Ball Corp Ups Stake in Brazilian JV - Analyst Blog

Ball Corporation (BLL) has raised its stake in the Brazilian beverage packaging joint venture, Latapack-Ball Embalagens Ltda, by 10.1%. With this additional hike in stake, the company now has an ownership of approximately 60% in the joint venture.

 

Latapack-Ball operates metal beverage packaging manufacturing plants in Tres Rios, Jacarei and Salvador, Brazil. Sales of Latapack-Ball for full-year 2010 are expected to approximate $360 million.

 

On its part, Ball Corporation has been operating in Brazil over the past fifteen years. There is no gainsaying that the growing importance of the Brazilian market for the company's products and profitability will feed profitability going forward.

 

Beginning from the third quarter of 2010, the results of Latapack-Ball will be reported in the metal beverage packaging, Americas and Asia business unit. Ball expects to report a gain in the third quarter on its previous ownership interest in Latapack-Ball. The segment reported a year-over-year sales growth of 38.3% as well as an operating income growth of 53.1% in the second quarter. We expect the segment to continue to deliver solid growth further supported by Latapack-Ball's strong performance.

 

The company reported a robust second quarter largely driven by volume increases across its packaging businesses, a strong Aerospace segment and accretive acquisitions of four U.S. metal beverage packaging plants.

 

The Zacks Consensus Estimate for fiscal third-quarter 2010 earnings is $1.42 per share. For full year 2010 and 2011, the Zacks Consensus Estimates are, respectively, $4.59 per share and $5.17 per share.

 

We maintain our “Neutral” recommendation on Ball Corporation. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

 

Broomfield, Colorado-based Ball Corporation is a manufacturer of metal and plastic packaging, primarily for beverages and foods. It also supplies aerospace and other technologies and services to government and commercial customers.