Berry Global posts sales, profit growth; highlights advances in sustainability

Add packaging giant Berry Global Group Inc. to the list of publicly traded plastics processors that overcame resin shortages and huge price increases to post strong quarterly results.

The Evansville, Ind.-based company also updated investors on its efforts to become a more sustainable manufacturer, including stepping up its use of post-consumer resins.

On the resin shortage front, the situation was reminiscent of last year's hurricane season, which disrupted commodity resin production on the Gulf Coast for months.

"Certainly things got tight, there's no doubt about it. But the good fortune is that we've got a pretty robust list of suppliers, we've got the ability to interchange materials, and we were actually able to move material from different parts of the country that may actually have had surpluses to those that had shortages," Chairman and CEO Tom Salmon said in a telephone interview with Plastics News.

Salmon said the situation was "as severe as anything we've seen in the last 35 years."

"It was different than a hurricane. A hurricane is unique in its own right. But the fact when you have all the infrastructure frozen and the amount of work that has to go through to make certain that those facilities are safeguarded, it's a lot. I hope, I believe, we're actually on the end of it; we will see the supply situation more normalized in the near term," Salmon said.

The company highlighted sustainability in its quarterly earnings call with analysts, and Salmon fielded lots of questions about how the changing market will impact Berry in the future. He also addressed the issue in the interview with Plastics News.

"The industry is making decent progress; we obviously can do more faster. But I'm excited about the prospects for molecular recycling, as well as the investment we've made in mechanical recycling. I think it puts us in a really good spot," Salmon said.

Both Berry and its customers have "very public sustainability goals," Salmon said, and Berry's work on making products that are reusable, recyclable, compostable or that use recycled content is "really a growth opportunity for our company."

Berry has its mechanical recycling capacity to roughly 300 million pounds per year, and it has recently helped customers commercialize packaging that uses chemically recycled resins.

"While advanced recycling is in its infancy, in terms of pilot facilities, etc., the prospects for it, I think, are really robust," Salmon said. "We're going to continue to be at the forefront of investment around that to make certain that we have our own fair share. And, you know, the progress we've made in Europe, the commercialization we've made in North America, are all really exciting, and customers seemed really optimistic about it."

Also related to sustainability, he gave more details about a recently announced $70 million capital investment in equipment to make film using recycled and renewable resins.

"The film investment supports our e-commerce space, as well as some of the snacking categories inside our engineering materials business," Salmon said. "The technology that we're buying enhances our ability to incorporate post-consumer [and] bio-based materials. There's not a lot more I can say about that without describing some proprietary components of it. But, you know, we're excited. It's going to support what we think is a super exciting market where we've enjoyed a lot of growth.

"We're seeing more requests to incorporate larger percentages of post-consumer materials or post-industrial materials in those products; it's going to afford us that ability to do so. So more to come. But it's clearly a growth investment for engineered materials business," he said.

The $70 million investment will buy new multilayer blown film lines that will come online in 2021 and 2022, across North American sites.

In the presentation to analysts, Salmon touched on one legislatively driven product change, a new tethered closure designed to meet new European Union regulations that require closures remain attached to containers throughout their intended use.

Asked how proposed federal or state legislation might impact Berry Global in the future, Salmon said that to date, there's no legislation that would impact the business where the company is concentrated today.

"We will look to work with local legislators and municipalities to make certain that they're educated and make the best decisions," Salmon said, adding that he supports proposals that will help create a better infrastructure to recycle plastics.

"Frankly, plastics is a critical component to making people's lives better," he said. "We're going to be active in every region that we participate, both in the U.S. and outside of the U.S., to make certain that we are a part of the discussion so that we can, in a good, balanced way, create the kind of infrastructure necessary to get these raw materials multiple lives."

For the company's second quarter of 2021, Berry Global reported net sales of $3.4 billion, a 13 percent increase over the same period a year ago. Some 5 percent of the increase was the result of organic volume growth, and the rest was attributed to higher resin costs and favorable currency changes.

Operating profit was up 17 percent to $333 million, and operating earnings before interest, taxes, depreciation and amortization was up 9 percent to $590 million.

The company also raised its EBITDA guidance for the full year and predicted organic volume growth for the year of 5 percent, up from a previous estimate of 4 percent.

"The continued positive momentum from our investments in areas such as health and wellness, e-commerce and food safety, along with the focus on growing our emerging market exposure and driving more sustainable packaging, provide us the path to realize long-term, consistent volume growth," Salmon said.

Berry has 47,000 employees across more than 295 locations. According to Plastics News data, the company ranks among the top 10 thermoformers, injection molders, film and sheet manufacturers and blow molders in North America.