Ball Corp. Ups Alumi-Tek Production – Analyst Blog

Following the success of its light weight Alumi-Tek bottle, Ball Corporation (BLL) is expanding its production in order to meet the burgeoning demand in North America. The Alumi-Tek bottle offered an innovative concept of reclosability, making it popular among customers. The novelty is an addition to the already known aluminum can advantages such as superior shelf life, tamper-resistance, fast chilling and recyclability.  

Ball Corporation’s Monticello, Indiana plant has been producing the Alumi-Tek bottles for beverage customers since 2006. To cater to the increased demand, the company will produce Alumi-Tek bottles at its Golden, Colorado plant facility, expectedly in the second half of 2011. The plant currently produces aluminum beverage cans and ends.

The Alumi-Tek know-how came to Ball Corporation in 2006 when the company entered into a licensing agreement with Tokyo-based Universal Can Company (“UCC”). The deal enabled Ball Corporation to use UCC’s proven, commercial technology to manufacture Alumi-Tek bottles and sell it in the United States, Canada and Mexico. Ball Corporation was the first company to license this manufacturing technology outside Japan.

Alumi-Tek bottle can be used for a wide variety of beverages, such as carbonated soft drinks, juices, energy drinks, and even coffee drinks and other beverages requiring retort processing.

Specialty beverage cans account for about 15% of Ball’s beverage can business. Ball Corporation is the largest producer of specialty beverage cans in North America, providing more than 20 sizes as well as innovative packages such as the Ball Reclosable End, enhanced can graphics and Alumi-Tek to its customers.

The increased production of Alumi-Tek will benefit Metal Beverage Packaging, Americas and Asia division going forward. The segment reported a year-over-year sales growth of 38.3% to $1.04 billion and operating income growth of 53.1% to $114.5 million in the second quarter.

In September, Ball Corporation raised its stake in the Brazilian beverage packaging joint venture, Latapack-Ball Embalagens Ltda, by 10.1% to bring its ownership to approximately 60% in the joint venture. Beginning from the third quarter of 2010, the results of Latapack-Ball will be reported in the Metal Beverage Packaging, Americas and Asia business unit, and be immediately accretive. We expect the segment to continue to deliver solid growth going forward supported by Latapack-Ball’s strong performance and the incremental sales of the Alumi -Tek bottle from the Colorado plant.

We have a Zacks #2 Rank (short-term Buy recommendation) on the shares. We also reiterate our long-term Neutral rating.
 
Broomfield, Colorado-based Ball Corporation is a manufacturer of metal and plastic packaging, primarily for beverages and foods. It also supplies aerospace and other technologies and services to government and commercial customers.