Ardagh cuts forecast as weak dollar and US beer market bites

Ardagh Group, the metal and glass containers maker led by Irish financier Paul Coulson, has scaled back its full-year earnings forecast for the second time in three months amid weakness in the dollar and US beer market.

The group, which floated on the New York Stock Exchange in March, said that it now expects its full-year earnings before interest, tax, depreciation and amortisation (ebitda) to come to €1.34 billion. The company had previously warned in July that dollar weakness would be likely to shave €30 million off its original €1.4 billion full-year earnings target.

The dollar has fallen by more than 12 per cent against the euro so far this year.

Group revenue decreased by 1 per cent to €1.99 billion in the three months to the end of September, while adjusted ebitda declined at the same pace to €377 million. Stripping out currency fluctuations, both revenue and earnings increased by 2 per cent.

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Ardagh, whose customers include Heineken, L’Oreal and John West, raised more than $350 million (€299.4 million) through an initial public offering in March and listing on the New York Stock Exchange, using the funds as well as cash on its balance sheet to pay down debt.

Total borrowings

The group’s total borrowings stood at €7 billion at the end of September, down from €8.142 billion at the end of last year. The company’s move to refinance billions of euro of debt over the last two years has seen its average interest rate fall to less than 5 per cent from over 7 per cent.

Ardagh’s North American glass packaging unit stood out as the weakest part of the group in the third quarter, with the division posting an 8 per cent revenue decline to €383 million amid a decline in demand in the beer and wine markets and negative currency effects.

The group’s chief executive Ian Curley told the board last month that he plans to step down by the end of the year in a move that will see Mr Coulson become chairman and chief executive. When asked on a call with analysts whether the management changes were down to a difference in opinion on strategy, Mr Coulson said that there had been no such discord.