OREANDA-NEWS. Ball Corporation (NYSE: BLL) today reported a first quarter 2016 net loss attributable to the corporation of $127 million, or a loss of 90 cents per diluted share (including after tax charges of $213 million, or $1.50 per diluted share for business consolidation, debt refinancing and other costs) on sales of $1.8 billion, compared to $21 million of net earnings attributable to the corporation, or 15 cents per diluted share (including after tax charges of $76 million, or 54 cents per diluted share for business consolidation costs, debt refinancing and other costs), on sales of $1.9 billion in the first quarter of 2015. Comparable earnings per diluted share were 59 cents in the first quarter 2016 versus 69 cents in the first quarter of 2015.

"Strong operating performance in our U.S. and European metal beverage businesses was offset by difficult year-over-year comparisons in our China metal beverage and U.S. metal food businesses, as well as start-up costs for growth projects," said John A. Hayes, chairman, president and chief executive officer. "Our proposed offer for Rexam continues to move forward and we expect the transaction to close in late June."

Details of comparable segment earnings, business consolidation activities, historical segment reporting, and Rexam transaction-related hedging and other costs can be found in the notes to the unaudited condensed consolidated financial statements that accompany this news release.

Metal Beverage Packaging, Americas & Asia

Metal beverage packaging, Americas and Asia, comparable segment earnings in the first quarter 2016 were $102 million on sales of $937 million, compared to $125 million on sales of $1 billion in the first quarter 2015.              

In North America and Brazil, first quarter volumes improved, all of which was more than offset by weakened demand and price erosion in China. During the first quarter, the company began production on one of the new beverage can lines and multiple end lines at its Monterrey, Mexico, facility with a second beverage can line scheduled to start up in mid-2016. Start-up costs related to this major project will moderate in the second half of 2016 as production ramps to support our customers' demand.

Metal Beverage Packaging, Europe

Metal beverage packaging, Europe, comparable segment earnings in the first quarter 2016 were $39 million on sales of $356 million, compared to $29 million on sales of $379 million in the first quarter 2015.

Comparable segment earnings were higher in the first quarter due to lower year-over-year aluminum premiums and strong manufacturing performance.

Metal Food & Household Products Packaging

Metal food and household products packaging comparable segment earnings in the first quarter 2016 were $20 million on sales of $284 million, compared to $30 million on sales of $308 million in the first quarter 2015.

During the first quarter, the segment faced difficult year-over-year volume comparisons, inventory holding losses and start-up costs related to the introduction of a new two-piece steel aerosol investment in the U.S.  Demand for metal aerosol containers remains strong and related investments made in late 2015 will provide momentum throughout the remainder of 2016.

In February, the company also announced the closure of its Weirton, West Virginia, steel food and household metal service center, which is expected to cease production in early 2017. Certain equipment will be redeployed throughout Ball's existing U.S. manufacturing locations to support the segment's remaining facilities.

Aerospace and Technologies

Aerospace and technologies comparable quarterly segment earnings in the first quarter 2016 were $18 million on sales of $180 million, compared to $20 million on sales of $215 million in the first quarter 2015.

Across the segment, effective cost management continues and the company is in the final stages of negotiating multiple contracts for programs awarded in late 2015.  As projected, contracted backlog grew more than $100 million to $729 million at the end of first quarter and anticipated meaningful quarter-on-quarter backlog improvement will further position the company for stronger segment performance in the future.

During the quarter, the business acquired Wavefront Technologies, a specialized engineering services firm that provides systems and network engineering, software development and analytical services for cyber and mission-focused programs within the U.S. government.  Ball will leverage its existing hardware capabilities to complement this acquisition.

Outlook

"We continue to expect 2016 free cash flow to be in the range of 2015 free cash flow, excluding cash costs for the proposed Rexam acquisition. The multiple currency and interest rate hedges implemented throughout 2015 and early 2016 to mitigate risk related to the proposed acquisition continue to influence GAAP accounting results," said Scott C. Morrison, senior vice president and chief financial officer.

"Operationally and from a demand perspective, our first quarter results were largely in line with our expectations. We fully expect for our businesses to gain momentum through the balance of this year as our cost optimization efforts are further realized and the growth capital deployed in 2015 transitions into full production," Hayes said. "We are nearing the finish line on our proposed offer for Rexam and look forward to reaping the benefits and increasing EVA dollar generation." 

About Ball Corporation

Ball Corporation supplies innovative, sustainable packaging solutions for beverage, food and household products customers, as well as aerospace and other technologies and services primarily for the U.S. government. Ball Corporation and its subsidiaries employ 15,200 people worldwide and reported 2015 sales of $8.0 billion.