Packaging Gateway

Daily Newsletter

10 August 2023

Daily Newsletter

Berry’s Q3 2023 net income drops by 30.9%

The company also reported declines across its net sales and diluted EPS.

Plastic packaging provider Berry Global Group has posted a net income of $143m for the third quarter (Q3) of 2023, a dip of 30.9% when compared with $207m in last year's period.

For the quarter that ended on 1 July 2023, net sales were $3.22bn, a drop of 13.3% from $3.72bn in Q3 2022.

This drop in net sales is primarily due to a $250m decrease in selling prices, which is linked to the pass-through of lower resin costs, and a 7% decline in volume.

Under the adjusted non-GAAP results, the company's operating earnings before interest, taxes, depreciation, and amortisation for the quarter was $522m, a fall of 5% compared with $550m a year earlier.

The company announced adjusted diluted earnings per share (EPS) of $1.90 for the current quarter, a 6% fall from $2.03 in the same quarter last year.

For the three-quarter period put together, Berry reported a net income of $423m as against $533m during the same period last year. This shows net income declined by 20.3%.

The company posted net sales of $9.57bn for the three-quarter period, reflecting a decrease of 13.5% compared with $11.07bn in the same period last year.

Berry chair and CEO Tom Salmon said: “We continue to prioritise structural cost improvements, enhance operating efficiencies, and successfully shift our portfolio toward high-value growth products across all of our businesses.

“Our cost actions, including site rationalisations, moving business to more cost-efficient facilities, and labour cost reductions, have resulted in significant annualised cost savings of now $140m.”

Under the financial year's guidance, the company expects to have an adjusted EPS of $7.30 and a free cash flow of $800m, and a cash flow from operations of $1.45m.

Additionally, Berry is expecting to give back at least $700m to its shareholders via dividends and share repurchases.

Generative AI remains an untapped potential across the consumer industry

GlobalData estimates the total AI market will be worth $909 billion in 2030, growing at a CAGR of 35.2% between 2022 and 2030. The consumer goods, foodservice, and packaging sectors are undergoing digital transformation, accelerated by the COVID-19 pandemic and changing consumer preferences. AI can help companies operating in these sectors by significantly reducing costs and production times. In Nestlé's 2022 full-year results, the company announced a renewed focus on digitalization to drive growth. Financial and reputational pressures associated with supply chain disruptions and sustainability concerns are also driving interest in the digitalization of supply chains. Data science and ML are strong investments across all areas. However, the sectors cannot stop at AI-powered data analytics applications. They must also explore computer vision (CV), smart robots, AI sensors that automate manufacturing and distribution logistics, and generative AI tools that increase efficiency across corporate departments and customer service operations and enable innovation in product design. For the most part, the consumer goods, foodservice, and packaging sectors will not play a significant role in creating and developing AI hardware or platforms. Instead, these sectors will help scale up the adoption of AI technologies, such as CV, conversational platforms, and smart robots. This adoption will be driven by the financial benefits and potential cost savings AI automation delivers across global supply chains.