Crown Holdings discusses four plant closures in Q3 2015 results

Tim Donahue, president/COO, Crown, told shareholders in its Q3 2015 results conference, to ‘right-size its food end making capacity’, it has proposed the closure of an end plant in the UK and a food can plant in Morocco, as it merges that business into its acquired Mivisa facility.

245 job losses in Wales

According to Gareth Jones, from Unite, a UK trade union, Crown Packaging in Neath, Neath Port Talbot, Wales, is considering closing the site, which makes lids for cans.

"Unite has received formal notification that the company is considering closing its site in Neath with the subsequent loss of 245 jobs​," he said.

While Donahue did not mention the name of the facility closing in the UK he said it was in the process of removing four food can plants globally.

“We have a consultation process we’ll need to go through in the UK and that will take a fair amount of time, so the factory won’t actually be shut down for several months​,” he said.

In Crown’s Q3 financial results unit volumes in European beverage increased more than 1% in the quarter as strong demand across continental Europe (France, Greece, Eastern Europe, Italy and Spain) offset continuing demand weakness in Jordan, where its proximity to Iraq and Syria make shipments difficult.

“In European food, improved efficiencies, lower spoilage, positive mix and the continuing integration of Mivisa all contributed to offset a 1% volume decline in the quarter, leading to an 8% income improvement over the prior year​,” said Donahue.

“The various harvests this year were actually very good, but just not at the high levels seen last year. The third quarter provision for restructuring also includes charges for the closure of two European food facilities​.”

Aluminum beverage can line in France

Donahue said the new aluminum beverage can line in Custines, France, continues to progress and as expected, the impact from aluminum premiums was a slight positive.

“We have also announced the installation of a second beverage can line in the Osmaniye, Turkey plant with a commercial start date targeted for late 2016, early 2017​.”

Strong performance was seen in the Americas beverage and European food. The former had a revenue increase of 39% with segment income up 68%, and although food Europe revenue was down 3.3%, segment income increased by 8.4%.

“In North American food, revenue and income again showed declines to the prior year, primarily the result of customer loss as well as an earlier than expected end to the midwest corn pack​,” said Donahue.

“During the quarter, we announced the closure of two North American food can plants, one in Baltimore, Maryland and the other in Chatham, Ontario. Both were difficult but necessary decisions that more appropriately align our capacity with customer demand​.

“We have an extremely low cost food can footprint in North America. We now have two two-piece food plants​.

“The one plant that we’ve announced the closure of in Baltimore was a one-line two-piece plant which was not as low cost as we would have liked, and a significant amount of the volume we lost on that large customer were two-piece cans, we so remain extremely low cost in two-piece food cans and we only have, after the closure of the Chatham plant, on three-piece cans, non-specialized three-piece cans, three or four three-piece factories​.”

He added, the company has multiple growth projects and cost reduction initiatives underway, to increase Crown’s income and return on investment.

“We continue to look at opportunities to buy good metal packaging businesses at attractive prices, and we have confidence in our ability to manage and incorporate new enterprises as they are added​,” he said.