US Can reports increased losses for Q3

Although net sales were slightly up for US Can in its third quarter, operating cost inefficiencies have pushed the company further into the red.

The company reported net sales of $205.5 million (€211m) for its third quarter ended 29 September 2002 compared to $204.2 million for the corresponding period of 2001, a 0.6 per cent increase.

US Can said that the increase is primarily attributable to increased US aerosol unit volume and a positive foreign currency impact on sales made in Europe.

The increases were partially offset by volume decreases in the company's paint, plastic and general line and custom and specialty operations.

For the first nine months of 2002, net sales increased to $595.1 million from $588.7 million for the same period in 2001. The company said that the increase was primarily due to higher aerosol volume throughout the year coupled which was also coupled with a positive foreign currency impact on sales made in Europe, offset by decreases in paint, plastics and general line operations and custom and specialty volume. Paint and general line sales were negatively impacted by closed facilities.

For the third quarter, US Can reported a gross income of $19.8 million or 9.6 per cent of sales, compared to $23.7 million or 11.6 per cent of sales in 2001. Year-to- date, 2002 gross income was $61.7 million or 10.4 per cent versus $74.5 million or 12.7 per cent for the first nine months of 2001.

Although gross income has been positively impacted by increased US aerosol volume, the company said it was not sufficient to overcome the negative impact of manufacturing inefficiencies and volume declines in custom and specialty, operating cost inefficiencies resulting from its plant consolidation in the UK, including the closing of its Southall, UK, operation in September this year, and production inefficiencies at its manufacturing facility in Germany.

As of 29 September 2002, the company had substantially completed the restructuring programmes initiated in 2001. In these programmes the company offered voluntary termination programs to corporate office salaried employees, consolidated two Georgia, US, plastics facilities into a new facility, and completed closure of four other manufacturing facilities.

A fifth, the Burns Harbor, Indiana lithography facility will be closed in the fourth quarter, completing the facility closure program. US Can has also reassessed its reserves related to the 2001 restructuring programs and has recorded an additional charge of $5.1 million in the third quarter of 2002, primarily due to additional employee separation costs and updated estimates of facility carrying costs.

The net loss before preferred stock dividends was $5.2 million for the quarter ended September 29, 2002 compared to a net loss of $1.4 million for the quarter ended September 30, 2001. The net loss before preferred stock dividends on a year-to-date basis for 2002 was $8.5 million compared to $2.3 million for the same period of 2001.

US Can Corporation is a leading manufacturer of food cans in Europe.