Investment in its metal beverage packaging business, particularly in the US, has provided packaging giant Ardagh Group with a "platform for future growth", a leading industry analyst has said.
Flor O'Donoghue of Davy was commenting as Ardagh announced a 5% increase in revenue in the fourth quarter of its financial year, to $1.7 billion, with metal beverage packaging revenue rising by 9% and glass packaging revenue rising 1%.
"Ardagh successfully negotiated the unexpected and sudden challenges that emerged last year," O'Donoghue wrote in a briefing note.
"Fourth-quarter results were better than expected with organic revenue growth picking up and the metals business in the Americas delivering a stand-out performance. Significant projected investment in the latter, above what was previously flagged, provides the platform for future growth."
Metal Beverage Packaging
In its report, Ardagh said that its European metal beverage packaging operations saw revenue increase by 11% at constant currency levels in Q4, principally due to volume/mix growth of 12%, while in the US, metal beverage packaging revenue rose by 8% in the quarter.
New metal packaging production lines in Olive Branch, Mississippi commenced production in late 2020 and early 2021, while an extension to its Winston-Salem plant in North Carolina is also under way.
Ardagh also recently announced the acquisition of a brownfield facility in Huron, Ohio, which it is current converting to a new can and ends production facility.
According to chief executive Paul Coulson, the business recently increased its 2021-2024 Business Growth Investment programme from $1.8 billion to $2.1 billion, "due to additional beverage can opportunities", adding that the business expects a "doubling" of EBITDA from its metal beverage packaging business by 2024.
"The resilience of our businesses, the adaptability of our teams and the outlook for our sustainable products was underlined in 2020," he added.
Looking ahead, Ardagh Group said that it is targeting an adjusted EBITDA of between $1.28 billion and $1.3 billion.
On the group's share price performance, Davy's O'Donoghue added, "The stock has ticked up in recent months and unsurprisingly gained on the latest update but remains 5% below where it stood this time last year. It remains attractively valued, and we believe it can continue to push ahead."
© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.