In a conference call with analysts discussing the firm's Q1 financial results, Tony Allott, president and CEO, said: “I think our view in Europe at this point is, broadly, that it's going to have a long fight here.
“Now the trickier, sometimes, opportunity is exactly where things are at their worst. And so you can't -- you would never want to say no acquisitions in Europe because you might find great opportunity there.”
He added they were pleased with the results as the business performed as expected in the quarter.
Allot added: ““Our metal container business benefited from strong soup and pet food sales in North America and continued to reduce inventory in line with our working capital goals.
“Our plastic container business delivered solid operating performance in the face of the negative impact of increases in resin costs and volume realignment in our legacy business.
“Our closure business was also negatively impacted by significant increases in resin costs and the devaluation of currency in Venezuela.”
Metal Containers
Net sales of the metal container business were $463.8m for Q1 2013, an increase of 4.2%, as compared to $444.9m in 2012 due to the increase in unit volumes and higher average selling prices as a result of the pass through of higher raw material costs.
Income from operations of the metal container business in Q1 2013 decreased $2.4m to $39.6m and operating margin decreased to 8.5% from 9.4% over the same periods.
Rationalization charges were $1.1m in the quarter for the shutdown of the Crystal City, Texas manufacturing facility and a restructuring of the Sacramento, California site. Plant start-up costs were $0.8m and $1m in Q1 2013 and 2012, respectively.
Closures
Net sales of the closures business were $161.1m in Q1 2013, a decrease of 1.2%, as compared to $163m in 2012 due to unfavorable impact from the devaluation of currency in Venezuela, partially offset by higher average selling prices as a result of the pass through of higher raw material costs.
Income from operations of the closures business for Q1 2013 decreased $7.4m to $10.6m and operating margin decreased to 6.6% from 11% over the same periods.
“The surprises in the quarter were the devaluation of the Venezuelan Bolivar, resulting in a $3m charge for the remeasurement of assets; the operational challenges as political instability in Venezuela led to an inability to acquire sufficient raw materials; and the timing of certain statutory rate changes, which led to a temporarily higher tax rate,” explained Robert Lewis, chief financial officer and executive vice president in the firm’s conference call.
Plastic Containers
Net sales of the plastic container business were $170.8m in the first quarter of 2013, an increase of $10.3m due to the inclusion of net sales from the plastic food container operations acquired in August 2012, partially offset by lower volumes in the legacy operations.
Income from operations of the plastic container business for Q1 2013 was $10.4m, an increase of $1.5m from 2012, and operating margin increased to 6.1% from 5.5% over the same periods.
The increase in income from operations was because of the inclusion of the plastic food container operations and lower rationalization charges, partially offset by the unfavorable impact from the lagged pass through of increases in resin prices in the current year quarter.
When asked about Can Vision 2020, Allott added progress remained good but stressed it was a long term project.
“But we continue to be pleased with the opportunities that we're seeing. We've spent on this -- something like $1m this quarter on it. We'll continue to spend, and then there will be capital as we get closer to meaningful investments with customers.”