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‘We’ll be the No.1 can player in China!’ Crown Holdings

By Ben Bouckley+

05-Feb-2014

Crown Holdings says Chinese can prices are 'challenging' but is excited by growth prospects (DSC_325/Flickr)
Crown Holdings says Chinese can prices are 'challenging' but is excited by growth prospects (DSC_325/Flickr)

Crown Holdings expects to become the leading beverage can producer in China this year and is bullish on the nation’s growth prospects despite low prices for its products.

Reporting its FY 2013 results for the year ending, Crown Holdings grew net sales 2.1% to $8.656bn, and although gross profit rose 4.8% to $1.342bn, net income fell 55% to $428m – due to interest expense, a penalty due to early debt repayment, and a hefty tax bill.

Crown’s global beverage can volumes rose 5% during the year but food can volumes fell 1%.

North America beverage sales volumes fell 1% -- due to the close of operations in Puerto Rico – but European volumes rose 4% helped by a new Turkish plant.

Outstanding platform in Asia

Asia Pacific volumes rose double-digit, and the firm’s chief operating officer, Timothy Donahue, told analysts that nine new plants built in Asia over the last four years had established an “outstanding platform from which we can continue to grow and benefit the company for many years”.

During this time Crown’s revenue and segment income rose 90% and 53% respectively, he said, and turning to China later on in the call Donahue said the firm expected 14-15% volume growth this year.

Donahue described pricing for beverage cans in China as “very challenging” but said Crown was very positive about the overall market direction despite price volatility.

“Our estimate of industry utilization right now is in the 70-75% range as the number of small competitors have brought up or are bringing up capacity and are under-utilized,” he said.

Insisting that Crown’s plant are very well utilized in China, CEO John Conway said Crown sold 35% more units in 2013 and 38% more in Q4 year-on-year.

Global can growth rate? ‘We don’t have a clue!’

“I think this year we will probably be the number one beverage can producer in China. We have a national network of beverage can plants – we’re the only company now in the country that does,” Conway said.

“We line up exceptionally well now for the multinationals and nationals – the brewers, soft drink companies, the Asian drink companies. We can serve their beverage can needs throughout the country,” he added.

When asked about global growth rates for beverage cans, Conway replied: “We can honestly say with our hands on our hearts that we don’t have a clue…I guess it’s something the aluminum can sheet people want to talk about.”

Crown sees most beverage markets bar Canada and the US as growth markets, Conway added, either due to economic growth, migration from glass or success for a given beverage segment.

Donahue added that one global figure touted of 4-5% reflected “low to no growth” in North America, clearly a very big market, but said that Europe could be 3-5%, Brazil 10% and Southeast Asia and China each 10-20%.

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