%.

Segment Performance

Net sales from the Americas Beverage segment amounted to $583 million, up 1.6% year over year.  Segment operating profit rose 1.2% to $83 million from $82 million in the year-ago quarter.

The North America Food segment reported revenues of $249 million compared with $259 million in the year-ago quarter. Operating earnings were $44 million, flat with the prior-year quarter.

The European Beverage segment sales went up 6.6% year over year to $481 million. Consequently, operating income climbed 20.6% year over year to $82 million.

In the European Food segment, sales declined to $543 million from $547 million in the year-ago quarter. Segment operating income also declined 1.5% year over year to $63 million.

Revenues in the Asia Pacific segment increased 21.9% over year to $300 million. However, operating profit fell 11% to $32 million from the year-ago quarter.

Financial Update

As of Sep 30, 2013, Crown Holdings had cash and cash equivalents of $236 million, down from $240 million as of Sep 30, 2012. Total debt of the company increased to $4.0 billion as of Sep 30, 2013 from $3.8 billion as of Sep 30, 2012.

Total cash flow used in operating activities was $124 million for the period of nine months ended Sep 30, 2013, compared with $117 million in the comparable period last year. Free cash flow in the reported quarter was $70 million compared with $34 million in the prior-year quarter. During the quarter, Crown Holdings repurchased 2.5 million shares for $106 million.

2013 Outlook

Crown Holdings aims to expand the beverage cans volume worldwide, especially in the growth markets. In addition, management remains optimistic about performance, based on a uniquely balanced product portfolio and geographic presence of high quality metal packaging. These will drive future unit volume, free cash flow and profit growth. Crown Holdings also expects food can demand to rebound owing to the improvement of the European economy.

Philadelphia-based Crown is a leading supplier of packaging products to consumer marketing companies. The company manufactures aluminum beverage cans, food cans, aerosol cans and other packaging products.

Mobile Mini, Inc. ( MINI ) also belongs to the same industry wherein Crown Holdings operates and holds a Zacks Rank #2 (Buy). Crown Holdings' peers such as Ball Corp. ( BLL ) and EveryWare Global, Inc. ( EVRY ) are yet to announce their quarterly results.

Crown Holdings currently retains a Zacks Rank #5 (Strong Sell).

BALL CORP (BLL): Free Stock Analysis Report

CROWN HLDGS INC (CCK): Free Stock Analysis Report

EVERYWARE GLBL (EVRY): Free Stock Analysis Report

MOBILE MINI INC (MINI): 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 Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: BLL , CCK , EVRY , MINI

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