Berry Chairman and CEO Tom Salmon says, “While there are unprecedented uncertainties impacting the global economy right now, we are fortunate to have an extremely diverse portfolio of products, both geographically and by end market, which will further demonstrate our proven track record of stability as we progress through the back half of fiscal 2020. The long-term fundamentals of the business have strengthened and we remain focused on our top three financial objectives of improving our strong balance sheet, organically growing our businesses, and integrating the RPC acquisition as demonstrated in this recently completed quarter."
March 2020 Quarter Results
Overall net sales in the quarter were $2.975 billion, a 53% increase compared to the prior year quarter. The net sales growth is primarily attributed to acquisition net sales of $1,174 and a base volume increase of 2%. These increases were partially offset by lower selling prices of $148 million due to the pass through of lower resin costs and prior quarter divestiture sales of $24 million.
Consumer Packaging - International
Consumer Packaging – International delivered net sales of nearly $1.1 billion in the March 2020 quarter. The net sales and operating income growth in the Consumer Packaging International segment is attributed to the RPC acquisition.
Consumer Packaging - North America
Consumer Packaging – North America delivered net sales of $706 million, a 10% increase compared to the March 2019 quarter. The net sales growth in the Consumer Packaging North America segment is primarily attributed to acquisition net sales of $123 million related to the US. portion of the acquired RPC business partially offset by lower selling prices of $56 million due to the pass through of lower resin costs.
The operating income increase is primarily attributed to acquisition operating income of $16 million and a $3 million decrease in depreciation and amortization.
Health, Hygiene, & Specialties
Health, Hygiene & Specialties delivered net sales of $576 million in the March 2020 quarter. The net sales decrease in the Health, Hygiene & Specialties segment is primarily attributed to lower selling prices of $52 million due to the pass through of lower resin costs and prior quarter sales of $24 million related to the divested Seal for Life (SFL) business. These decreases are partially offset by a 3 percent base volume increase.
The operating income decrease is primarily attributed to an $8 million unfavorable impact from price cost spread and prior quarter operating income of $7 million related to the divested SFL business. These decreases were partially offset by a $6 million decrease in business integration costs and a $3 million favorable impact from the base volume increase.
"While certain markets have been impacted by COVID-19 and related restrictions, we are fortunate to have such a diversified portfolio with strong, stable end markets. Our guidance has assumed COVID-19 related restrictions, such as shelter-in-place orders, continue for the remainder of our fiscal year. We believe approximately 65% of our portfolio is advantaged to neutral with about 35% disadvantaged related to COVID-19. We expect the coronavirus to negatively impact our volumes with a low-single digit decline, but believe that we will still generate growth in EBITDA for the back half of our fiscal year driven by cost synergies and improved cost productivity. The net negative impact we are anticipating related to COVID-19 on volumes and earnings are transitory. As the restrictions are lifted, we anticipate all our segments will return to positive organic growth, as demonstrated in the most recent fiscal quarter from the pre-COVID-19 volumes and earnings levels."