Ardagh Metal Packaging S.A. (AMBP, $7.94): “Getting Canned”
By: Joseph
Anason, AIM Student at Marquette University
Disclosure:
The AIM International Equity Fund currently holds this position. This article
was written by myself, and it expresses my own opinions. I am not receiving
compensation for it, and I have no business relationship with any company whose
stock is mentioned in this article.
Summary
- Ardagh
Metal Packaging S.A. (NYSE: AMBP) develops, manufactures, and
sells metal beverage cans. The company operates through the Europe and
Americas geographical segments.
- The
company was spun off from Ardagh Group SA (ARD) in early 2021 and
completed their partnership with Gores holdings V on August 4, 2021. ARD
remains majority shareholder at 75.32% ownership.
- The
company experienced decreasing net income before and after exceptional
items from 2020 to 2021. The net loss after exceptional items in 2021 was primarily
contributed to listing and professional fees related to issuing shares for
the new partnership.
- AMBP
submitted plans to build a new $200 million beverage can facility in
Ireland. It is planned to be operational in 2023.
- The
company missed EPS expectations for Q4 2021. Additionally, over the last
year, the stock has been declining in value.
Key
points:
Ardagh
Metal Packaging was the metal-packaging unit spun off from Ardagh Group SA (ARD).
The company completed their business partnering with Gores Holdings V on August
4, 2021. Ardagh Group SA has remained the majority shareholder at 75.32% ownership.
AMBP ended
the 2021 year with sales of $4,055 million and adjusted EBITDA of $612 million.
However, the company had declining net income before exceptional items from
2020 to 2021 of $15 million. After exceptional items, the company reported a
net loss of $210 million, compared to net income of $111 million in 2020. $242
million of the exceptional items that contributed to the net loss relates to the
listing service of the shares for the business combination on August 4 and for
professional advisory fees.
On April
5, 2022, Ardagh Metal Packaging submitted plans for a $200 million (£150
million) beverage can plant. This facility will be located in Northern Ireland,
40,000 square meters in size, and will create about 160 on site jobs and about
30 indirect jobs through associated businesses. This facility will strengthen
customer relationships across Ireland and Great Britain and grow their
production base in Europe. David Spratt, CEO of Ardagh Metal Packaging Europe,
is expecting the plant to be operational in 2023.
What
has the stock done lately?
The
stock experienced increased volatility in March 2022. AMBP hit a 52-week low of
$7.17 on March 17 and rebounded by the end of the following week to reach a
price of $8.80. Since then the stock has been in decline. This is despite submitting
plans to build a new beverage can facility in Ireland.
Past
Year Performance:
Shortly after the announcement of the completion of the business combination, Ardagh Metal Packaging hit an end-of-day stock high of $12.15. Since then, the stock has been declining, hitting a low on March 7, 2022. Additionally, the stock is down 12% YTD. For Q4 2022, AMBP reported $0.07 EPS, missing expected EPS of $0.09, and exceeded expected revenue of $1.02 billion by $0.07 billion. The company will be releasing Q1 2022 earnings on April 28. The expected EPS and revenue are $0.06 and $1.12 billion, respectively.
My
Takeaway
The market positively received the news of the completion of the partnership with Gores Holdings V. Since then, however, the company has been underperforming to the benchmark and has been in a steady decline. Despite the news of a new facility, the stock continues to decline. The company faces headwinds from current macro events in Europe, increase in material and transportation costs, and rising interest rates. The company will need to effectively manage these costs to improve their current situation and to stop their share price from further decline.
