Berry Global Group Inc.'s new CEO wants to see a deeper integration of operations to help drive sustainability and growth throughout the company's business.
Kevin Kwilinski, on the job for 50 days when he spoke with stock analysts Nov. 16, said the company's European businesses have expertise to share with Berry operations in the United States and elsewhere.
"We have a very large opportunity around sustainability. And it isn't theoretical because the reality of the world that we are in is [that] Europe is quite a ways ahead of use. We are operating in Europe and we are seeing where legislation is going and the opportunity it creates," Kwilinski said.
Europe, when it comes to environmental issues, seemingly always is in front of the United States. And that certainly is the case with plastics.
So Kwilinski said the expertise Berry has gained in Europe can serve as a roadmap for operations elsewhere to provide more sustainable packaging products elsewhere.
Those opportunities include products that are highly recyclable, contain high recycled content or utilize chemically recycled feedstock. Both extended producer responsibility — an approach where manufacturers play a role in seeing that their products are recycled — and the manufacture of reusable or returnable options are also opportunities, he said.
"Those drive very large opportunity for growth and share gain if we have products that are superior and differentiated," Kwilinski said.
"I think a lot of the opportunity here will be to more tightly integrate the work that we're doing in Europe to expand over the larger footprint that we have knowing that what is happening there is going to end up happening here in the U.S. and other markets," he said.
"Traditionally, I think the company operated a bit more siloed than I would like to see in terms of the whole commercial organization process and how we leverage areas for growth. I'm sure there will be other observations that come as I learn more about the business, but that would be my initial take," Kwilinski said.
The new CEO also gave some insight regarding the previously announced potential sale of the company's Health, Hygiene and Specialties division.
Berry, in confirming that the division was in play in September, did not initially provide a specific rationale for the potential sale.
But Kwilinski gave some insight during the call.
"This obviously is a perspective from someone who wasn't here at the time. I've got an incomplete understanding," he cautioned. "It's a tremendous business. It has good mid-single digit growth over the long term."
But that portion of the Berry business is more capital intensive and cyclical than other company segments that include consumer packaging and engineered materials.
HH&S makes nonwovens, specialty films and tapes for what the company calls "a broad range of end markets including health care, hygiene, consumer, building and construction, and industrial."
"When I think about what are we trying to achieve here, we want to have consistent earnings, consistent cash flow. We want investors to understand our story and to know when they buy our stock what they are getting and what they are invested in," he said.
"So we need to make sure that when we think about our portfolio it looks alike and we're not confusing and we're not closing ourselves off to investors we would like to have because we have a complicated story," Kwilinski said.
"So when we look at divesting it, we're looking at a good business that just is not a good fit for us in the long-term portfolio that we want to cultivate here," he said.
Berry also reported fiscal year earnings of $609 million, or $4.95 per diluted share, on sales of $12.67 billion for the period ended Sept. 30. That compares with earnings of $766 million, or $5.77 per diluted share, on sales of $14.5 billion for the previous fiscal year.
Fourth quarter earnings were $186 million, or $1.55 per diluted share, on sales of $3.09 billion. That compares with earnings of $233 million, or $1.85 per diluted share, on sales of $3.42 billion during last fiscal year's fourth quarter.
Berry also increased the company's quarterly dividend by 10 percent to 27.5 cents per share. The new dividend equals $1.10 per share per year.