Ardagh blames sluggish growth in US glass packaging on cash earnings slump

Ardagh chairman and chief executive Paul Coulson. Photo: Jason Clarke
Ardagh chairman and chief executive Paul Coulson. Photo: Jason Clarke

Cash earnings at Paul Coulson’s global metal and glass containers company, Ardagh Group, sank by 6pc in the second quarter to the end of June as efforts to boost profitability in the its US glass packaging proved more difficult than anticipated.

The fall in earnings before interest, taxation, depreciation and amortisation, a cash earnings measure,  $392m, was blamed on lower volumes, higher freight costs and the cost of  planned production downtime.

However revenue climbed by 6pc to $2.3bn, or 1pc on a constant currency basis, over the past quarter, while eanings per share leapt by 79pc to $0.25 compared to $0.14 in the same period last year.

In a statement to the New York stock exchange, Mr Coulson said the results “reflected good performances in three of our four divisions.”

He said this was “offset by a reduction in Glass Packaging North America, where multiple initiatives to improve profitability are expected to deliver benefits on a more gradual basis than previously expected.”

Ardagh, which counts Heineken, L’Oréal and John West among its customer base, recently repaid US$440m of  high-cost borrowings ahead of schedule as it continues to focus on reducing its $8.3bn total borrowings.

Mr Coulson stressed that as the company enters “the seasonally more cash generative second half, we remain focused on further de-leveraging.”

Shares in Ardagh have fallen by close to 13pc since the group’s US initial public offering in March last year.

The group scaled back its earnings forecasts late in 2017 on the back of persistent weakness in the US beer market and adverse swings in the foreign exchange markets.

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