The news came during the company’s, Q2 2016 Results Earnings announcement, which saw second quarter sales grow 4% to $620m, but F&B sales decline 3%.
SimpliSqueeze valve
Other deals included bottled water launches in Latin America, featuring Aptar’s sports cap, and Weight Watchers launching a liquid concentrate water enhancer using its closure and SimpliSqueeze valve in the US.
Its closures with SimpliSqueeze valves can also be found on barbecue sauces in Brazil and Mexico for Hunts and Heinz.
Bob Kuhn, executive VP/CFO and secretary, AptarGroup said the reason for the decline was a decrease in core sales ‘due to lower custom tooling sales’ and the negative effects of passing through lower resin costs to customers.
Changes in currency translation rates accounted for 2% of the decrease, with core sales dropping 1%.
“Despite this setback, the segment achieved a strong EBITDA margin of just over 22%, which was a slight increase over the prior year period,” said Kuhn.
“Sales to the food market increased 6% on increased sales to the dairy creamer, sour cream, and infant formula categories. And sales to the beverage market decreased 9%, primarily due to the declines in sales to beverage customers in Asia.”
Currently, 18% of Aptar’s F&B sales are made in Asia, with a 59%, 41% split between food versus beverage.
Guangzhou, China
Steve Hagge, president/CEO, AptarGroup, who retires at the end of the year, said the company is looking to expand in Guangzhou, China, and it will monitor the F&B side of the business over the next six to 12 months.
He added, setbacks in Asia were caused by one of its key customers on the food side, which normally does a plant shutdown in the first quarter but moved it to the second quarter and several of its beverage customers were seeing some ‘softness’ in demand.
Hagge blames the inventorying of beverages on the length of distribution channels in China.
“In China the markets we are serving, whether it’s water or functional drinks, are seeing more challenges from different competitors. It depends on which customer we are dealing with,” he said.
“Right now our customers are saying they think it’s more of an inventory issue. Once you’ve got the order there’s still a fair amount of product you have to put to be able to cover the country. And several of our customers have to distribute these throughout the full Asian market.
“We see this as a temporary blip but we will get more color as we go through to the third quarter and we continue to be optimistic about the long-term future in Asia.
“In Latin America, we’re seeing continued expansion with Gatorade and other products expanding. We are actually increasing from non-dispensing to dispensing. It’s been a positive outlook for the whole region.”