Silgan slows down its historical streak of good results due to a drop in orders

Silgan, a leader in the packaging industry, recently announced its financial results for the first quarter of 2024.  They reported net sales of $1.32 billion and net income of $55.2 million, which equals $0.52 per diluted share. This represents a decrease compared to the same period last year, where net sales of $1.42 billion and net income of $72.0 million, or $0.65 per diluted share, were achieved.

According to Silgan President and CEO Adam Greenlee, however, he says the team posted solid first-quarter results that were at the high end of its expectations. This demonstrates the strength of its diversified portfolio and long-term business strategy. Another year of growth is expected thanks to innovation in its dispensing products, strong market demand and significant momentum.

He further adds that, although first quarter volumes were affected by customers’ inventory reduction priorities, sequential improvement is seen in the Custom Packaging business. The manager forecasts an increase in demand during the second quarter of 2024.

Silgan is moving toward its cost reduction program to achieve $50 million in savings by 2024. Spokespersons for the holding company are confident in its ability to meet its objectives and are excited about future opportunities.

During the first quarter of 2024, the company recorded earnings before interest and taxes (EBIT) of $111.7 million, a decrease of $19.5 million compared to the same period of the previous year ($131.2 million). This EBIT was divided into three segments: Dispensers and Specialty Closures ($59.7 million), Metal Packaging ($41.7 million) and Custom Packaging ($17.8 million). In addition, rationalization charges totaling $11.7 million were recorded in the first quarter of 2024 and $4.1 million in the same period of 2023.

During the first quarter of 2024, net sales for the Dispensers and Specialty Closures segment had a decrease of $44.0 million compared to the same period in 2023, which is equivalent to an 8% decrease. This reduction is mainly due to an 8% decrease in volume and inventory, especially in high volume closings for the food and beverage markets. However, overall demand for dispensing products remained strong during this quarter.

During the first quarter, earnings before interest, taxes and amortization (EBIT) in the Dispensers and Specialty Closures division decreased by $5.1 million, totaling $77.8 million.
On the other hand, during the first quarter of 2024, net sales of the Metal Containers sector decreased by $53.0 million compared to the same period of the previous year, reaching a total of $617.1 million. This decrease is mainly due to a 5% reduction in unit volume, caused by the lack of supply from customers in different categories and strong demand in the first quarter of 2023. In addition, there was also a contractual pass-through of lower raw material costs.

During the first quarter of 2024, metal container adjusted EBIT fell by $7.4 million to $45.0 million compared to $52.4 million for the same period in 2023. This expected decrease was primarily due to unfavorable price/cost and product mix, due to the liquidation of higher-cost inventory in the European operations and lower metal costs in 2024, as well as lower sales. However, this was partially offset by better management of costs and general and administrative expenses.