Berry Global (BERY) Increases Production To Fight Coronavirus
Zacks Investment Research | Mar 10, 2020 10:22PM ET
Berry Global Group, Inc. (NYSE:BERY) recently underlined its participation in the fight against the deadly coronavirus. Notably, as a major manufacturer and distributor of nonwoven specialty materials, the company holds an important place in the supply chain for healthcare materials.
At the end of January 2020, the company had prioritized the production of nonwoven healthcare products in Nanhai and Suzhou facilities, based in China. As noted, it also shifted its capacity in the United States for delivering maximum output to cater to the growing demand for healthcare materials. In addition, the company noted that its meltblown production line is running at full capacity in Europe for the production of materials required for face masks and other healthcare applications like materials utilized in blood filtration.
Additionally, the company announced that it has commercialized its new Spinlace production line, based in Mooresville, North Carolina. It noted that this state-of-the-art asset has been functioning at full production rates, offering the company an additional annual capacity of 17,000 metric tons to the marketplace.
Coronavirus, officially named as COVID-19, is currently threatening the economies throughout the world. Notably, the virus originated in Wuhan, China and has spread in a minimum of 80 countries, including South Korea, Italy and Iran. In fact, fatal cases have been reported to cross the 3,200 mark, while an increasing number of infected cases are being recorded on a daily basis.
Existing Business Scenario
Berry Global has been strengthening its product portfolio and leveraging business opportunities through the addition of assets. Notably, in July 2019, the company acquired RPC Group, which has been enhancing its growth opportunities by creating a leader in the plastic and recycled packaging industry. Notably, in first-quarter fiscal 2020 (ended Dec 28, 2019), the buyout added 38.4% to sales. As a matter of fact, the company expects this deal to generate annual cost synergies of $150 million, with half of it expected to be realized in fiscal 2020 (ending September 2020).
However, the company is experiencing a soft operational performance across its Engineered Materials segment due to lower organic sales and fall in selling prices. Also, its Health, Hygiene & Specialties segment has been witnessing soft organic sales on account of divestiture of its SFL business and customer product transitions in hygiene. The company expects these headwinds to persist in the near term.
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In the past six months, this Zacks Rank #3 (Hold) stock has lost 15.3%, narrower than the Zacks Investment Research
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