Berry Global to Close 15 Plants, Focus on Critical Packaging Segments

EVANSVILLE, IN—Berry Global is making long-lasting structural cost improvements while advancing strategic initiatives to exit 2023 a much stronger and more focused company. Chairman and CEO Tom Salmon reported out financial positions for first half Fiscal 2023 and revealed plans to shutter 15 plants globally. No sites were specifically identified for closure during the May 2023 investor call, but assurances of sound financial positioning were rendered.

Salmon reported, “Our business delivered solid second quarter and first half results with adjusted earnings per share growth of 4 percent and 7 percent, respectively.” He openly acknowledged, “During the past several quarters, we have seen supply chain constraints continue to ease, prioritized structural cost improvements and continued our efforts to pivot our portfolio to high-value growth products across all of our businesses.”

Berry’s CEO further noted, “Our cost actions include the rationalizing of 15 facilities across the world, moving business to more efficient cost facilities, and other labor cost reductions from improved productivity. These cost savings initiatives are expected to provide annualized cost savings of $115 million and we expect to realize $70 million in Fiscal 2023.“

Salmon stated on record, “These internal actions helped to offset a 6 percent volume decline driven by destocking and general market softness.”

At least eight Berry plants are FTA members. They are located in Evansville, IN; Bowling Green, Ky; Des Moines, IA; Lecompton, KS; Mason, OH; McAlester, OK; Nashville, TN; and Richmond, IN. Berry has plants in 34 of the 48 contiguous United States.

Salmon cited a net sales decline in the Consumer Packaging North America business segment and said, “It is primarily attributed to decreased selling prices of $80 million and a 3 percent volume decline. The volume decline is primarily attributed to general market softness, partially offset by growth in our foodservice market.”

Similarly, Berry’s CEO indicated, “A net sales decline in the Consumer Packaging International segment, primarily attributed to a $57 million unfavorable impact from foreign currency changes, a 5 percent volume decline, and prior quarter divestiture sales of $42 million, partially offset by increased selling prices of $76 million–primarily due to the pass-through of European inflation. The volume decline is primarily attributed to general market softness.”

He explained, “The operating income decrease is primarily attributed to a $10 million unfavorable impact from the volume decline, a $9 million unfavorable impact from foreign currency changes, a $7 million unfvavorable impact from increased business integration costs, and increased selling, general, and administrative expenses. These items are partially offset by a $10 million favorable impact from price cost spread.”

Salmon openly pledged, “We will continue to target key end markets which offer greater potential for differentiation and long-term growth, such as healthcare, beauty, and foodservice. Additionally, we will continue to invest and expand our emerging market exposure while delivering highly desired innovative and sustainability-focused customer-linked products.”

On a positive note, he announced, “We continued our focus on driving long-term value for our shareholders and repurchased $155 million of shares, or another 2.1 percent of shares outstanding, in the second quarter, while also paying our quarterly dividend. We believe our shares remain undervalued and our repurchases reflect our confidence in the outlook of our business, our long-term strategy, and the strength of our operating model and cash flows.”