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January 29, 2008 |
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BALL CORP: Reports US$281.3 Million 2007 Full Year Earnings Ball Corporation has reported full-year 2007 net earnings of US$281.3 million, or US$2.74 per diluted share, on sales of US$7.39 billion, compared to US$329.6 million, or US$3.14 per diluted share, on sales of US$6.62 billion in 2006. Fourth quarter 2007 net earnings were US$33.3 million, or 33 cents per diluted share, on sales of US$1.76 billion, compared to US$48.3 million, or 46 cents per diluted share, on sales of US$1.59 billion in the fourth quarter of 2006. In both 2007 and 2006 results included costs from business consolidation activities and significant non-operating items. Fourth quarter 2007 results included net after-tax costs of approximately US$27 million, or 27 cents per diluted share, for business consolidation primarily in the company's food and household products packaging, Americas, segment. Full-year 2007 results included the fourth quarter business consolidation costs and a third quarter after-tax charge of US$51.8 million, or 50 cents per diluted share, related to a customer settlement. Fourth quarter 2006 results included net after-tax costs of US$20.2 million, or 19 cents per diluted share, from business consolidation activities, reduced by a one-time tax gain. Full- year 2006 results included property insurance proceeds resulting from a fire at a plant in Germany, offset by business consolidation costs, for a net after-tax gain of US$25.6 million, or 24 cents per diluted share. Chairperson, president and chief executive officer, R. David Hoover said "2007 was a record year for Ball in terms of operating results." "On a comparable basis, our diluted earnings per share were US$3.50 in 2007, up 21 percent from our previous record of US$2.90 in 2006. This came despite a difficult fourth quarter comparison where, also on a comparable basis, we earned 60 cents per diluted share in the period in 2007 versus 65 cents in the fourth quarter of 2006," Mr. Hoover said. "While we generally are pleased with our results from 2007, we have identified and are executing on numerous initiatives that we believe will lead to further improvements in 2008 and better position us for the longer term," Mr. Hoover said. "Earlier this week our board of directors elected John A. Hayes as executive vice president and chief operating officer of Ball Corporation. John has done a superior job of leading our operations in Europe in recent years. We look forward to having him as chief operating officer for all of our businesses." Metal Beverage Packaging, Americas Metal beverage packaging, Americas, segment operating earnings were US$213.6 million in 2007 on sales of US$2.76 billion, including an US$85.6 million charge for a customer settlement, compared to US$269.4 million on sales of US$2.60 billion in 2006. For the fourth quarter, earnings were US$57.8 million on sales of US$666.6 million in 2007, compared to US$75.9 million on sales of US$611.9 million in 2006. "Continued strong demand for specialty size cans contributed to overall results in our metal beverage packaging, Americas, segment in 2007," Mr. Hoover said. "Work is progressing on schedule to install a new 24-ounce can production line in our Monticello, Indiana, beverage can plant. That capacity will come on stream later this year to help us keep up with the growing demand for that particular container, primarily for energy drinks and beer." Ball Corp.'s board of directors approved yesterday the corporation's participation in a one-line metal beverage container plant in southeastern Brazil. The plant will be part of Latapack-Ball Embalagens, Ltda., the company's 50-50 joint venture can company in Brazil. Its capacity will be 900 million cans per year and can be expanded to 2 billion cans per year as demand grows. The plant will be financed entirely by cash flows from the joint venture, and production is expected to begin in mid-2009. Metal Beverage Packaging, Europe/Asia Metal beverage packaging, Europe/Asia, segment results in 2007 were operating earnings of US$256.1 million on sales of US$1.9 billion, compared to US$268.7 million on sales of US$1.51 billion in 2006, which included a pre-tax property insurance gain of US$75.5 million related to a fire in a German plant. For the fourth quarter, operating earnings in 2007 were US$37.6 million on sales of US$455.5 million, compared to US$33 million on sales of US$352.6 million in the fourth quarter of 2006. Ball Corp. announced today plans to build a new beverage can manufacturing plant in Poland in order to meet the rapidly growing demand for beverage cans there and elsewhere in Central and Eastern Europe. The plant will be built in Lublin, near the borders of Belarus and Ukraine. It will initially have one production line with an annual capacity of approximately 750 million cans per year and is expected to begin production in the first half of 2009. "Our metal beverage packaging, Europe/Asia, segment had a strong 2007, with improved results throughout Europe and in China, and we have numerous growth opportunities," Mr. Hoover said. "We currently are speeding up certain production lines in Germany and Poland in advance of the busy 2008 summer selling season. In addition, during the fourth quarter of 2007 we announced plans for a beverage can plant in India that will use existing manufacturing equipment." Metal Food & Household Products Packaging, Americas Metal food and household products packaging, Americas, segment results for 2007 were a loss of US$8 million on sales of US$1.18 billion, including business consolidation