Plastics Technology — As the plastics industry adjusts to 2018’s higher orders volume, capital expenditures in the industry have increased significantly.
Using the financial data submitted to the Securities and Exchange Commission (SEC), along with forecasts provided by major Wall Street brokerages, Gardner Business Intelligence (GBI) has compiled financial results for 17 publicly traded firms in the containers and packaging industry to assess the current and future state of the industry. The results reveal an industry that has experienced eight consecutive quarters of revenue and earnings growth through the third quarter of 2018.
Total inflation-adjusted revenue and earnings growth during this time were 12.6% and 18.6% respectively. In 2018’s third quarter, the container and packaging industry achieved year-on-year revenue growth—known as the “12/12” rate of change—of 9.2%. Earnings before interest, taxes and depreciation (EBITDA) achieved a 12/12 growth rate of 12.2% during the same period. These strong results enabled the industry to achieve a profit margin not seen since the Great Recession of 2007-2009.
Using the aggregated financial forecasts provided by Wall Street analysts for the firms used in this study, the industry in 2019 and 2020 is expected to see continued but slowing growth in revenues after climaxing sometime during the second-half of 2018. As revenue growth slows, EBITDA growth is also expected to slow in the quarters afterward. Aggregated projections, however, do not show revenue or earnings growth falling below 4% until the third quarter of 2019 and second quarter of 2020 respectively. This suggest that containers and packaging will grow faster than the overall economy for most of 2019.
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