Ball Corporation’s full-year earnings call proved eventful, with the world’s largest can manufacturer announcing plans to build a new dual-line can manufacturing facility in Oregon, as well as acquire a Florida manufacturer in a $160 million deal.
Ball struck a deal in January to acquire Florida Can Manufacturing and its more than 800,000 sq. ft. plant in Winter Haven, Florida, in close proximity to the company’s existing Tampa plant. The transaction closed Tuesday.
Florida Can Manufacturing, founded in 2022, produces canned products for Coca-Cola, according to its website. The company employs more than 150 workers.
Ball’s plans to add new facilities follows recent retrenchments of its U.S. footprint, with layoffs and plant closures in Phoenix, Arizona; St. Paul, Minnesota; and Wallkill, New York.
“Our North American business is running at high utilization rates in part of the U.S., and with the growth we expect in the coming years, this capacity will provide us the fuel for growth we need to deliver on our customers’ plans,” Ball chairman and CEO Daniel W. Fisher said.
Fisher described the purchase price as “well-below replacement value” and a “significantly reduced price,” which he said will not affect its share repurchase plan.
Meanwhile in the Pacific Northwest, a contract extension with one of Ball’s largest global partners will lead to the construction of a two-line can plant in Oregon. The plant is not expected to change Ball’s cap-ex plans or share repurchase targets, Fisher said.
In explaining Ball’s facility additions, Fisher said the company’s footprint was concentrated “in the upper Midwest” and northern Kentucky, while “the demand growth” has come from the coasts and southeast Texas.
Depressed Consumer Spending in North America Keeping Fisher Up at Night
Headwinds continue to persist with softness in the beer market, a weak end consumer and the ongoing effects of Dry January, Fisher said.
“No surprises that you see softness on the beer side,” he said, adding that he expects the business to pick up with this weekend’s Super Bowl, spring break, better weather, pricing behavior and “hopefully a return to volume growth being the principal driver of their economic decisions.”
Fisher said the issue that keeps him up at night is the “health of the end consumer in North America” and anything else is “noise.” His concern is getting the end consumer back to more traditional spending patterns.
The instability in the market created by the now-paused 25% tariffs was another topic of discussion among Ball leadership and analysts. Fisher told analysts that the 25% tariffs would be “vastly different” from the 10% or 2.5% tariffs and would “dampen” Ball’s current outlook.
“The 25% to me, would be more concerning just in terms of a pretty stressed end consumer,” he said. “So I would be more concerned about the volume for that aspect of the portfolio, which is not that big for us, but every bit counts these days relative to accumulating a tailwind on growth.”
Fisher noted that some of the companies with “really nice growth trajectory” are “dealing with tariffs right now, and they’re dealing with how they make sense out of that.”
Nevertheless, Fisher acknowledged that Ball’s business is driven by its largest global partners.
“If Coke is growing, and ABI [Anheuser-Busch InBev] is growing, and the large customers are growing, we’re going to grow,” he said. “If they’re not growing, you can have all of the startups in the world, and you’re just not going to move the needle on the size of volume. So there’s definitely a balance.”
Ball’s 2024 By the Numbers
For full-year (FY) 2024, Ball reported net earnings of $4.01 billion on sales of $11.8 billion. In 2023, the company reported $707 million in net earnings on sales of $12.06 billion. Those YoY net earnings include the company’s former aerospace business, which was divested of on February 16, 2024.
On a comparable basis, excluding aerospace, Ball’s FY 2024 net earnings were $977 million, compared to $920 million in 2023.
In Q4, Ball posted a net loss of $32 million on sales of $2.88 billion, compared to Q4 2023 net earnings of $154 million on sales of $2.9 billion.
In North and Central America, FY 2024 earnings were $747 million on sales of $5.62 billion. In FY 2023, the company reported $710 million in net earnings on sales of $5.96 billion.
“In North America, persistent economic pressure on the end consumer and our exposure to U.S. domestic beer led to softer than expected volume,” Fisher said in prepared remarks. “Our regional performance culminated in Ball’s global beverage can shipments being down low-single digits year-over-year (YoY) in the fourth quarter and up +1% in 2024.”
In Q4 2024, the region reported net earnings of $142 million on sales of $1.29 billion. The quarter lagged YoY with the company posting $156 million in net earnings on sales of $1.38 billion in Q4 2023. Ball’s volume declined “mid-single digit” during Q4 2024.
Ball attributed FY and Q4 trends to “lower volume and lower price/mix partially driven by the contractual pass through of lower aluminum costs for the year.” Comparable FY earnings increased YoY “due to favorable price/mix, cost savings and improved operating performance despite lower than anticipated volume.”
In 2025, the company is projecting global volume growth of +2% to +3%, Fisher said. He added that Ball expects to grow volume “in line with or slightly above market” in North America despite 2024’s “volume challenges.”
Ball has also been “proactive about extending contracts,” with more than 85% of its 2026 volume under contract, Fisher said. The previously mentioned extension “that will take us to nearly the end of the decade,” he added.
Ball to Form ‘Strategic Partnership’ for Aluminum Cup Biz; Takes Non-Cash Impairment Charge
Ball is expected to announce the formation of a “strategic partnership in early 2025” for its aluminum cup business. In Q3, the company reported that its aluminum cup business would lose around $40 million in 2024.
The company stated that the partnership would lead to “deconsolidation of the business by Ball.” As such, the company recorded a non-cash impairment charge of $233 million on the business due to its “decision to sell the company’s controlling financial interest” in that business.
The process is expected to close by the end of Q1.