Shares of packaging company Crown Holdings (CCK 1.01%) fell as much as 21.2% in trading on Tuesday after the company reported fourth-quarter 2023 financial results. Shares were still down 12.9% at 3:15 p.m. ET.
Declining revenue hits Crown hard
Revenue for the quarter was $2.86 billion, down from $3.01 billion a year ago, including positive impact from foreign currency of $42 million and lower material costs passed on to customers of $145 million. Income from operations increased from $229 million to $259 million in the quarter.
Management said North America had 5% volume growth in beverages and Brazil volumes grew 2%.
As part of efficiency efforts, the company stopped operations in Batesville, Mississippi, and Decatur, Illinois, and moved operations in Vietnam from Ho Chi Minh City to Vung Tau where there's a high-speed plant. This is expected to improve Crown's operational efficiency and utilization rates for capital equipment.
Where investors were likely disappointed was earnings per share guidance of $5.80 to $6.20 per share, only a slight increase from $5.86 per share in 2023. Management said softness in cans and aerosols is expected to drive the relatively disappointing results.
Lower expectations and a value for investors
Growth may not be what investors hoped for, but Crown Holdings is trading for a reasonable value given the steady performance on the bottom line. Shares trade for slightly less than 13 times earnings and that's a fair value for a company that's likely to improve efficiency in 2024 and beyond.
