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Glass-filling investments boost South America for O-I

By Joe Whitworth , 15-Feb-2013

O-I said heavy investment in glass-filling capabilities in South America is ensuring they are well positioned for continued growth in the region.

The firm added that there are no planned material merges and acquisitions but small strategic bolt-ons are possible, as part of an investor day held yesterday (Thursday).

Across all regions, the company is targeting volume annual growth of 1-2% up to 2015 with a segment operating margin of 15% by the same year.

Heavy investment

O-I said they were in a good position for future growth in South America with beer the main sales category, which was reflected with targets of annual volume growth of 3% and segment operating margin in 2015 of 20-22%.

The company said beer customers were investing heavily in glass-filling capabilities in the region and consumption was favourable in all end uses.

It also eliminated three uncompetitive furnaces and relocated 16 machines closer to demand areas and increased throughput speed by 9% on average.

Uncertain Europe

In Europe, O-I said there were uncertain macroeconomic conditions, price covering cost inflation, flat domestic consumption and many small competitors with divergent strategic and financial objectives.

O-I reported niche growth mature markets such as Europe, with speciality juices, water and a trend for food in glass the main factors.

Wine made up the majority of sales, followed by beer, food and spirits and non-alcoholic beverages completed the category.

The firm targeted 1% annual volume growth through 2015 and segment operating margin on 14% in the same period.

Beer drives North America

Beer was the largest seller in North America with more than half of total sales and O-I pinpointed financial targets of 1% annual volume growth and segment operation margin in 2015 of 15%.

It said there was a strategic focus on craft beer, speciality spirits and wine segments and reducing the cost of goods sold.

In North America, craft beer, spirits and wine, food in glass and private brands for premium food applications were cited as key drivers.

Selected growth in Asia Pacific

Beer was also the leader of sales in Asia-Pacific, followed by wine, non-alcoholic beverages, food and spirits with demand stabilizing in Australia and New Zealand and favourable growth in China and South East Asia.

The aim for annual volume growth through 2015 was less than 1% due to flat predictions in developed economies but 2-5% in emerging markets, excluding revenue from non-consolidated joint ventures.

Asbestos payments are expected to decline by $5m-$10m per year.

The firm has 79 plants and 148 furnaces in 21 countries and claims to be number one in Europe, Australia and New Zealand and Brazil, Colombia, Ecuador and Peru.

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