Crown Holdings, Inc.
) nudged up 1.28% and closed at $46.53 on Apr 16, 2014, after it
reported a 14% year-over-year rise in its first-quarter 2014
adjusted earnings to 57 cents per share, surpassing the Zacks
Consensus Estimate of 51 cents.
On a reported basis, earnings came in at 17 cents per share,
compared with 28 cents in the prior-year quarter. In the reported
quarter, Crown Holdings recorded a charge of $7 million ($5
million net of tax) in cost of products sold, related to hedge
ineffectiveness caused mainly by volatility in the metal premium
component of aluminum prices. Both the quarters' earnings include
restructuring charges and the prior-year quarter included a loss
from early extinguishment of debt.
Net sales edged up 1% year over year to $1.99 billion, but fell
short of the Zacks Consensus Estimate of $2.02 billion. The
year-over-year rise was attributable to a 6% increase in global
beverage can volumes particularly due to strong demand in Asia
Pacific and Brazil. Global food can shipments, however, declined
3% in the quarter.
Cost of products sold increased 1% year over year to $1.66
billion. Gross profit increased 2% year over year to an adjusted
$304 million, mainly due to the increase in beverage can sales.
Gross margin expanded 10 basis points to 15.3% in the quarter.
Selling, general and administrative expenses remained flat at
$104 million. Adjusted operating profit increased 3% to $200
million from the year-ago quarter and operating margin increased
10 basis points to 10%.
Net sales from the Americas Beverage segment were $549 million,
compared with $552 million in the year-ago quarter. Segment
operating profit rose 4% to $79 million from $76 million in the
The North America Food segment reported revenues of $179 million,
down 9% from $197 million in the year-ago quarter. Operating
earnings also decreased 6% year over year to $29 million.
The European Beverage segment sales went up 5% year over year to
$388 million. Consequently, operating income grew 16% year over
year to $59 million.
In the European Food segment, sales declined 1% to $373 million
from $376 million in the year-ago quarter. Segment operating
income plunged 19% year over year to $26 million.
Revenues in the Asia Pacific segment increased 8% year over year
to $298 million. However, operating profit rose 3% to $34 million
from the year-ago quarter.
Crown ended the quarter with cash and cash equivalents of $267
million, down from $304 million at the prior-year quarter-end.
Cash used in operations in the first quarter of 2014 was $495
million versus $432 million in the prior-year quarter. Total debt
of the company remained flat at $4.1 billion as of Mar 31, 2014
compared with Mar 31, 2013.
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Crown Holdings will benefit from improving general business
conditions in North America and Europe in 2014. Beverage can
growth and solid contributions from the 2013 capacity expansions
in Cambodia, China, Malaysia, Thailand and Vietnam will aid in
increase of Crown's profitability as well. The company will
benefit from the new plant in Teresina, Brazil as well, which
will start commercial production this month by fulfilling the
increased demand for beverage cans in Brazil. The upcoming soccer
World Cup in Brazil will be a catalyst.
Crown Holdings has received the approval of the European
Commission for its pending acquisition of Mivisa, a leading
Spanish manufacturer of two- and three-piece food cans and ends.
We anticipate that the transaction will close on Apr 23, 2014.
The acquisition will significantly fortify the company's position
in the strategically important European food can market by
increasing its presence in Spain, one of Europe's leading
agricultural economies. Per the company, the transaction will be
accretive to earnings in 2014.
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.
Crown Holdings currently retains a Zacks Rank #2 (Buy). Some
other stocks worth considering in the sector include
Neenah Paper, Inc.
Berry Plastics Group, Inc.
KapStone Paper and Packaging Corporation
). While Neenah Paper sports a Zacks Rank #1 (Strong Buy), Berry
Plastics Group and KapStone Paper and Packaging Corporation hold
the same rank as Crown Holdings.