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Crown Holdings' Profit Dips Amid Sales Slump Sending Shares Tumbling

AInvestMonday, Feb 5, 2024 6:59 pm ET
1min read

$CCK(CCK)

Crown Holdings Inc. (NYSE: CCK) hit the wires with its latest financials Monday after hours, including results for fiscal Q4 and the entirety of 2023, revealing a 5.1% dip in net sales to $2.86 billion, missing the anticipated $2.96 billion mark set by analysts. Despite an operational income boost to $259 million from $229 million year-over-year, net income plummeted to $32 million from the previous year's $89 million. The quarter saw a sharp decline in diluted earnings per share (EPS) to $0.27, a significant fall from $0.74.

The adjusted diluted EPS offered a glimmer of hope, inching up to $1.24 from $1.17. However, the annual net income faced a stark decline, standing at $450 million compared to $727 million in 2022. The company has set its sights on an adjusted diluted EPS for 2024 ranging between $5.80 and $6.20.

Crown Holdings' financial journey was marred by several headwinds, including lower material costs, a downturn in business volumes, and a noticeable inventory impact due to steel repricing. Nevertheless, the company managed to secure a record adjusted EBITDA, marking an 8% year-over-year improvement, primarily fueled by its robust operating performance in key business areas.

In a strategic move to bolster operational efficiency and cost absorption, Crown Holdings decided to halt operations at several facilities. The outlook for 2024 hints at persistent demand challenges and consumer pressure across most markets.

The earnings announcement led to a sharp downturn in Crown Holdings' stock, which saw a significant gap down, testing the critical $27 support level. This level is closely watched, as it aligns with the 20-sma ($26.95). The stock's resilience at this juncture is crucial; a breach could trigger a downward spiral towards the $25-26 range, aligning with the 50-weekly moving average ($25.68).

Crown Holdings Inc. faced a tumultuous quarter, marked by reduced sales and net income amidst challenging conditions. However, slight improvements in adjusted EPS and strategic operational adjustments highlight the company's efforts to navigate through these turbulent times and potentially strengthen its financial standing in the future.

CCK shares dropped sharply off the release, trading down as much as 14% in thin after hours action.


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