In the second quarter, operating income declined compared to the prior year quarter, reaching $208 million. The decrease was primarily attributable to goodwill write-offs related to recent divestitures within the consumer packaging international segment, an unfavourable impact from volume and an unfavourable impact from price-cost spread related to the timing of passing through resin costs.
“Berry once again produced solid financial results, consistent with our expectations. Our teams executed well, offsetting an extended period of sluggish macroeconomic demand along with persistent inflation in our primary raw material to start fiscal 2024. We undertook additional structural enhancements across our businesses and increased our original cost savings target of $140 million to $165 million. We continue to expect a $55 million contribution from the program in fiscal 2024 with the additional $25 million to be realised in fiscal 2025. Moving forward, we remain steadfast in our commitment to prudent management and strategic advancement,” Kevin Kwilinski, Berry’s CEO said.
“During the quarter, operating EBITDA margins demonstrated sequential improvement compared to the prior quarter across all four business segments. Our year-to-date results reinforce our trajectory toward achieving our fiscal 2024 guidance—a reaffirmation we made today. We maintain confidence in the underlying strength of our businesses. Reinforced by strong April volumes, we continue to expect low-single digit volume growth in the second half of this fiscal year. As market volumes continue to recover, we anticipate incremental earnings benefits from more efficient asset utilisation. I am excited by the tremendous growth and operational excellence opportunities ahead. We’re focusing on three key efforts: optimising our portfolio to accelerate growth and deleveraging, implementing our lean transformation, and driving growth by enhancing our commercial excellence,” explained Kwilinski.
“Our firm dedication lies in delivering long-term value to our shareholders. In 2024, we will continue our focus on driving shareholder value and prioritising debt repayment. Additionally, we remain committed to returning capital to shareholders through further share repurchases and dividend payments,” added Kwilinski.
In February, the company announced plans for a tax-free spin-off and merger of the majority of its HH&S segment to include its global nonwovens and films business with Glatfelter Corporation (GLT) to create a global leader in specialty materials. Upon the completion of the transaction, Berry shareholders are expected to own approximately ninety per cent of the newly combined company. The transaction valued the combined company at $3.6 billion on an enterprise value basis.
In April, the company achieved a regulatory milestone with the expiration of the required waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. The transaction is subject to further certain customary closing conditions and regulatory approvals including, but not limited to, approval by GLT shareholders, the effective filing of related registration statements, completion of a tax-free spin-off and receipt of certain required anti-trust approvals, the company said in a press release.
“This announcement is the culmination of a comprehensive review to determine the highest value alternative for Berry shareholders. We believe these two businesses can drive significant value for their respective stakeholders with more focused portfolios, positioning each for greater success. Berry will now become a pure-play leading supplier of innovative, sustainable global packaging solutions and we believe this focus will result in an even more predictable, stable earnings and growth profile for Berry. This proposed transaction is a significant step in the optimisation of our portfolio and allows Berry’s management team to be one hundred per cent laser-focused on driving consistent long-term growth with a more simplified and aligned portfolio,” added Kwilinski.
Fibre2Fashion News Desk (RR)
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