Ball Corporation Expands in Southeast Asia


Ball Corporation (BLL) intends to expand in Southeast Asia by building a one-line beverage can manufacturing plant in Myanmar. The plant, located in the Yangon area, will complement Ball's existing operations in Southeast Asia.

Ball Corporation’s previous expansion in the region was a joint venture plant in Vietnam, which began production in 2012. The new plant is required to supply beverage containers to Coca-Cola Pinya Beverages, a joint venture of The Coca-Cola Co. (KO) as well as other local, regional and multi-national customers. The Myanmar plant will help the company solidify its presence in this high-potential market in exchange for a relatively small investment.

The beverage can plant, which is expected to come on-line in mid-2015, will help the company capitalize on the growing demand for beverage containers in Southeast Asia. Furthermore, after a span of more than 60 years, Coca-Cola started bottling from a plant in Myanmar in 2013 after receiving an investment permit under Myanmar’s new Foreign Investment Law. Coca-Cola intends to invest $200 million over the next 5 years in the region which holds immense opportunity for Ball Corporation.

Ball reported first-quarter 2014 adjusted earnings of 81 cents per share, which outperformed the Zacks Consensus Estimate of 68 cents. Moreover, the reported figure surged 40% from the year-ago quarter, aided by global packaging volume growth and manufacturing efficiencies. The company has maintained its long-term diluted earnings per share growth goal of 10–15%.

Ball will continue to benefit from product launches and expansion in emerging markets. Moreover, the company believes that there is growth potential in many of its segments. Metal beverage packaging, Americas & Asia will benefit from the Alagoinhas plant's third production line in Brazil, which is on track. This increased capacity will help the company to capitalize on the increased demand spurred by the upcoming soccer World Cup in Brazil.

In December, Ball acquired Envases del Plata S.A. de C.V., a leading producer of extruded aluminium aerosol packaging in Mexico. Demand for extruded aluminum packaging for personal care products continues to increase, thus providing new opportunities for Ball’s growing business. Ball has also initiated cost cutting measures in Europe, the benefits of which are expected to be realized in 2014 and 2015.

Ball Corporation retains a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Crown Holdings Inc. (CCK) and Sealed Air Corp. (SEE), both of which carry a Zacks Rank #2 (Buy).

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