Two packaging businesses enter temporary management

Russia placed 100% stakes in two Silgan Holdings businesses under temporary state management on 11 July 2024. President Vladimir Putin issued the decree, with management assigned to the Federal Property Management Agency, Rosimuschestvo. The affected companies are food metal-packaging businesses. The businesses identified in the Interfax report were:

  • Silgan Metal Packaging Stupino LLC, in the Moscow Region.
  • Silgan Metal Packaging NM LLC, in Adygea.

The two companies’ combined revenue had fallen to RUB3.6 billion in 2022 from RUB4.3 billion in 2021. Their financial indicators suggested that the Russian businesses were essentially inactive in 2023. Those figures describe the local operations before the management decision, rather than the sales of Silgan’s international manufacturing network.

Fisht refuge, Adygea
Fisht refuge, Adygea

Earlier closures and asset charges

Silgan closed its two Russian metal-container manufacturing facilities at the beginning of 2023. The company had recognised a US$73.8 million rationalization charge in the fourth quarter of 2022, within its Metal Containers segment, for writing off net assets used to serve the Russian market. The closure and accounting treatment therefore preceded the July 2024 management announcement.

In the fourth quarter of 2023, Silgan recorded a US$17.7 million rationalization credit in the same segment following a loss recovery from OeKB relating to those net assets. The charge and subsequent credit appear in the company’s 2023 annual report. They are accounting items associated with the assets, distinct from the Russian companies’ revenue figures.

Silgan Holdings
Silgan Holdings

Group results before the management decision

Silgan generated consolidated net sales of US$1.32 billion in the first quarter of 2024, compared with US$1.42 billion a year earlier. Net income was US$55.2 million, against US$72 million in the first quarter of 2023. The company released those results on 1 May 2024.

Its Metal Containers segment recorded quarterly sales of US$617.1 million, down 8% from US$670.1 million. Unit volumes fell 5%. Silgan attributed the lower sales primarily to customer destocking and the contractual pass-through of lower raw-material costs.

Russian asset milestones
Russian asset milestones

Metal Containers reported earnings before interest and taxes of US$41.7 million. Adjusted EBIT was US$45 million, compared with US$52.4 million a year earlier. The adjusted measure differed from reported EBIT; these were group segment results, not a statement that the two Russian factories had resumed production.

At the May announcement, Silgan operated 106 manufacturing facilities across North and South America, Europe and Asia. Its three business segments covered dispensing and specialty closures, metal containers and custom containers. Metal-container customers included the pet-food and human-food industries, alongside general-line packaging applications.