Crown Holdings has announced its financial results for the fourth quarter and year ended 31 December 2018.
Net sales in the fourth quarter were $2,734 million compared to $2,168 million in the fourth quarter of 2017 reflecting the impact of the Signode acquisition, increased beverage can volumes and the pass through of higher material costs to customers partially offset by $53 million of unfavorable currency translation.
Income from operations was $218 million in the quarter compared to $212 million in the fourth quarter of 2017. Segment income increased to $279 million in the fourth quarter compared to $244 million in the prior year fourth quarter primarily due to the Signode acquisition.
Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, “The Company’s earnings performance was on plan for both the fourth quarter and full year, adjusted free cash flow exceeded our expectations, and we are reaffirming our cash flow guidance for 2019.
Strong global beverage can volume growth of 5% during the quarter, led by robust shipments in Asia Pacific and the United States, combined with firm results in Transit Packaging, offset challenges in other operations. As expected, European Beverage results in the quarter had a difficult comparison to the prior year due to pre-production and start-up costs associated with new beverage can plants in Valencia, Spain and Parma, Italy, and volume softness in the Middle East consistent with previous quarters.
European Food results in the quarter, compared to the prior year, were affected by currency translation and under-absorption of fixed costs due to lower production following poor harvest yields and higher inventory levels at the end of the third quarter.
“Beverage cans, the world’s most sustainable and recycled beverage packaging, are increasingly recognized as the most responsible form of beverage packaging, and as such are gaining preference among brand owners and consumers alike. To meet this expanding demand, in July we commenced production at a new one-line beverage can plant in Yangon, Myanmar.
“The first line of the Valencia plant began operations in October and the second line will start-up in February 2019. In December, we commenced operations in Parma, initially a one-line beverage can plant, and in January 2019 we commenced operations on the third line at the Company’s existing plant in Phnom Penh, Cambodia. During the fourth quarter of 2019, we will begin operations at a new one-line beverage can plant in Rio Verde, central Brazil.”
Interest expense was $102 million in the fourth quarter of 2018 compared to $65 million in 2017 primarily due to higher outstanding debt from borrowings incurred to finance the Signode acquisition.
Net income attributable to Crown Holdings in the fourth quarter was $53 million compared to a loss of $89 million in the fourth quarter of 2017. Reported diluted earnings per share were $0.40 in the fourth quarter of 2018 compared to a loss of $0.67 in 2017. Adjusted diluted earnings per share increased to $1.00 over the $0.84 in 2017.
A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.
Net sales for the full year of 2018 increased to $11,151 million compared to $8,698 million in 2017 primarily due to the impact of the Signode acquisition, increased beverage can volumes, the pass through of higher material costs to customers and $134 million of favorable currency translation.
Income from operations was $1,096 million in 2018 compared to $1,024 million in the prior year. Segment income increased to $1,328 million over the $1,117 million in 2017, reflecting the Signode acquisition.
Interest expense was $384 million in 2018 compared to $252 million in 2017 primarily due to higher outstanding debt from borrowings incurred to finance the Signode acquisition.
Net income attributable to Crown Holdings for 2018 was $439 million compared to $323 million in 2017. Reported diluted earnings per share were $3.28 compared to $2.38 in 2017. Adjusted diluted earnings per share increased to $5.20 over the $4.24 in 2017.
The company currently expects 2019 adjusted diluted earnings per share to be in the range of $5.20 to $5.40, which includes a non-cash headwind of approximately $53 million ($0.32 per share after tax) in pension expense primarily due to a decline in the market value of pension assets and an increase in discount rates in 2018, and an unfavorable currency translation impact of approximately $0.09 per share based on current exchange rate levels. Adjusted diluted earnings per share for the 2019 first quarter are expected to be in the range of $1.00 to $1.10.
The adjusted effective income tax rate for 2019 is expected to be in the range of approximately 25%-26% compared to 24.7% in 2018.
Crown Holdings, through its subsidiaries, is a leading global supplier of rigid packaging products to consumer marketing companies, as well as transit and protective packaging products, equipment and services to a broad range of end markets. World headquarters are located in Yardley, Pennsylvania.
Source: Company Press Release