Ardagh Group, the glass and metal packaging group led by Dublin financier Paul Coulson, said on Tuesday it plans to increase its medium-term investment plan by 17 per cent to $2.1 billion (€1.7 billion) as it seeks to double earnings in its drink cans business over the next four years.
Mr Coulson also signalled that splitting the group between its glass packaging and beverage cans units may be an option, as analysts noted on a conference call, after the company reported full-year figures, that metal cans companies are attracting higher valuations.
However, he declined to comment on a report late last week that Ardagh is considering a separate listing of the beverage cans business through a merger with a US-listed "blank cheque" company, called Gores Holdings V. This company raised $525 million last August specifically to target acquisitions.
Asked by an analyst on a potential split of the businesses, Mr Coulson said it was something Ardagh looks at “on an almost constant basis” as the company weighs options to improve shareholder value. “As at this stage, there is no decision on anything like that,” he said.
He declined to comment specifically on the report by Bloomberg last Friday that the company is in talks with Gores Holdings V.
Mr Coulson is chairman, chief executive and an indirect 33 per cent shareholder of New York-listed Ardagh.
The company reported on Tuesday that earnings before interest, tax, depreciation and amortisation (Ebitda) dipped by 2 per cent to €1.16 billion last year, with an increase in beverage can sales offset by lower glass packaging production, higher operating costs and $30 million of Covid-19 related expenses.
The result was better than the “mid-single-digit” percentage drop it had previously forecast. The company expects earnings this year to rise to between $1.28 billion and $1.3 billion.
Mr Coulson revealed last October that Ardagh planned to invest a record $1.8 billion between 2021 and 2024 on projects aimed at taking advantage of an expanding international market for canned energy drinks, flavoured beverages and craft beer as well as an ongoing shift away from plastic packaging.
However, the company has now hiked the programme to $2.1 billion due to additional beverage can growth opportunities. Shares in Ardagh jumped as much as 10.2 per cent to more than $20.
Ardagh, which traces its roots back to the long-shuttered Irish Glass Bottle factory in Ringsend in Dublin, entered the drink cans business in 2016 through the $3.4 billion purchase of assets from US packaging group Ball and UK rival Rexam as they offloaded plants to appease competition authorities to complete their own merger.
“The resilience of our businesses, the adaptability of our teams and the outlook for our sustainable products was underlined in 2020,” Mr Coulson said.
“We remain focused on growth and have increased our 2021-24 business growth investment programme from $1.8 billion to $2.1 billion due to additional beverage can opportunities. These highly accretive investments underpin accelerated growth, including a projected doubling in metal beverage packaging adjusted Ebitda by 2024.”
The group’s European and Americas metal beverage packaging units reported a combined Ebitda of $545 million last year, while its glass packaging businesses across both regions posted a total figure of $610 million.
