Trade Resources Industry Views Crown's Net Sales Increase in 2017 Fourth Quarter

Crown's Net Sales Increase in 2017 Fourth Quarter

Crown Holdings has released its financial results for the fourth quarter and year ended 31 December 2017.

Net sales in the fourth quarter increased to $2,168 million compared to $1,923 million in the fourth quarter of 2016, reflecting increased global beverage and food can volumes, the pass through of higher raw material costs, and $83 million of favorable currency translation.

Income from operations was $222 million in the fourth quarter of 2017.  Segment income improved to $245 million in the quarter over the $236 million in the fourth quarter of 2016, including an $11 million benefit from currency translation. 

Commenting on the quarter, Timothy J. Donahue, President and Chief Executive Officer, stated, "Our solid fourth quarter and full year operating results were in line with expectations and reflect strong performances throughout the Company's global businesses.  We exceeded our adjusted free cash flow projections due to another year of excellent working capital performance.  Global beverage can volumes advanced three percent for the full year with particularly robust shipments in Europe, Latin America and Southeast Asia.   

Interest expense was $65 million in the fourth quarter of 2017 compared to $62 million in 2016 primarily due to an increase in average borrowing rates.

During the fourth quarter of 2017, the Company recorded a tax charge of $177 million to recognize the estimated impact of the Tax Cuts and Jobs Act (the "Act").  The charge primarily includes an adjustment to write down the Company's existing U.S. net deferred tax assets to account for a reduction in the U.S. statutory rate from 35% to 21%, and provisional adjustments principally for the estimated impact of deemed repatriation of foreign earnings. 

The provisional elements of the charge represent a reasonable estimate of the impact of certain requirements of the Act and will be updated as new information becomes available during the measurement period, which concludes in December 2018.  The Company does not expect these charges to result in the payment of cash due to its anticipated use of existing tax attributes to offset any tax payments that would otherwise be owed. 

The net loss attributable to Crown Holdings in the fourth quarter of 2017 was $89 million compared to income of $65 million in the fourth quarter of 2016.  The reported loss per share was $0.67 in the fourth quarter of 2017 compared to diluted earnings per share of $0.47 in the prior year quarter.  Adjusted diluted earnings per share were $0.79 compared to $0.71 in the fourth quarter of 2016.

A reconciliation from net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share is provided below.

In connection with the Signode transaction discussed above, in January of this year the Company, through its subsidiaries, issued €335 million principal amount of 2.25% senior unsecured notes due 2023, and €500 million principal amount of 2.875% senior unsecured notes and $875 million principal amount of 4.75% senior unsecured notes due 2026.  The Company also entered into agreements with lenders for €750 million and $1.25 billion of Term Loan B borrowings to be drawn at the closing of the acquisition.

On January 3, 2018, the Company issued a Worker Adjustment and Retraining Notification (WARN) announcing its intention to close the Lawrence, Massachusetts beverage can manufacturing facility.  The facility consists of two production lines with a capacity of 1.6 billion 12-ounce beverage cans per year and employs approximately 100 people. 

Net sales for the full year were $8,698 million compared to $8,284 million in 2016, primarily due to increased global beverage and food can volumes, the pass through of higher raw material costs, and $19 million of favorable currency translation.

Income from operations was $1,077 million in 2017.  Segment income improved to $1,128 million over the $1,078 million in 2016, including a benefit of $5 million from currency translation.

Interest expense was $252 million in 2017 compared to $243 million in the prior year primarily due to an increase in average borrowing rates.                                                               .

Net income attributable to Crown Holdings for 2017 was $323 million compared to $496 million in 2016.  Reported diluted earnings per share were $2.38 compared to $3.56 in 2016.  Adjusted diluted earnings per share were $4.03 compared to $3.93 in 2016.

During 2017, the Company purchased 6.2 million shares of its common stock for $339 million.

Excluding the impact of the Signode acquisition discussed above, the Company currently expects first quarter and full year 2018 adjusted diluted earnings per share to be in the ranges of $0.75 to $0.85 per share and $4.30 to $4.50 per share, respectively. Also excluding the impact of the acquisition, the Company currently expects a full year 2018 adjusted effective tax rate of approximately 26%, cash provided by operating activities (before the impact of new accounting guidance discussed below) of approximately $925 million, and capital expenditures of approximately $425 million.

Source: http://packagingmaterials.packaging-business-review.com/news/crowns-net-sales-increase-in-2017-fourth-quarter-080218-6050575
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