Berry’s cost actions include the rationalising of facilities and labour
While announcing the second quarter 2023 results, Tom Salmon, Chairman and CEO of Berry, indicated cost reductions: “Our business delivered solid second quarter and first half results with adjusted earnings per share growth of 4% and 7%, respectively. During the past several quarters, we have seen supply chain constraints continue to ease, prioritised structural cost improvements and continued our efforts to pivot our portfolio to high-value growth products across all of our businesses. Our cost actions include the rationalising of 15 facilities across the world, moving business to more efficient cost facilities, and other labour cost reductions from improved productivity. These cost savings initiatives are expected to provide annualised cost savings of $115 million and we expect to realise $70 million in fiscal 2023. These internal actions helped to offset a 6% volume decline driven by destocking and general market softness. We continued our focus on driving long-term value for our shareholders and repurchased $155 million of shares, or another 2.1% of shares outstanding, in the second quarter, while also paying our quarterly dividend. We believe our shares remain undervalued and our repurchases reflect our confidence in the outlook of our business, our long-term strategy, and the strength of our operating model and cash flows.”
He defined health, beauty and foodservice as key end markets that offer greater potential for differentiation and long-term growth. In addition, Berry indicated investments and engagement in emerging markets. In this way, the company aims to achieve long-term structural cost improvements while driving strategic initiatives.
The net sales decline is primarily attributed to a 6% volume decline, decreased selling prices of $143 million due to the pass-through of lower resin costs, an $80 million unfavorable impact from foreign currency changes, and prior quarter divestiture sales of $42 million. The volume decline is primarily attributed to general market softness and ongoing inventory destocking.
The operating income decrease is primarily attributed to a $35 million unfavorable impact from the volume decline, an $18 million increase in business integration costs, a $15 million unfavorable impact from foreign currency changes, and an unfavorable impact from increased selling, general, and administrative expenses. These declines are partially offset by a $40 million favorable impact from price cost spread as a result of cost reduction and improved product mix.
