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By the numbers: Q1 2024
Net sales: $2.78B
Down 6.4% year over year
Americas Beverage net sales: $1.22B
Crown’s largest unit, down 3.1% year over year
Net income: $93M
Down 23.8% year over year
- Q1 recap: Crown Holdings reported that global beverage shipments rose 2.5% year over year in the first quarter, with 7% growth in North America and 5% in Europe. This helped offset lower shipments in Asia, where the company initiated cost reduction efforts in Q4 that also countered 8% lower shipments in the region, CEO Tim Donahue said during a Tuesday earnings call. Unit volumes declined 1% in Brazil after a high-growth period in Q1 2023.
- Beverage market trends: North America, where Crown grew the most in Q1, is more heavily weighted toward non-alcoholic beverages, Donahue said, which includes carbonated soft drinks and sparkling waters as well as juices, teas and the like. The Mexican market, which grew during the quarter, and Brazil, which declined, are both skewed toward beer. As for customer promotional activity, it’s “at a lower level than we've seen historically, and perhaps even a lower level than we'd like to see,” Donahue said, although upcoming Memorial Day and July Fourth weekends could spur increases in the U.S.
- Destocking and restocking: Sales declined in Europe in Q4 2023, but Donahue said Crown is seeing recovery this year after that period of destocking. He said in prepared remarks that it’s “perhaps too early to declare an inflection in Europe, but April shipments were also strong, and the sentiment for beverage and shipments is more positive than only three months ago.” He later elaborated, “I do still think that consumers are relatively weak in Europe, and they're certainly weaker in Europe than they are in North America, but I think that the destocking was so great that we have a little bit of a restocking effect ... all signs point towards a pretty healthy summer as we sit here today.”
- Growth plans: The company also stated that it’s completed an expansion program initiated in 2019, bringing new plants online in Mesquite, Nevada, and Peterborough, U.K., where it’s “now focused on continuous operational improvement” this year. Crown expects capital expenditures will top out at $500 million in both 2024 and 2025. The company estimates adjusted free cash flow for the year will be between $700 million and $750 million.
- Outlook: Crown maintains its full-year volume growth target of 4% to 5% for the North American business in 2024, with “low to mid-single-digit growth” expectations for Brazil.
