Ball Corporation (BLL) reported fourth quarter earnings of 84 cents per share, beating the Zacks Consensus Estimate of 71 cents. The company posted year over year earnings growth of 50% for the quarter. Strong earnings growth in the quarter was driven by higher sales as well as an improved operating performance.
 
Net sales in the quarter increased 7.6% to $1,864.4 million from $1,732.8 million a year ago. Lower sales in the Plastic Packaging, Americas and Metal Food and the Aerospace and Technologies segment were more than offset by sales growth in the three other segments.
 
The Metal Beverage Packaging, Americas & Asia segment sales improved 18.7% due to acquisitions and increased promotional activity. Sales in the Metal Beverage Packaging, Europe segment were up 12.2% as the segment benefited from a stronger euro. The Metal Food and Household Products Packaging, Americas segment posted a sales growth of 5.5% due to increased promotional activity.
 
The Plastic Packaging, Americas segment posted year over year sales decline of 15.2% due to double digit decline in volumes, while sales in the Aerospace and Technologies segment declined 18.0% due to weak demand.
 
For the full year 2009, Ball reported earnings of $4.05 per share, compared to the Zacks Consensus Estimate of $3.92 and 2008 earnings of $3.61. Net sales of $7.35 billion in 2009 were 2.9% below the prior-year sales of $7.56 billion. Earnings growth during the year, despite lower sales, was a result of the initiatives taken by the company to adjust its production levels in line with the prevailing demand. Ball has streamlined its operations and implemented pricing initiatives and other cost-cutting plans in response to the tough market conditions.
 
During the reported quarter, Ball announced its plans to acquire the remaining 65% interest in a joint venture metal beverage can and end plant in Sanshui, China, from Guangdong Jianlibao Group Co. Ltd. The transaction, which is expected to close in 2010, will strengthen the company’s presence in the fast growing Chinese market.
 
In the past few months, the company has reiterated its focus on expanding worldwide beverage can business. The company is concentrating on its core businesses and is exiting from businesses outside its strategic focus area.
 
Given its ability to generate strong cash flows, we believe Ball is well positioned to invest in business expansion. The company generated free cash flow of $373 million in 2009 and expects to generate more than $500 million in 2010. Also, the company is confident of continuing its strong operating performance in 2010 and expects to post higher earnings compared to 2009.
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