Crown’s sales fall for a third quarter but American beverage can volumes point to recovery

Weakening demand and a continued decline in its Asian business dogged Crown in the second quarter as an anticipated recovery in global can sales was yet to materialise.

The US-based canmaker reported a third consecutive quarterly drop in sales, as the global economic outlook improved amid slowing inflation. It also almost halved its investment plans – from $900m to $500m – to rein in spending after two years of capacity expansion. Nevertheless, improved shipments in the Americas prompted chief executive Timothy Donahue to predict healthier performance for the remainder of the year.

Sales fell 11% in the three months to the end of June, compared with the same quarter a year before, to US$3.1 billion. Profit dropped by almost half to $157 million. While the Pennsylvania-based canmaker gave no details on the number of cans shifted – a key metric watched by investors – it said volumes had increased in its American markets but noted that “lower volumes across most other businesses” had hit sales.

The company’s Asian business had suffered from “softer-than expected” volumes in Asia after suffering “double-digit” declines in the first quarter. Profit had also fallen despite the one-off addition of $113m from the sale of its transit packaging business’ Kiwiplan, a software provider for manufacturers. Donahue said global financial headwinds also continued to weigh on performance.

“Cumulative inflationary effects and challenging macroeconomic conditions in certain markets continue to adversely impact volumes,” Donahue said, adding that negotiations to secure cheaper raw materials had helped pare declines.

Canmakers have been recalibrating after a two-year boom during the pandemic came to an end last year. Shipments that had reached records between 2020 and 2022, and forced US canmakers to import cans to fill supply shortages, gave way to sliding demand as rising inflation took its toll on consumer spending habits. Logistics snarls that resulted from the pandemic also weighed on canmaker results. 

Sales fell across all Crown’s sectors, with those in the Americas declining 6.2%, Europe was 11.2% lower and Asia sliding 13%. Profit also declined across the globe except in Europe, where they rose 23%. Despite this, total segment income was down only 6.2%. In Crown’s transit packaging segment profit was up 21%.

Canmakers had predicted a return to growth in the middle of 2023. Despite inflationary pressures easing and growth in global markets indicating a feared recession may have been averted, Crown’s earnings suggest the canmaking sector may have to wait a little longer before it sees light at the end of the tunnel.

Nevertheless, Donahue is confident that after stripping out underlying headwinds – including unfavourable currency movements that had an impact on the most recent results – volumes will begin to recover in the second half of the year.

“In North America, we anticipate increased second-half beverage can shipment levels as retail promotional activity, while still somewhat limited, is expected for carbonated soft drinks,” he said. “The benefits from actions taken in 2022 to negotiate more comprehensive raw material and other inflationary pass-through provisions in European Beverage and a significant overhead reduction programme initiated in Transit Packaging are expected to continue to yield benefits throughout the remainder of the year.”

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