Ball Corporation president and CEO Daniel Fisher expressed confidence in the world’s largest can manufacturer’s ability to win with beer and beverage-alcohol companies, during the company’s Q3 2024 earnings call Thursday.
“We’re with the brands that are winning in beer, overwhelmingly,” Fisher said. “We’re with all the brewers, and the company that’s winning the most, we’ve got a dramatically significant share of that position.”
Fisher added that he believes Ball is “moving in the right direction” and is partnered with “the folks that are going to win in this category.” He encouraged analysts to take a more holistic view of the portfolios of Ball’s clients as they’ve expanded their offerings beyond beer.
“One of our biggest partners has the fastest growing RTD, probably the fastest growing non-alcohol beer and the two fastest growing domestic light beers,” Fisher said. “So there are elements of winning with the right brands, winning with portfolios, winning with folks that are innovative – all of those factor into that.”
Fisher acknowledged that the beer category has been in decline for two decades but those producers’ shift to can packaging and new innovations being launched in cans have largely insulated Ball’s business. He noted that aluminum cans now hold a “70% share” of the beer business, as brewers have moved away from glass bottles.
“Beer, in general, yes, has been declining for 20 years, but it hasn’t within our portfolio,” he said. “And I think the end consumer softness has a lot more to do with this than the beer decline.”
Fisher also reminded analysts that beer has historically provided higher, “far better” margins than other products.
“The demise of beer is a little bit overdone, given the backdrop of that substrate shift,” he continued.
Looking ahead to 2025, Fisher said he’s encouraged that some of the “drags for the end consumer,” such as inflation and uncertainty caused by next week’s election will be alleviated.
“When we talk to all of our customers, they’re very encouraged about 2025,” he said.
Fisher expects the alcohol business to have “a tailwind of discretionary spending coming back,” which he expects to manifest in Ball’s “top-line results.”
“We’re bullish on seeing growth next year in that category writ large,” he said. “And I think we’re with the right folks who are going to do well in that category.”
By The Numbers
Ball reported Q3 net earnings of $197 million, including a net after-tax loss of $81 million, on sales of $3.08 billion. In Q3 2023, Ball reported $203 million in net earnings, including a net after-tax loss of $60 million, on $3.11 billion in sales.
Through the first nine months of 2024, Ball has recorded net earnings of $4.04 billion (with a net after-tax gain of $3.31 billion related to the sale of the company’s aerospace business), with sales of $8.92 billion, compared to $553 million on sales of $9.16 billion through the first three quarters of 2023.
Ball’s beverage packaging division in North and Central America recorded $203 million in net earnings on sales of $1.46 billion in Q3 2024. In the same quarter last year, the company posted $196 million in net earnings on sales of $1.54 billion.
Ball attributed the decline in Q3 2024 sales to lower volumes and price/mix year-over-year (YoY). The increase in operating earning YoY was attributed to price/mix, which was only partially offset by a -3.1% decline in volumes.
Aluminum Cup Business Loses Around $40 Million in 2024
Ball CFO Howard Yu told analysts that the company’s aluminum cup business will lose around $40 million this year.
“That can’t continue,” he said.
Ball is exploring several options for that business, including “rightsizing” it, “a joint venture or third-party interaction” or winding down the business, Yu said.
Fisher added that Ball will not be infusing additional capital into that business. Fisher pinned the issues with the aluminum cup business on inflation and “a price point that’s unsustainable relative to what people are willing to pay for sustainability.” He added that “the downstream recycling infrastructure that’s required is also far more complicated” and there were “some pretty significant barriers to move quickly” within the service industry, airports, travel and transportation sectors.