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Berry Plastics looks to new products and global opportunities to boost business

By Joe Whitworth , 28-Nov-2012

Berry Plastics has recorded a net sales decrease of 2% as all but one of its segments declined year-on-year.

For Q4 ending 29 September, the company said net sales declined by 2% to $1.20bn from $1.23bn, related to the pass through of lower raw material costs and the decision to exit low margin business.

This was partially offset by sales from acquired businesses and a slight market share gain in certain segments.

The company said it was attempting to reduce debt leverage, accelerate the rate of inorganic growth through product launches around plastic barrier packages and thermo management.

It would also continue to identify bolt-on acquisitions which generate substantial synergies and potential to grow in their 14 plants abroad with existing customers as North America currently makes up 90% of sales.

Improved product mix, aggressive cost reduction initiatives, and lower costs for raw materials, coupled with higher prices in certain product segments were key factors in the quarter.

Profit rose from the same period last year which was severely hit by hefty restructuring and impairment charges.

Berry investments

In what he described as traditionally the firm’s weakest quarter, Jon Rich, chairman and CEO of Berry Plastics, said they were a number of positive factors.

Berry has been investing heavily in new products launches which will likely have a slightly negative near term impact but will generate future new revenues.

“Also nine Berry facilities were impacted temporarily as a result of Hurricane Sandy and the associated costs will have a modest impact in the December quarter.

“Facing these headwinds in the December quarter, we still anticipate that our operating EBITDA will improve versus the prior year as long as volumes continue on their current trend.

“These are indeed exciting times here at Berry, our results this quarter are consistent with our believe that we are winning in the marketplace.”

Segment glance

The segments Rigid Open Top, Engineered Materials and Flexible Packaging net sales are fell year on year by 11%, 4% and 8% respectively.

But Rigid Closed Top net sales rose 15% to $352m, representing a $45m rise.

It was the same story in the fiscal year end results with Rigid Open Top reporting a 3% decline, Engineered Materials a 6% decline and Flexible Packaging a 7% decline.

Rigid Closed Top net sales rose 37% to $1.4bn in the fiscal year.

Rich said that while they were pleased with overall performance, the weakening global economic environment will present challenges to industry and Berry.

“Our strategic actions are allowing us to continue to strengthen the company’s balance sheet, maintain significant liquidity, and generate substantial free cash flow.

“Going forward, we will continue to execute on our strategies to further reduce our overall debt leverage, pursue innovative organic growth opportunities, identify value adding acquisitions that can be accretive to shareholder value, and take steps to grow our business internationally.”

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