Ardagh’s drink cans unit warns on profits amid costs and demand woes

The Paul Coulson-led Ardagh Group’s beverage cans unit warned on Thursday that its full-year earnings will come in lower than previously expected, as it grapples with higher costs and weaker-than-expected growth in demand for its products as the global economy slows.

Ardagh Metal Packaging (AMP), which is listed in New York and 75 per cent owned by Ardagh Group, said it now expects its full-year earnings before interest, tax, depreciation and amortisation (Ebitda) to fall to between $640 million (€637 million) and $650 million, compared to $630 million last year. It sees shipments of its products rising by a “mid-single digit” percentage.

It had previously forecast that earnings would rise to about $710 million amid “high-single digit” shipment growth.

“We experienced a challenging third quarter of 2022,” said Oliver Graham, chief executive of AMP. “While global shipments increased by 9 per cent compared with the same period last year, demand was below our expectations and impacted earnings.”

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He added: “We expect these conditions to persist through the fourth quarter and into the first half of 2023. In response we are taking a disciplined approach to managing our costs and capacity, and further flexing our growth expenditure. Our well-advanced investment programme puts us in a very strong position to serve the continuing secular demand growth for sustainable beverage can packaging.”

AMP’s European business stood out as a particularly weak spot during the quarter, with its Ebitda sliding 50 per cent, driven by rising input costs and euro weakness against the dollar. Earnings in AMP’s Americas unit edged 2 per cent higher to $102 million.

The unit’s earnings per share of 6c for the quarter came in 2c below consensus expectations among analysts that cover AMP’s stock.

The wider Ardagh Group, where Mr Coulson has an indirect 33 per cent stake and which also includes a glass containers business, reported in a separate statement on Thursday that its third-quarter Ebitda dipped to $332 million from $336 million for the same period last year.

Ardagh Group has been investing heavily in ramping up production – especially in its beverage cans business – amid rising underlying growth in demand for recyclable packaging products on both sides of the Atlantic.

Group revenue rose to $2.34 billion in the third quarter from $1.94 billion a year earlier, mainly as it passed on rising costs where possible to customers.