Packaging firm Ardagh Group has posted a 5% decrease in revenue at constant current levels in the second quarter of its financial year, to $1.6 billion (€1.38 billion).
The group said that its Metal Beverage Packaging division saw a 3% increase in revenue for the quarter, which was offset by a 7% reduction in its Glass Packaging division.
'Resilient' Performance
Commenting on the group's performance, Paul Coulson, Ardagh chairman and chief executive, said, “The Group performed well in the quarter, reflecting strong execution and the defensive end markets we serve. Earnings grew in Metal Beverage Packaging, while Glass Packaging’s performance was very resilient.
"Demand for sustainable packaging remains strong and we continue to progress our growth investment projects."
Volume/mix for the group declined by 3% in the quarter, as growth of 1% in Metal Beverage Packaging was offset by a 8% reduction in Glass Packaging.
Adjusted EBITDA stood at $271 million for the quarter, a reduction of 11% at constant currency levels on the previous year.
Across The Divisions
The group said that its Metal Beverage Packaging division 'performed strongly, reflecting continued strong demand and good operational execution', with the business posting adjusted EBITDA of $139 million in the period.
This was up 2% at constant currency levels, it said, with the business seeing 5% EBITDA growth in the Americas.
In its Glass Packaging arm, Ardagh reported a 'resilient performance', saying that 'strength in food end markets mitigating the impact of on-premise closures'.
Adjusted EBITDA in the division was $132 million, which it said reflected a lower volume/mix and under absorption of fixed overheads.
Capital Structure
Ardagh took steps to improve its capital structure during the period, with an average debt maturity of six years and no bond maturities before 2025.
"We also availed of favourable markets to improve our capital structure and ended the quarter with total liquidity of $1.6 billion," Coulson added.
"Overall trading trends in June were positive and we are well-positioned to benefit from further improvements in market demand.”
Analyst Viewpoint
Commenting on Ardagh's performance, analyst Flor O'Donoghue of Davy said, "The relatively defensive nature of Ardagh’s product portfolio – weighted towards the beverage sector and the off-trade category – helped limit the impact of COVID-19 on the group’s Q2 results.
"In addition, management has recently taken a number of actions that have reinforced Ardagh’s liquidity and improved its maturity schedule. After falling sharply in Q1 (down 39%), the Ardagh share price has regained some ground but the stock’s valuation continues to screen well."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
