Good performance for Silgan’s canmaking business, but overall sales slip

Silgan’s sales fell from a record in the second quarter as profit growth in the US-based canmaker’s metal packaging segment was outweighed by weakness in its food and beverage closures unit.

The mixed picture for the three months to the end of June indicates that the industry is still awaiting a return to growth for metal packaging.

North America’s largest specialist maker of food and general lines cans along with closures for beauty and other speciality products reported a 7.5% year-on-year fall in sales to US$1.43 billion while income before tax dropped 15%.

Its metal packaging division bucked the trend, with profit rising 11% thanks to the delayed pass-through of rising labour and manufacturing costs. Nevertheless, sales dropped 5.8%. Can volumes also fell, by 4%, due to anticipated seasonal changes in soup sales, while cans for pet food strengthened.

A combination of rising consumer prices and the continued impacts of the Russian invasion of Ukraine and the Covid pandemic on supply chains have punched a hole in canmakers’ profit in the past three quarters. While Silgan posted record sales in the first quarter, it has suffered along with other canmakers from declining volumes. Chief executive Adam Greenlee said macroeconomic weakness was still impacting performance.

“While we believe consumers of our products continue to be resilient, we are beginning to see an impact from inflation at the retail level on consumer buying habits, including for core food and beverage products, as we cycle against record performance in the prior year,” Greenlee said.

In Silgan’s dispensing and speciality closures business, sales declined 7% and profit slumped 30%. The Stamford, Connecticut-based company attributed the sharp decline to poor performance in its lower-value food and drink closures unit, which accounts for 65% of the segment’s business.

In the wake of the results, Silgan has lowered its profit outlook for 2023. It said many customers had adjusted their financial priorities “to focus on new working capital and inventory management initiatives”.

Nevertheless, it forecasts volumes will return to the buoyant levels of 2022 when sales were still benefiting from surging demand for packaged goods after cafes and restaurants closures as part of pandemic-mitigating lockdowns.

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