Silgan’s run of record profits stalled in the first quarter of 2024 after volumes of food, general line and speciality cans sold dropped as customers brought forward destocking plans.

The manufacturer of tinplate cans, closures and dispensing products also attributed the decline in sales growth and profit to the lower cost of metal used in its products, which it passed on to customers through contractual agreements. 

The Stamford, Connecticut-based company also warned that while growth was expected to return this year, it would be tempered by an anticipated drop in canned fruit and vegetable sales. 

Sales of cans in the three months to the end of March fell 8% year-on-year to US$617 million. The decline was accentuated by the record sales in the period last year, Silgan said. Earnings before interest and tax (EBIT) in the division slid 14% to $45m. Total company sales declined 7% to $1.32 billion and EBIT was 15% lower at $111m after sales at its dispensing and closure business retreated 8%.

Silgan outperformed the broader canmaking market in the past year, racking up consecutive quarters of record profit as it managed its product mix and contracts to minimise the impacts of lower sales and shipments. Customers’ seasonal reduction of stock in preparation for summer and pre-Christmas product launches had a bigger impact this year.

“Consumer demand for our food and beverage products remains resilient, and our first quarter volumes, as expected, were impacted by our customers’ first half destocking priorities,” said chief executive Adam Greenlee. “In certain markets, customers accelerated those activities to be more weighted to the first quarter than initially anticipated.”

Silgan said the destocking effect had been most pronounced in Europe where performance had been dented by the “sell through of higher cost inventory from the prior year”.

The canmaker added that it expected sales to begin climbing again in the coming months thanks to a forecast rise in demand for pet food packaging. 

Growth will only come in low single digits, however, because one of the company’s larger customers plans to reduce the amount of fruit and vegetables it will pack this year, lowering total container shipments. The fruit and vegetable segment accounts for a fifth of Silgan’s sales.