Ball, the jarmaker, boils up profits in aerospace, too
Unlike many company presidents, Richard Ringoen won't be unhappy about signing his 1982 annual report message to shareholders. It could start out similar to last year's, reporting new records in sales, net income, and earnings per share.Skip to next paragraph
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Mr. Ringoen heads Ball Corporation, the Muncie, Ind.-based company best known for its production of home-canning glass jars. Since the company became public in 1972, Ball's earnings and sales have increased at above-average rates, says Richard Palm, an analyst at Merrill Lynch & Co. Now a diversified manufacturer, Ball still emphasizes packaging but is steadily building its technical (including aerospace) and industrial products divisions, too.
An ''outstanding'' performer in the recession, according to Mr. Palm, Ball has averaged a 14 percent annual growth rate in earnings per share over the last five years.
Mr. Palm estimates revenues will continue to grow this year to about $960 million from the 1982 estimate of $800 million. In October, Ball initiated a two-for-one stock split. With the split, 1982 earnings per share will come out to about $3.15 (a 14 percent gain over 1981), he says, while 1983 should increase only 8 percent, to $3.40. ''Ball solved a lot of problems last year and they won't have as many opportunities to do that this year. But its good growth remains intact,'' Palm explains.
In an interview here, Mr. Ringoen said Ball has been able to square off with the recession because it is a low-cost producer and has a number of long-term contracts - especially in aluminum cans and aerospace. Management has its eagle eyes focused on the bottom line too, he says, and divests and acquires companies accordingly.
Over Ball's lifetime, the packaging division (which accounted for 73 percent of 1981 revenues) has been the major breadwinner. Home canning jars have done well. ''During a recession, people are looking for a way to conserve,'' Ringoen said. ''So there is more canning.''
Consolidation and cost-cutting have worked their way through packaging, too. In 1980, Ball acquired Metropak Containers Inc., a glass manufacturing company, from Kraft. Since then it has reworked the company, closing one glass plant and emphasizing glass containers for the food industry. It has left beverages, where plastics are replacing glass. Ball also closed one of its own glass plants.
Since Ball began manufacturing beverage cans, it has been a low-cost producer in that area, too. ''We got into the business just when technology was shifting from three-piece cans with a soldered side to two-piece aluminum cans, which save metal. We built all our plants for two-piece production. Other canners had to change over and some stayed in three-piece a little too long,'' Ringoen explained.
But overcapacity in the aluminum canning industry has caused predatory pricing and has caught up with Ball's low prices. The company's profit margins in cans shrank and earnings have been flat. Ringoen, however, says overcapacity in the industry has halved since a year ago. ''I think we've reached the worst of it,'' he said.