Weakened Europe, resin volatility put cap on Silgan’s closure business in 2012

Foreign currency translation, lower net sales in Europe, and lower selling prices due to lower resin costs pushed Silgan's closure business lower in 2012. Net sales of $680.1 million were down $7.7 million, or 1.1%, compared to $687.8 million in 2011. Some of the negative impacts were partially offset by higher unit volumes in the U.S. single-serve beverage market in the U.S., according to Silgan.

The company believes net sales in the closures business will increase slightly in 2013, primarily due to the pass through of higher raw material costs. Closures income is also expected to improve slightly thanks to what the company calls "ongoing improvements in manufacturing efficiencies." The company will have to contend with resin cost increases that it is already experiencing in 2013 but hasn't been able to pass through yet.

Closures income in 2012 fell $2.8 million to $73.1 million, compared to $75.9 million in 2011. The operating margin also slipped, decreasing to 10.7% from 11.0%. Silgan noted that these decreases were primarily attributable to price pressure and lower unit volumes in the European market, unfavorable foreign currency translation and higher rationalization charges.

Silgan's plastic container business, which includes injection stretch blowmolded containers, had 2012 revenues of $614.5 million, up $4.6 million, or 0.8%, compared to $609.9 million in 2011.

 

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