Metal packaging products manufacturer Crown Holdings (NYSE:CCK) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 3.7% year on year to $2.89 billion. Its non-GAAP profit of $1.67 per share was 35.4% above analysts’ consensus estimates.
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Crown Holdings (CCK) Q1 CY2025 Highlights:
- Revenue: $2.89 billion vs analyst estimates of $2.84 billion (3.7% year-on-year growth, 1.5% beat)
- Adjusted EPS: $1.67 vs analyst estimates of $1.23 (35.4% beat)
- Adjusted EBITDA: $473 million vs analyst estimates of $405.7 million (16.4% margin, 16.6% beat)
- Management raised its full-year Adjusted EPS guidance to $6.90 at the midpoint, a 1.5% increase
- Operating Margin: 12.6%, up from 8.8% in the same quarter last year
- Free Cash Flow was -$6 million compared to -$183 million in the same quarter last year
- Constant Currency Revenue rose 4.7% year on year (-6.7% in the same quarter last year)
- Market Capitalization: $11.16 billion
StockStory’s Take
Crown Holdings’ first quarter results reflected notable improvements in both revenue and profitability, which management credited to strong beverage can volumes in the Americas and Europe and operational execution across its business lines. CEO Timothy Donahue highlighted that “outstanding manufacturing performance globally, including benefits from the prior year’s Asian capacity optimization program, also contributed to the excellent results.” The company also saw significant growth in North American food cans, particularly for pet food and vegetable customers.
Looking ahead, management raised its full-year adjusted EPS guidance, citing continued momentum in beverage can demand and expectations for a tight supply environment during the summer. However, Donahue was careful to note potential risks, stating, “We tried to be thoughtful around what the impact could be and we tried to provide a forecast that encapsulated what we think we know, understanding that things are fluid and they're changing rapidly.” The company’s outlook reflects both current strength and caution around tariffs and broader economic uncertainties.
Key Insights from Management’s Remarks
Crown Holdings’ management attributed the quarter’s outperformance to higher beverage can volumes, improved manufacturing efficiency, and favorable customer mix. They addressed regional trends and ongoing cost management as key factors supporting results, while noting areas of risk such as tariffs and industrial demand.
- Beverage Can Volume Growth: The company saw higher-than-expected beverage can shipments in the Americas and Europe, with North American and Brazilian volumes up 2% and 11% respectively, supporting segment income gains.
- European Substrate Shift: Management observed an accelerated shift from other packaging materials to aluminum cans in Europe, which they believe is driving above-market growth and could lead to a tight supply environment through the summer.
- Asia Pacific Optimization: Benefits from recent cost reduction programs and facility rationalization in Asia Pacific improved margins, despite lower volumes following the closure of an underutilized plant.
- North American Food Can Surge: A 16% increase in North American food can volumes, led by pet food and vegetable demand, contributed to income growth in the segment. Management attributed this to a favorable customer mix rather than broad market promotions.
- Transit Packaging Uncertainty: The transit packaging business remained subdued, with management pointing to cautious customer capital spending and direct and indirect tariff exposure as key risks for this segment.
Drivers of Future Performance
Management’s outlook for the upcoming quarters is shaped by robust beverage can demand, the ongoing shift to aluminum packaging, and cautious assumptions around potential tariff impacts and industrial demand.
- Beverage Can Demand: Sustained strength in beverage can volumes in North America and Europe is expected to drive margin performance, with management anticipating a tight supply environment during summer months.
- Tariff and Economic Risks: Management highlighted the potential for tariffs to affect transit packaging and consumer demand, particularly in more economically sensitive regions such as Asia Pacific and Mexico.
- Operational Efficiency: The company’s focus on manufacturing productivity and disciplined capital allocation is expected to support margin resilience, even as market conditions fluctuate.
Top Analyst Questions
- George Staphos (Bank of America): Asked whether customers are changing purchasing patterns ahead of potential aluminum price increases. Management reported no significant anticipatory buying, noting that beverage can supply chains are tightly managed.
- Phil Ng (Jefferies): Inquired about demand trends through March and April and whether any slowdown was observed. CEO Donahue said strength in demand persisted and expects a tight supply situation in North America and Europe this summer.
- Ghansham Panjabi (R.W. Baird): Sought clarification on exceptional incremental margins in the Americas beverage segment. Management attributed margins to high utilization and effective capital investment, but cautioned not to extrapolate Q1 trends through the full year.
- Stefan Diaz (Morgan Stanley): Questioned the rationale behind maintaining cautious full-year guidance despite a strong Q1 beat. Management cited uncertainty surrounding tariffs and economic conditions as reasons for a conservative outlook.
- Anthony Pettinari (Citigroup): Asked about capacity constraints and the need for further investments given the accelerated shift to aluminum cans. Management indicated some capacity expansion is underway in Greece and ongoing evaluation across Europe.
Catalysts in Upcoming Quarters
As we look to the upcoming quarters, the StockStory team will monitor (1) beverage can demand trends in North America and Europe to see if the expected tight supply persists, (2) the impact of tariffs on transit packaging and any resulting shifts in customer capital spending, and (3) evidence of further substrate shifts in Europe or other major markets. Progress on operational efficiency and any updates on capacity investments will also be important markers for execution.
Crown Holdings currently trades at a forward P/E ratio of 13.9×. In the wake of earnings, is it a buy or sell? See for yourself in our free research report.
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