Crown Holdings, Inc. (CCK) reported fourth-quarter 2014 adjusted earnings of 48 cents per share, flat year over year and in line with the Zacks Consensus Estimate.
On a reported basis, earnings declined to 9 cents per share, compared with 36 cents in the year-ago quarter.
Operational Update
Net sales increased 2.7% year over year to $2.13 billion. Revenues, however, lagged the Zacks Consensus Estimate of $2.18 billion. The year-over-year rise was attributable to the Mivisa acquisition and increase in beverage can volumes, partially offset by unfavorable currency translation.
Cost of products sold increased 1.4% year over year to $1.79 billion. Gross profit increased 4.7% year over year to $287 million. Gross margin increased 30 basis points to 13.5% in the quarter.
Selling, general and administrative expenses declined 9.4% year over year to $96 million. Adjusted operating profit increased 13.7% to $191 million from the year-ago quarter and operating margin increased 87 basis points to 8.98%.
Segment Performance
Net sales from the Americas Beverage segment were $622 million, up 8.7% from $572 million in the year-ago quarter. Segment operating profit also rose to $93 million from $83 million on a year-over-year basis.
The North America Food segment sales went down 6.2% year over year to $181 million. Operating earnings decreased 4.8% year over year to $20 million.
The European Beverage segment sales dropped 9.6% year over year to $350 million. Consequently, operating income decreased 8.7% year over year to $42 million.
Revenues in the European Food segment increased 20% year over year to $482 million. Segment operating profit surged 150% to $25 million from $10 million in the year-ago quarter.
Revenues in the Asia Pacific segment decreased 3.2% year over year to $302 million. Operating profit also rose 3% to $34 million from the year-ago quarter.
Financial Update
Crown Holdings ended 2014 with cash and cash equivalents of $965 million, up from $689 million at 2013-end. Cash flow from operations was $912 million in 2014, compared with $885 million in 2013. Total debt of the company increased to $5.3 billion as of Dec 31, 2014 compared with $3.8 billion as of Dec 31, 2013.
Fiscal 2014 Performance
Crown Holdings posted adjusted earnings of $3.41 per share for 2014, which increased 14% from $2.99 a share in 2013. Earnings, however, lagged the Zacks Consensus Estimate by a penny. Including special items, earnings for the year were at $2.79 per share, compared with $2.30 in 2013.
Revenues for the full year increased 5.1% year over year to $9.1 billion from $8.7 billion in 2013. Revenues, however, fell short of the Zacks Consensus Estimate of $9.2 billion.
Our Take
Crown Holdings will benefit from global beverage can growth and integration of Mivisa in 2015. The company is also looking forward to completing the acquisition of EMPAQUE. Crown Holdings entered into an agreement to acquire Dutch brewer Heineken’s Mexican packaging business, EMPAQUE, for $1.2 billion in Sep 2014. The acquisition will help Crown Holdings to expand in the growing Mexican market and to fortify its global beverage packaging business.
Philadelphia-based Crown is a leading supplier of packaging products to consumer marketing companies. The company manufactures aluminum beverage cans, food cans, aerosol cans and other packaging products.
Crown Holdings currently holds a Zacks Rank #4 (Sell). Some better performing stocks worth considering in the sector include Abengoa SA (ABGB), Belden Inc. (BDC) and Berry Plastics Group, Inc. (BERY). All these stocks carry a Zacks Rank #1 (Strong Buy).
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