November 13, 2015 Updated 11/13/2015
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Berry Plastics Group Inc. is creating three separate divisions with its Health Hygiene and Specialties division — led by recently acquired Avinitiv Inc. — expected to be the star performer.
Berry forecasts overall sales to grow about 2 percent in fiscal 2016 but its health unit is expected to increase above that, Berry officials said in a Nov. 13 conference call. The new Consumer Packaging division’s sales will be flat while the Engineered Materials division will show some positive, but unspecified growth.
Avintiv’s global footprint will help Berry grow internationally, especially in the fast-growing Asian region, Berry executives said in the conference call.
Evansville, Ind.-based Berry completed the acquisition of Avintiv, a big producer of polypropylene and polyethylene nonwovens based in Charlotte, N.C., on Oct. 1. The deal dramatically boosted Berry’s stake in the medical market. Berry’s new HHS division comprises of Avintiv along with Berry’s heritage businesses in flexible packaging personal care products and medical products, which were formerly part of Berry’s now-defunct flexible packaging division. The HHS division is headed by Scott Tracey, who had been Avintiv’s president for North America.
Berry expects synergies between the former Avintiv and other units in the HHS division in terms of raw material purchasing, particularly for PP, and in manufacturing because nonwovens production is similar to film extrusion. Avintiv’s sales were running at about $ 2.1 billion per year, mostly for hygiene products, but it also has been big in personal and industrial wipes, and health care goods such as gowns, masks and wound care.
The new HHS division will account for about 35 percent of sales, Berry estimated in the conference call. It will be split into four geographies: North America; South America; Europe, Middle East, Africa and India; and Asia. The new Consumer Packaging division will represent about 45 percent of sales.
Berry’s new Consumer Packaging division combines the firm’s former rigid open-top and rigid closed-top divisions, as well as flexible food and consumer packaging, and shrink films, previously part of engineered materials. The new Engineered Materials division includes Berry’s historical engineered materials division and the flexible packaging converter product lines except for shrink films.
Berry logged sales of $ 4.88 billion in the fiscal year ended Sept. 26, down 1.6 percent from the previous year. Of its former four divisions, only flexible packaging sales grew, by 3.4 percent to $ 955 million. Operating profit for fiscal 2015 was $ 408 million, up 29 percent, with gains recorded for each of the former four divisions.
