Crown Holdings (CCK) Divests 80% of European Tinplate Business
Crown Holdings (CCK) expects to utilize net proceeds of the deal in reducing debt, funding capital projects and making share repurchases.
Crown Holdings, Inc. CCK recently completed the previously disclosed sale of its European Tinplate business to KPS Capital Partners, LP. for €1.9 billion ($2.3 billion) while retaining 20% shareholding interest in the business.
The company had entered into this agreement on Apr 8. Tinplate is the largest manufacturer of steel and aluminum food packaging business in Europe and operates 44 manufacturing plants across 17 countries in Europe, the Middle East and Africa (EMEA). These plants produce food cans, aerosol cans, metal closures and promotional packaging for several consumer brands.
Crown Holdings’ European Tinplate business offers innovative metal packaging to European customers for protection and preservation of premium products. In fact, its infinitely recyclable food cans offer the highest sustainability, which helps eliminate food waste of more than one billion liters a year. The business generated €1.9 billion ($2.3 billion) revenues in 2020, with EBITDA of €220 million ($269 million).
The company expects to utilize net proceeds of the deal in reducing debt, funding beverage can capital projects and making share repurchases.
Crown Holdings has been witnessing strong demand across all product lines and geographies. It has efficiently managed to convert this into record earnings. It is particularly benefiting from the surge in the global beverage can demand as consumers are preferring cans over other packaging formats owing to its many inherent benefits, including being infinitely recyclable. Average segment income from continuing operations over the last four quarters, (or last 12 months ended June 2021) is approximately $100 million per quarter, higher than the average of the four preceding quarters (or last 12 months ended June 2020). Approximately $60 million of that income growth has stemmed from the Americas Beverage segment. Thus, the company continues to implement several beverage-can capacity-expansion projects. Strategic acquisitions in geographic areas and product lines will continue to aid the company in tapping this demand.
The company anticipates adjusted earnings per share in the current year between $7.30 and $7.40, up from the prior guidance of $6.60 to $6.80. The guidance suggests year-over-year growth of 24% at the mid-point.
Crown Holdings’ shares have gained 10.2% so far this year, outperforming the industry’s growth of 6.3%.
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Zacks Rank and Stocks to Consider
Crown Holdings currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Encore Wire Corporation WIRE, Terex Corporation TEX and Lincoln Electric Holdings, Inc. LECO While Encore Wire and Terex sport a Zacks Rank #1 (Strong Buy), Lincoln Electric carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.
Terex has an estimated earnings growth rate of 2,207.6% for 2021. The company’s shares have gained 47.4% so far this year.
Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.
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