Ardagh to differentiate premium & sustainable packaging to meet European demand

26-Feb-2019 - Last updated on 26-Feb-2019 at 13:14 GMT

Ardagh continues to focus on lightweighting, down-gauging and operational excellence. Photo: Ardagh Group.

Ardagh Group says ‘the sustainability agenda has intensified in Europe’ and it will support its growth with differentiated premium and sustainable packaging.

Speaking during Ardagh Group’s Q4 2018 financial results conference call last week, CEO Paul Coulson announced metal packaging revenue for the quarter increased by 3% to $1.36bn, compared to last year’s revenue growth of 5% with 6% in Metal Packaging Europe, and 4% in Metal Packaging Americas.

Specialty cans

In Metal Packaging Europe, volume mix grew by 3%, with broad-based increases in Bev Cans, which increased by 4% and food and specialty cans, which increased by 1%.

“Brand owners in all regions, most notably in Europe recognized the central role of metal packaging and we are supporting their growth with differentiated premium and sustainable packaging, while enabling them to meet their publicly stated targets,” said Coulson.

“The level of everyday engagement with customers on this topic continues to increase and we are a committed partner in helping customers to meet their long-term requirements.”

He said its commitment to delivering sustainable packaging was recently recognised for the fourth consecutive year, for example, with a gold rating by EcoVadis, a sustainability rating platform.

In other parts of the business, Coulson reported Glass North America's earnings were lower in the quarter and it will ‘continue to execute profit improvement initiatives’.

Q4 revenue of $2.4-$2.14bn increased by 1% and by 4% compared to the same period last year.

“Volume mix growth for the quarter, 1% comprised of 3% increase in metal packaging led by our beverage can businesses globally, partially offset by a decline of 1% in glass packaging where broad-based growth in Europe was offset by lower volumes in North America,” he said.

Highlights for the quarter included volume mix growth in three of its four divisions, led by advances of 3% in both metal packaging Americas and metal packaging Europe.

“In North American Bev Cans we've seen an environment where the value for our products is certainly improving, but those margins are still relatively lower than what we have in Europe and elsewhere, but there is improvement coming and we have been negotiating improved pricing, which will come on stream next year and I think that will have a knock-on effect elsewhere in our market there,” said Coulson.

“Groupwide volume mix in beverage cans increased by 5% in 2018 and with supported demand drivers we intend to invest in our customers' growth in 2019.“

Targeted investments

This will involve cans and ends expansion in Brazil with other targeted investments in Europe and North America.

Continued strength in Glass Packaging Europe, where packaging volume/mix increased by 2% in a strong market with a 3% decline in Glass North America.

“In North America, volume mix declined by 3% in the quarter, principally due to continued weakness in the beer category, partially offset by growth in wines and other beverages,” said David Matthews, CFO, Ardagh Group.

“We are looking at growth in three of the four areas in Glass. North Americas is going to be pretty flat, but we do see growth in other areas.”

According to Coulson there are lot of other steps being taken not just footprint optimization, but improvements in efficiency, profitability, and quality across its Glass sector in North America.

“It will take some time before it comes to the level of profitability, or the level of margin that we currently enjoy in Europe,” he added.

“The European Glass industry is probably better invested than the US Glass Industry. It takes time for increased automation and inspection equipment to start taking effect and also improving the whole operating performance of the business.”