Crown Holdings reports Y-o-Y decline of 5.83% in net sales for Q3 2023, offset by lower volumes in other operations

Crown Holdings, one of the world's largest aluminium can manufacturers, recently announced their financial results for Q3 ending 30 September 2023. As per the reports, higher beverage can volumes in North America and favourable foreign currency translation of $60 million contributed to the third quarter's net sales of $3,069 million, down by $190 million or 5.83 per cent from $3,259 million in the Q3 2022. Lower volumes across most other businesses and the pass-through of $187 million in lower material costs also contributed to the decline.

The income generated from operational activities amounted to $374 million during the third quarter, exhibiting an increase from the $297 million recorded in the same period of 2022. Segment income was $430 million in Q3 2023, up from $336 million in the prior year's third quarter, reflecting the benefits of higher beverage can volumes in North America, contractual recovery of prior years' inflationary cost increases in Europe, and the successful implementation of cost-cutting programmes in Transit Packaging.

"Operating results for the third quarter were solid, and the Company performed in line with expectations despite the cumulative effects of persistent inflation and challenging macroeconomic conditions in certain markets, such as Asia, which continue to adversely impact volumes. Beverage can volumes in North America expanded by 13 per cent, and the can continues to be the preferred choice by both customers and consumers alike for new beverage product introductions. The benefits of the overhead cost reduction program were clearly visible in strong Transit Packaging results for the quarter, more than offsetting generally sluggish volumes resulting from lackluster production in several industrial markets," said Timothy J. Donahue, chairman, president and chief executive officer of Crown Holdings.

The interest expenditure for the third quarter of 2023 amounted to $111 million, representing an increase from the $76 million incurred during the same period in 2022. This rise may be attributed to the impact of increased interest rates. In the third quarter, Crown Holdings had a net income of $159 million, an increase from the $127 million reported in 2022. In the third quarter of 2023, the reported diluted profits per share amounted to $1.33, increasing from the $1.06 reported in 2022. Similarly, the adjusted diluted earnings per share for the same period were $1.73, reflecting a rise from the $1.46 recorded in 2022.

Net sales for the first nine months of 2023 were $9,152 million, compared to $9,931 million in the same period last year, owing primarily to 6 per cent higher beverage can volumes in North America and a $35 million favourable foreign currency translation, offset by a $575 million pass through in lower material costs and lower overall net volumes.

In the first nine months of 2023, income from operations was $1,010 million, compared to $1,107 million in the same period last year, which included a $113 million gain on the sale of the Transit Packaging segment's Kiwiplan business. The income generated during the initial nine months of 2023 amounted to $1,164 million, compared to $1,151 million in the corresponding period of the previous year. Many factors contributed to this increase, including the positive impact of increased beverage can volumes in the Americas Beverage segment, the contractual recovery of inflationary cost increases from the prior year in the European Beverage segment, and cost reduction initiatives implemented in the Transit Packaging segment.

"Actions taken in 2022 to negotiate more comprehensive raw material and other inflationary pass-through provisions resulted in improved income performance in the European Beverage division. Beverage can volumes in Asia Pacific and aerosol can shipments in North America continued to be weak during the quarter.

"Looking forward, we remain focused on customer satisfaction and executing that which is under our control. We have adjusted production schedules to reduce inventory levels across aerosols, Asia and Transit in response to current demand. Net leverage at 3.5 times is one-half turn lower than only three months ago, and we remain on pace to generate approximately $500 million in free cash flow. We anticipate that capital expenditures will be significantly reduced to approximately $500 million in 2024 and 2025, and the Company expects to use the increased cash flow to pay down debt and return capital to shareholders."

However, these gains were partially offset by a $60 million negative impact resulting from year-over-year inventory adjustments due to changes in steel pricing within the Other segment and lower volumes observed in various other business segments, notably in aerosols in North America and beverage cans in Asia.

The interest expenditure for the first three quarters of 2023 amounted to $323 million, an increase from the previous year's figure of $194 million. This rise may be attributed mainly to the escalation in interest rates. The interest expenditure for the first three quarters of 2023 amounted to $323 million, an increase from the previous year's figure of $194 million. This rise may be primarily attributed to the escalation in interest rates.

Fourth-quarter adjusted diluted earnings per share are expected to be in the $1.40 to $1.50 range, with full-year 2023 adjusted diluted earnings per share in the $6.00 to $6.10 range, reflecting full-year improved operating results in Americas and European Beverage and Transit Packaging, offset by continued weakness in Asia and North America aerosols, which are traditionally more economically sensitive. After about $900 million in capital expenditures, adjusted free cash flow is estimated to be around $500 million.