Ball Corporation stock battered after signal of softening demand

bravo1954/E+ via Getty Images

Ball Corporation (NYSE:BALL) stock slumped on Thursday after the company missed earnings expectations and commented on decelerating customer demand.

For the second quarter, the Colorado-based aluminum packaging products supplier posted $0.82 in adjusted EPS alongside $4.13B in revenue. While the latter easily exceeded estimates, the below-expectation profits and management commentary on the quarters ahead caught the attention of the market.

In particular, North American beverage is projected to remain a troublesome market for the coming quarters due to persistent inflationary headwinds.

“Segment volumes were flat in the second quarter and reflect the deceleration of customer demand resulting from significant retail pricing actions by customers to pass through inflationary costs to consumers, particularly in the U.S,” the earnings release read. “In response to the deceleration in customer demand late in the second quarter, the construction of a new beverage can manufacturing facility in North Las Vegas, Nevada, has been delayed, and certain actions across the existing North American manufacturing footprint, including ceasing production at our Phoenix, Arizona, and St. Paul, Minnesota, facilities, have been announced to address localized supply/demand imbalances.”

Shares fell 18.42% on Thursday as a result of the disappointing print.

Truist analyst Michael Roxland downgraded the stock to “Hold” from “Buy” on the basis of this slowing demand.

“The beverage can segments were below our model driven by weaker demand in North America, softness in Brazil, supply chain issues, and other inefficiencies,” he told clients on Thursday. “Given weaker North American demand and related plant closures as well as lower capital return, we move to Hold from Buy.”

The company also took a $435M impairment charge related to the wind-down of operations in Russia.