After notching up further losses in its fourth quarter, global packaging giant Crown Cork and Seal has announced a refinancing plan which aims to get the company back into the black.
The company announced that net sales in the fourth quarter were $1.5 billion (€1.4bn) and $6.8 billion in the twelve-month period, 7.3 per cent and 5.5 per cent respectively, below the prior year's same period results.
The company said that the decrease in net sales reflected divested operations whose net sales were $221 million in 2001 ($116 million in the fourth quarter of 2001), and reflected the pass-through of lower raw material costs and volume decreases in certain product lines.
On a brighter note, gross profit (net sales less cost of products sold) as a percentage of net sales improved to 15.2 per cent in the fourth quarter compared to 11.8 per cent in the same period last year, and 17.7 per cent for 2002 compared to 15.0 per cent in 2001. The company said the improvement was the result of price increases across its product lines, improved operating performance and continuing cost reduction efforts offsetting net overall volume decreases.
Operating income in the fourth quarter improved to $57 million, or 3.7 per cent of net sales, compared with operating income of $9 million, or 0.5 per cent of net sales in last year's fourth quarter.
For the twelve-month period, operating income increased to $481 million or 7.1 per cent of net sales, an improvement of 52.7 per cent over the $315 million, or 4.4 per cent of net sales, reported in 2001.
The amicable settlement of pending asbestos cases and the fact that the company has managed to maintain higher prices have helped pare back some of the company's debt, however the company is expecting a heavy debt load this year, necessitating an increased credit facility.
Commenting on the results, CEO John W. Conway stated: "2002 was marked by a more rational pricing environment. Consistent with our goals announced at the beginning of last year, in 2002 Crown Cork & Seal achieved increased productivity, effective cost containment, a substantial improvement in working capital and a stronger balance sheet through debt reduction."
In the Americas Division operating income for the twelve months ending December 31, 2002, operating income increased to 8.6 per cent of net sales compared to 4.6 per cent in 2001.
European Division operating income in the fourth quarter increased to 5.3 per cent of net sales from 4.1 per cent in last year's same quarter. Operating income was 3.7 per cent of net sales in the quarter compared to 4.4 per cent in the prior year period. For 2002, operating income increased to 8.7 per cent of net sales from 8.5 per cent for 2001. The company said that the decrease in the fourth quarter of 2002 was due to the above-mentioned provision for bad debts.
The financing plan consists of a $550 million revolving credit facility, a $500 million term loan, the issuance of $1.75 billion in secured notes and the receipt of gross proceeds from the issuance of convertible notes and debt for equity exchanges in an aggregate of $325 million.
The plan, which is currently under discussion with financing sources and rating agencies, includes a commitment by Citicorp North America and Deutsche Bank Trust Company Americas to provide the $550 million revolving credit facility.
Currently the company claims to make one-fifth of the world's beverage cans and one-third of food cans used in North America and Europe.