By the numbers: Fiscal Q2 2024
Net sales: $3.08B
Down 6.4% year over year
Net income: $116M
Down 33% year over year
- Q2 recap: Berry Global executives said on an earnings call Thursday that the company’s fiscal second-quarter results were in line with their expectations amid a “continued soft macro environment.” Consumer packaging revenues declined 8% internationally to $968 million and 4% in North America to $751 million. Flexibles revenues fell 9% to $711 million. Executives said volumes accelerated in April.
- Portfolio optimization: Berry said it closed two divestitures during the quarter “and we have line of sight to much more,” said CEO Kevin Kwilinski. In its quarterly filing, Berry specified that it completed the sale of its Strata and Promens Vehicles businesses within its Consumer Packaging International segment. Net proceeds totaled $25 million and $22 million, respectively, for businesses that did annual net sales of $56 million and $111 million in fiscal year 2023. Italy’s Sapa reportedly bought Promens plants in Estonia and the Netherlands, while Chiltern Capital reportedly assumed ownership of Strata Products.
- Future divestiture plans: On the call, Kwilinski said the company expects strategic divestitures within the next year could result in at least $2 billion in cash proceeds, half of which is linked to the pending Health, Hygiene & Specialties division spinoff deal with Glatfelter, and half from “future portfolio optimization opportunities.” Additional divestitures could come from segments across the board, with the company particularly eyeing opportunities in flexibles and the international segment of consumer packaging.
- Growing consumer packaging focus: Kwilinski said the divestitures will get Berry toward a goal of increasing its consumer products focus from over 70% to over 80% of its volume. “I am absolutely committed to getting this portfolio right as fast as we can so that we can be very focused on growing our core consumer business,” Kwilinski said.
- M&A: Kwilinksi said Berry is focused on bolt-on acquisitions as a way to gain access to higher-growth markets. “We'll get cost-improvement synergy with any acquisition we do, given our scale, but we're really focused on how can we use acquisition to accelerate our organic growth for the long term.” Berry still expects the health segment spinoff to close in the second half of calendar year 2024.
- Outlook: The company reaffirmed guidance for the year, including free cash flow expectations between $800 million and $900 million. Berry is expanding a previously announced “cost savings program” by $25 million to $165 million in total savings that it expects will be realized by the end of fiscal year 2025, with $55 million in fiscal 2024.
