QUOTE AND NEWS
newratings.com  10 hrs ago  Comment 
WASHINGTON (dpa-AFX) - Ball Corp. (BLL) Thursday reported a rise in its second-quarter earnings attributable to the corporation to $153.1 million or $1.07 per share from $95.1 million or $0.63 per share a year ago. The company posted comparable...
Market Intelligence Center  May 6  Comment 
MarketIntelligenceCenter.com's option-trade picking algorithms have identified an attractive covered-call trade on Ball Corp (BLL). Look at the Nov. '14 $55.00 covered call for a net debit in the $53.69 area. This trade has a duration of 200...
newratings.com  May 1  Comment 
WASHINGTON (dpa-AFX) - Ball Corp. (BLL), a provider of packaging solutions for beverage, food and household products, said its net earnings for the first quarter rose to $93.5 million or $0.65 per share from last year's $72.0 million or $0.47...
SeekingAlpha  Jan 30  Comment 
Complete Story »
StreetInsider.com  Jan 30  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Ball+Corp.+%28BLL%29+Tops+Q4+EPS+by+13c/9104178.html for the full story.
StreetInsider.com  Jan 29  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Dividends/Ball+Corp.+%28BLL%29+Declares+%240.13+Quarterly+Dividend%3B+Gives+Nod+to+20M+Common+Buyback+Plan/9101654.html for the full story.
Market Intelligence Center  Jan 1  Comment 
For a hedged play on Ball Corp (BLL), MarketIntelligenceCenter.com’s option-trade picking algorithms recommend the May. '14 $50.00 covered call for a net debit in the $48.89 area. That is also the break-even stock price for the covered call....
Market Intelligence Center  Dec 25  Comment 
For a hedged play on Ball Corp (BLL) MarketIntelligenceCenter.com’s patented trade-picking algorithms recommend the May. '14 $50.00 covered call for a net debit in the $48.44 area. That is also the break-even stock price for the covered call....
TheStreet.com  Nov 15  Comment 
NEW YORK (TheStreet) -- CHANGE IN RATINGSAmerigas Partners was initiated at UBS with a buy rating. The company has a strong balance sheet and synergy opportunities from recent acquisitions, UBS said. $47 price target. Ball Corp. was upgraded at...
Market Intelligence Center  Nov 15  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Ball Corp (BLL) that includes 3.94% downside protection. Sell one contract of the Feb. '14...




 

Ball Corporation (NYSE: BLL) is a manufacturer of metal and plastic packaging for beverages and foods. Most of Ball Corporation's customers are breweries and soft drink bottlers, which pay Ball to make aluminum soft drink and beer cans. The company sells 18 different beverage can sizes and helps its customers develop their own specialty cans such as a narrower 8.4oz can for Molson Cold Shots, which are currently sold in Canada.[1]

Ball also supplies aerospace and other technology and services to the government as well as outside customers. However, this segment is still relatively small, as only 9% of net sales came from its aerospace segment.[2]

Ball has captured 31% of the market for metal beverage cans in North America. It competes with companies like Amcor (AMCR), Rexam (REXMY), Crown Cork & Seal Company (CCK), and Silgan Holdings (SLGN) in the packaging and container market.[3] Despite strong competition, Ball maintains a stable market position as contracts rarely change hands in the packaging and container industry. Because of this, Ball's revenues and operating income are often controlled by external factors such as the demand for packaged beverages like soft drinks and beer. The cost of raw materials such as aluminum also tends to effect Ball's operating income despite clauses in their contracts that allow them to pass increases in raw material cost on to the customer because the increase in the cost of Ball's finished product can result in lower sales.

Company Overview

Ball sells its packaging products directly to a few major companies in the packaged food and beverage business, such as SABMiller plc (SBMRY), Pepsico (PEP), and the bottlers of Pepsi-Cola and Coca-Cola.

Business Financials

In 2009, Ball posted total net sales of $7.35 billion a small decline from its 2008 net sales of $7.56 billion. Despite this decrease in revenues, Ball was still able to increase its net income from $320 million in 2008 tpp $388 million in 2009.

Ball's largest product lines are aluminum and steel beverage containers, which accounted for 63 percent of our 2009 total net sales and 77 percent of its 2009 total earnings before interest and taxes.[2] In 2009, it held approximately 31% of the market share in the United States for beverage containers.[4]

Segments

Metal Beverage Packaging, Americas

The Metal Beverage Packaging, Americas segment consists of operations located in the U.S., Canada, and Puerto Rico, which manufacture aluminum cans and can ends used to package beverages such as soda and beer. Ball sells its aluminum cans to companies like Molson Coors Brewing Company (TAP), SABMiller plc (SBMRY), Pepsico (PEP), and the bottlers of Pepsi and Coca-Cola.

Metal Beverage Packaging, Europe/Asia

The Metal Beverage Packaging, Europe/Asia segment comprises the company's European, Asian, and Brazilian operations, which manufacture aluminum and steel cans and can ends used to package beverages such as soda and beer. The European market for metal beverage cans continues to grow, providing an opportunity for Ball to increase its revenues. In China, Ball manufactured 2.4 billion (22%) of China's metal beverage cans and another 1.4 billon (13%) were produced by Ball's joint ventures.

