Financially speaking, 2020 has been a good year for Berry Global Inc. The company posted strong sales and profit despite the pandemic, thanks to organic growth, even as it wrapped up the integration of its largest-ever acquisition.
Tom Salmon, chairman and CEO of the Evansville, Ind.-based company, is optimistic that 2021 will be even better.
“Unprecedented clearly is the word that has been used by 2020, and it’s accurate. We’ve seen hurricanes, we’ve seen financial instability, we’ve seen regions of the world literally shut down,” Salmon said in a telephone interview.
He said Berry’s local managers are empowered to make quick decisions to adapt teams to the changing market.
“That is really promising in terms of what we’re going to be able to do in 2021 and beyond,” Salmon said.
Berry is the largest plastics processor in North America, and maybe the largest in the world. It’s the only firm in the top 10 of four Plastics News rankings: injection molders (No. 1 with sales of $1.7 billion), film & sheet manufacturers (No. 2, $2.731 billion), thermoformers (No. 7, $470 million), and blow molders (No. 9, $541 million).
Berry finished its fiscal year on Sept. 26 with sales of $3 billion and net profit of $195 million. Overall, the impact of COVID-19 was neutral, Salmon said, with some sectors negatively impacted but other benefiting.
“We were very fortunate to be able to provide PPE [personal protection equipment] around the world, whether it was face masks, whether it was hard-surface disinfectant wipes, whether it was surgical drapes and gowns,” Salmon said. “I’ve seen an amazing amount of creativity, an amazing amount of agility.”
Salmon said the ability to grow organically in 2020 puts Berry in a good position for “long-term, predictable and sustainable growth” in the future.
Salmon is confident even as he sees legislative and media attention on plastics and the environment, which is a topic that he covers frequently with financial analysts.
“Listen, it’s very clear, there’s a great opportunity for us as an organization with our industry partners, to educate, to collaborate, to innovate with our customers to make sure that they understand and do their part, with our support, to make certain that they’re engineering products that are more sustainable, that help reduce waste, that lower emissions, increase recyclability. That’s a competitive advantage for Berry,” Salmon said.
“No doubt about it, plastics has demonstrated its importance in the world economy. What we have to continue to do is work on finding more means to address plastics waste more responsibly. Because what’s being lost is that opportunity for a second, third, and fourth life” for plastic products.
Salmon highlighted Berry’s work with the Alliance to End Plastic Waste, and its work with customers to commercialize new packaging, some with chemically recycled resins, others with easier-to-recycle designs.
When it comes to replacing virgin resin with recycled feedstocks, Berry’s goal is to find “bonafide, scalable differentiated business models that can be monetized,” Salmon said.
While he said Berry and the industry are making progress on plastic waste issues, Salmon added that “it’s not just about waste. The more difficult problem, in my view, is greenhouse gas emissions. And there, plastics fare very well.”
Salmon has been with Berry since 2007 and just started his fifth year as CEO. During his tenure Berry has continued to grow through acquisition. In 2020, the company wrapped up its integration of RPC Group Inc., which at $6.5 billion was its largest deal ever. This year Berry will continue its focus on reducing its debt to four times to adjusted earnings before interest, taxes depreciation and amortization.
“We’ll continue to deliver against that commitment to deliver consistent predictable organic growth,” Salmon said.
Berry is budgeting 2021 capital expenditures of $650 million, a $70 million increase from fiscal 2020, which Salmon said will focus on three megatrends that will drive future growth: e-commerce, health and wellness and food safety.
