Silgan Beats, Raises Guidance

Silgan Holdings Inc. (SLGN - Analyst Report) reported its third-quarter earnings before market open. The company posted earnings of $1.91 per share, above the Zacks Consensus Estimate of $1.59 per share and up 31.7% from the year-ago earnings of $1.45 per share.

Net sales in the quarter went up 5.4% to $1,016.5 million from $964.3 million in the prior-year quarter, primarily due to significantly higher unit volumes and increased average selling prices in the Metal Food Container segment, partially offset by lower average selling prices in the Plastic Container business resulting from the pass through of resin price declines, unfavorable foreign currency translation impact, and lower volumes in the Plastic Container and Closures businesses.

Silgan’s Metal Food Container segment’s third quarter revenue increased 16.1% year over year due to higher average selling prices and significantly higher unit volumes. Revenue in the Plastic Container segment was down 17.8% due to lower average selling prices, decline in unit volumes, and unfavorable foreign currency translation impact. The Closures business posted revenue decline of 9.8% due to unfavorable foreign currency translation impact and lower volumes due to soft demand in the single-serve beverage markets.

Operating margin increased 200 basis points year over year to 12.6% as the company benefited from higher net sales, effective cost controls and manufacturing efficiencies, which were partially offset by increased pension and depreciation expense and the unfavorable impact of the delay in pass through of recent resin price increases.

Silgan raised its full year earnings guidance based on its year-to-date operating performance. The company now expects 2009 earnings in the range of $4.00-$4.10 per share, compared to the previous guidance of $3.75-$3.95 and 2008 earnings of $3.69 per share.

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