Metal Food & Household Products Packaging, Americas

The Metal Food & Household Products Packaging, Americas segment consists of operations located in the U.S. and Canada, which manufacture steel containers used primarily in food and aerosol packaging. Ball's steel food containers are mostly three piece steel cans that are used for vegetables, fruit, soups, meat, seafood, nutritional products, pet food and other products.

Aerospace and Technologies

The Aerospace and Technologies segment includes defense systems, civil space systems, and commercial space operations. Ball has signed a deal to build DigitalGlobe's third satellite to take high resolution pictures of Earth.[5] In February of 2008, Ball Aerospace won a $42 million contract to do research on lasers for the Air Force.[6]

Plastic Packaging, Americas

The Plastic Packaging, Americas segment consists of operations located in the U.S., which manufacture polyethylene terephthalate (PET) and polypropylene plastic container products used mainly in beverage packaging.

Key Trends and Forces

Changes in the production capacity of the metal beverage container industry:

Currently, there is excess production capacity in the metal beverage packaging industry in the Americas as manufacturers have increased supply capacity faster than beverage companies have grown their output. If the industry doesn't decrease capacity quickly enough, Ball will be forced to lower prices or lose customers to other firms. On the other hand, if Ball and its competitors decrease production capacity until there is a shortage of metal beverage containers, Ball will be able to negotiate contracts with higher prices.

The loss of any one customer would negatively affect Ball's profitability:

Because a few key customers are responsible for almost all of Ball's sales, the loss of any one customer will have a negative effect on Ball's profits. For example, orders from the bottlers of Pepsi and Coca-Cola make up 28% of Ball's revenues. Therefore, if one or more of these bottlers decided not to renew their contracts with Ball, Ball could lose up to 80% of its revenues. Ball combats this risk to a certain extent by negotiating long term contracts, but the contracts include clauses to let customers cancel orders if Ball doesn't satisfy quality or volume requirements.

Changes in the price of raw materials:

The price of Aluminum is affected by several factors including demand from other industries (transportation, construction, etc.) and aluminum manufacturing costs. Changes in the price of commodities such as Aluminum on the London Metal Exchange affect Ball's profitability. For example, if the cost of aluminum rises, the cost of each aluminum can Ball produces will increase. Ball protects against this risk by negotiating contracts that let Ball pass increases in the cost of raw materials on to customers. However, if raw material prices rise over a long enough period of time, Ball's sales volume may decrease as customers try to cut costs. Furthermore, there is a small lag period between the price increase and the adjustment of the contract, and during this period Ball's margins suffer. However, Ball's pass through agreements usually protect short run profits.

Changes in consumer demand for beverage and food items:

The demand for almost all of Ball's products (except those manufactured by their Aerospace and Technologies segment) depends on sales of the beverages and food items they are made to hold. Demand for food and beverage items can change seasonally. For example, sales of Ball's metal beverage containers tend to be highest from April to September during the hot Summer months. Demand can also change in long term trends. For example, customer preferences can shift from one brand of soft drink or beer to another or from soft drinks and beer to alternatives such as bottled water and hard liquor. For example, if consumers start buying less Bud Light and more Miller Light, Ball's revenues will increase as SABMiller plc (SBMRY) orders more beer cans to package the extra beer. On the other hand, if consumers start buying less Miller Light and more hard liquor, Ball's revenues will decrease as SABMiller plc (SBMRY) orders less beer cans to compensate for decreased production of their beer.

Key Competitors

Ball competes with other packaging manufacturers and with food and beverage companies than make their own packaging such as Anheuser-Busch Companies (BUD). Ball's biggest competitors are:

  • Amcor (AMCR)-An Australian company that produces PET bottles, steel and aluminium food and beverage cans, containers for household products, and a variety of other packaging products. Amcor will be one of the main companies Ball competes with as it expands it's international operations.[7][8]
  • Rexam (REXMY)-A U.K. based company that produces cans and containers for the beverage, beauty, pharmaceuticals and food industries. Rexam is the world's largest beverage can manufacturer and one of Ball's main competitors internationally and in the Americas.[9][10]
  • Crown Cork & Seal Company (CCK)-A U.S. based company that manufactures aluminum and steel cans for the soft drink, food, citrus, brewing, household products, and personal care industries. Crown Cork & Seal Company is one of Ball's main domestic competitors.[11][12]
  • Silgan Holdings (SLGN)-A U.S. based company that manufactures aluminum and steel cans for human and pet food; plastic containers for food, consumer products, and pharmaceuticals; and vacuum closures for food and beverage products. They compete with Ball's Metal Food & Household Products Packaging and Plastic Packaging segments.[13][14]

Notes

  1. Molson Cold Shots Packaged in New Eye-Catching Can From Ball
  2. 2.0 2.1 BLL 10-K 2009 Item 1 Pg. 1
  3. Google Finance: BLL Related Companies
  4. BLL 10-K 2009 Item 1 Pg. 2
  5. BLL 2007 Letter to Shareholders, page 8
  6. Ball Unit Wins $42M Air Force Deal
  7. Google Finance AMCR
  8. AMCR 2006 20-F Item 4B: Business Overview, page 16
  9. Google Finance: REXMY
  10. REXMY 2007 Annual Report: Rexam at a Glance
  11. Google Fincance: CCK
  12. CCK 2007 10-K
  13. Google Finance: SLGN
  14. SLGN 2007 10-K Item 1: Business Overview
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