Ball Corporation (BALL) Closes Russia Business Sale for $530M

Ball Corporation BALL announced that it has completed the previously announced sale of its beverage packaging business in Russia to Arnest Group for $530 million. Arnest is the largest manufacturer of perfume, cosmetic and household products in aerosol packaging in Russia. BALL added that the sale is not expected to impact its businesses outside the country.

Ball Corporation has been operating three manufacturing facilities in Russia since the 1990s. Its Russian business (which came under its beverage packaging EMEA segment) contributed to 4% of its total net sales and 8% of total comparable operating earnings in 2021. BALL’s beverage can plants in Russia produced approximately 5% of its global beverage can unit shipments volume in 2021.

Following the Russian invasion of Ukraine, BALL announced the suspension of any future investments in the country. In March 2022, Ball Corporation announced that it reduced operations at its manufacturing plants in Russia and is contemplating the sale of its Russian business.

BALL performed an expected cash flow recoverability analysis to estimate the fair value of the long-lived assets in Russia, and recorded an impairment loss of $435 million in the second quarter of 2022. Consequently, Ball Corporation reported a loss per share of 55 cents for the second quarter against the prior-year quarter’s earnings of 61 cents. Adjusted earnings came in at 82 cents per share, down 5% year over year. Total sales were $4,134 million in the reported quarter, up 19.5% from the year-ago quarter’s levels.

Ball Corporation is poised to gain from the growing preference for cans over plastic owing to increasing customer awareness of environmental problems. BALL has been expanding its production capacity for a while to capitalize on this demand trend.

BALL had achieved its target of ending 2021 with 12 billion units of new installed capacity and expects to end this year with another 12 billion units of new installed capacity. It is on track to add at least 25 billion units of capacity by 2023 end. Management also expects its infinitely recyclable aluminum cup business to deliver profits starting late 2022. Additionally, the Aerospace segment’s robust backlog levels and business wins continue to aid BALL.

Price Performance

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Shares of Ball Corporation have lost 42% over the past year compared with the industry’s decline of 30.4%.

Zacks Rank and Key Picks

Ball Corporation currently carries a Zacks #3 Rank (Hold). Some better-ranked stocks in the Industrial Products sector are RBC Bearings Incorporated ROLL, Valmont Industries, Inc. VMI and Greif, Inc. GEF. While ROLL sports a Zacks Rank #1 (Strong Buy), VMI and GEF carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

RBC Bearings delivered a trailing four-quarter earnings surprise of 9.4%, on average. Earnings estimates have increased 31.1% for fiscal 2023 (ending March 2023) in the past 60 days. ROLL’s shares have gained 13.1% in the past year.

Valmont Industries’ earnings surprise in the last four quarters was 13.7%, on average. In the past 60 days, earnings estimates have increased 4.3% for 2022. The VMI stock has rallied 13.5% in the past year.

Greif delivered a trailing four-quarter earnings surprise of 22.4%, on average. Earnings estimates have increased 4.6% for fiscal 2022 (ending October 2022) in the past 60 days. GEF’s shares have risen 1.8% in the past year.

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