US' Berry Global's Q3 FY24 operating income up by 13%

In the third quarter, net sales decreased 2 per cent to $3.2 billion as the pass-through of lower resin prices had a 3 per cent negative impact which was partially offset by organic volume growth of 2 per cent, which was in line with the company’s expectations, as all four operating segments delivered low-single digit volume growth.

The net sales of company’s hygiene & specialties division decreased by 2 per cent, totaling $647 million. The decline was primarily due to lower selling prices partially offset by organic volume growth of 2 per cent. Notably, the surgical suite, hard-surface disinfectant wipe, and adult incontinence markets delivered solid volume growth. Operating income increased to $34 million, a strong increase over the prior year quarter. The increase was attributable to a 2 per cent volume increase, lower restructuring costs and benefits from our cost reduction efforts.

“Our strong financial results in the quarter were consistent with our expectations and our teams executed very well. Notably, we achieved a 2 per cent increase in overall organic volumes, with each four operating segments delivering low-single digit volume growth. At the same time, we delivered a solid increase in our operating EBITDA margins, which were 110 basis points higher than the previous year. We place a high value on honouring our commitments and excellence in execution. This quarter, I’d like to emphasise our team’s outstanding performance in achieving volume and earnings growth, as well as our progression in reducing our leverage and optimizing our portfolio,” Kevin Kwilinski, Berry’s CEO, said.

“We are confident in the strength of our underlying businesses, our customer value proposition, and our execution capabilities. We expect business momentum to continue as we demonstrated in the June quarter, including delivering low-single digit volume growth in the fiscal fourth quarter and exiting fiscal 2024 at or below our 3.5x leverage target. I am excited by the attainable growth and operational excellence opportunities ahead. We’re focusing on three key efforts: optimising our portfolio to accelerate growth and deleveraging, implementing our lean transformation, and driving growth by enhancing our commercial excellence,” added Kwilinski.

In February, the company announced plans for a spin-off of the majority of its HH&S segment to include its global nonwovens and films business, which is then to be merged with Glatfelter Corporation (GLT) to create a global leader in specialty materials. Upon the completion of the transaction, Berry shareholders are expected to own approximately ninety per cent of the newly combined company. The transaction valued the combined company at $3.6 billion on an enterprise value basis. In June, the company announced that, in addition to previously achieving a regulatory milestone with the expiration of the required waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act, the parties received all other approvals and clearances under competition and foreign direct investment laws which were conditions to the consummation of the transaction. The transaction is subject to further certain customary closing conditions including, but not limited to, approval by GLT shareholders and the effectiveness of related registration statements.

“This announcement is the culmination of a comprehensive review to determine the highest value alternative for Berry shareholders. We believe these two businesses can drive significant value for their respective stakeholders with more focused portfolios, positioning each for greater success. Berry will now become a pure-play leading supplier of innovative, sustainable global packaging solutions and we believe this focus will result in an even more predictable, stable earnings and growth profile for Berry. This proposed transaction is a significant step in the optimisation of our portfolio and allows Berry’s management team to be one hundred per cent laser-focused on driving consistent long-term growth with a more simplified and aligned portfolio,” Kwilinski added.

In July, Berry’s Health, Hygiene and Specialties Global Nonwovens and Films (HHNF) business and Glatfelter Corporation progressed further with the creation of the Magnera brand, a global leader in the specialty materials industry. Curt Begle, president of Berry’s health hygiene & specialties division, who will lead Magnera as CEO, said, “Magnera’s purpose is to better the world with new possibilities made real. By continuously co-creating and innovating with our partners, we will develop original material solutions that make a brighter future possible. With a breadth of technologies and a passion for what we create, Magnera’s solutions will solve end-users’ problems, every day.”

Fibre2Fashion News Desk (RR)