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Ball Corp (BLL) to Shut Beverage Packaging Plant in Brazil

Ball Corporation BLL has announced to cease production at its beverage packaging plant in Cuiabá, Brazil, in order to alleviate cost structure. The decision will affect around 70 employees, though Ball Corp has assured to provide those employees with benefits and outplacement services, in line with legal requirements.

Ball Corp’s Cuiabá plant has been operating for almost 20 years. It was one of its 14 facilities in South America. Following the closure of the plant, some of the employees will be transferred to other locations of the company.

In August 2017, Ball Corp announced to cease production at its three beverage packaging plants in Birmingham, AL; Chatsworth, CA; and Longview, TX.  It also declared to close the food-can production at its Springdale, AR plant in October last year. Moreover, these measures are in sync with Ball Corp’s focus to improve general and administrative cost structure.

Ball Corp’s South America segment accounted for 15% of consolidated net sales in 2017, producing around 16 billion aluminum beverage containers. However, the company remains concerned about the segment’s performance, due to the impact of the truckers' strike in Brazil lately.

Further, it continued to anticipate tougher year-over-year comparison in the second half of 2018 for the Brazilian business, mainly due to the lack of profit recorded by the manufacturing contract of a divested business, challenging year-over-year volume comparisons and tepid economic condition in the region. Moreover, due to competition, Ball Corp's volume growth is also predicted to be slower than the market rate during 2018 in Brazil.

Due to these concerns, Ball Corp’s shares dropped around 14% over the past year, which is in line with the industry’s decline.

Zacks Rank & Key Picks

Ball Corp currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same sector are Actuant Corporation ATU, DMC Global Inc. BOOM and Chart Industries, Inc. GTLS. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Actuant has a long-term earnings growth rate of 15.6%. Its shares have rallied 19% year to date.

DMC Global has a long-term earnings growth rate of 20%. The company’s shares have appreciated 249% year to date.

Chart Industries has a long-term earnings growth rate of 26.9%. The stock has surged 79% so far this year.

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