costs of US$44.2 million, compared to US$2.4 million on sales of US$1.14 billion in 2006. For the fourth quarter of 2007, segment results were a loss of US$33.4 million on sales of US$271.1 million, compared to a loss of US$23.2 million on sales of US$288.1 million in the same period of 2006. The fourth quarter and full-year 2007 results included business consolidation costs of US$44.2 million. The fourth quarter and full-year 2006 results include business consolidation costs of US$33.8 million and US$35.5 million, respectively. "Work has begun on the further restructuring announced early in the fourth quarter of our metal food and household products packaging, Americas, segment," Mr. Hoover said. "The restructuring plan includes closing aerosol can production plants in California and Georgia and exiting the custom and decorative tinplate can business. Even though the anticipated annualized cost savings of US$15 million from this restructuring are not expected until 2009, we believe other improvements we have already made and continue to make in pricing and operating efficiencies will lead to much improved performance in this segment in 2008." Plastic Packaging, Americas Plastic packaging, Americas, segment results for 2007 were operating earnings of US$25.9 million on sales of US$752.4 million, compared to US$28.3 million on sales of US$693.6 million in 2006. For the fourth quarter, earnings in 2007 were US$8.8 million on sales of US$172.1 million, compared to US$10 million on sales of US$172.6 million for the same period in 2006. "Plastic packaging, Americas, segment results were down slightly in 2007 from 2006 and are at unacceptable levels," Mr. Hoover said. "We will continue to emphasize our heat set and other higher margin plastic containers while pursuing price increases for commodity plastic containers for water and carbonated soft drinks, where returns are well below our cost of capital and must improve." Aerospace and Technologies Aerospace and Technologies segment results were operating earnings of US$64.6 million on sales of US$787.8 million in 2007, compared to US$50 million on sales of US$672.3 million in 2006. For the fourth quarter, earnings were US$11.1 million on sales of US$190.9. Fourth quarter 2006 earnings were US$16.7 million on sales of US$166.6 million. "Our aerospace and technologies segment enjoyed an outstanding year in 2007, even though fourth quarter results were down from a year ago," Mr. Hoover said. "We have several large projects, such as the WorldView 2 satellite for DigitalGlobe, in progress and are competing for several other large contracts. The market continues to hold strong demand for the products and technologies for which we are most recognized." Outlook Raymond J. Seabrook, executive vice president and chief financial officer, said adjusted free cash flow for 2007 was US$440 million and that 2008 free cash flow will be lower due to higher cash taxes, a one-time after-tax payment of US$42 million for the customer settlement reached in the third quarter of 2007 and higher 2008 capital expenditures, offset partially by a reduction in working capital. "In part due to lower than expected capital expenditures in 2007 which will be spent in 2008, and due to growth projects in the company's worldwide beverage can business, we expect capital spending to exceed US$300 million in 2008," Mr. Seabrook said. "Approximately 75 percent of our anticipated capital spending will be in our beverage can segments, with more than US$150 million of the total earmarked for top-line growth projects. Cost reduction and maintenance capital spending for the total company should be approximately 60 percent of overall depreciation. "Our credit profile remains strong with net debt at the end of 2007 at US$2.2 billion. This strong credit profile should allow us to repurchase approximately US$300 million of our common stock in 2008, including the accelerated share buyback program we announced in December," Mr. Seabrook said. "We are optimistic about 2008," Mr. Hoover said. "We are focused on getting results in our food and household products packaging and plastic packaging segments to more acceptable levels. "We have attractive opportunities for growth in our beverage can operations worldwide, and much of our capital spending will be directed at these opportunities. Our aerospace and technologies segment is coming off of a remarkable record year that will be difficult to duplicate, but results in 2008 should remain strong," Mr. Hoover said. "For full year 2008 we will work hard to achieve greater than the US$3.50 per diluted share we made in 2007, excluding restructuring and customer settlement costs," Mr. Hoover said. About Ball Corp. Headquartered in Broomfield, Colorado, Ball Corp. -- http://www.ball.com/ -- is a supplier of high-quality metal and plastic packaging products. It owns Ball Aerospace & Technologies Corp. -- a developer of sensors, spacecraft, systems and components for government and commercial customers. Ball Corp. reported sales of US$7.4 billion in 2007 and the company employs about 15,500 people worldwide, including Argentina, Hong Kong and China. * * * As of July 30, 2007, the company holds Moody's Ba1 long-term corporate family rating, bank loan debt, senior unsecured debt, and probability of default rating. Moody's said the outlook is stable. Standard & Poor's rates the company's long-term foreign and local issuer credits at BB+ with a stable outlook. Fitch also rates the company's bank loan debt at BB+ and long- term issuer default rating and senior unsecured debt at BB. Fitch said the outlook is stable. |
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