Ardagh Group SWOT and PESTLE Analysis

Strength

1. Significant and growing specialty can capacity: In response to the positive forecast demand outlook for the metal and glass packaging Ardagh Group had announced a $2.1 billion business growth investment program covering the period 2021 to 2024. Nearly 85% of this investment is in their Metal Beverage Packaging business, with the balance being in Glass Packaging. This program principally involves capacity expansion initiatives, line speed-ups, including the installation of multiple new lines, brownfield and greenfield development and furnace expansion, as well as additional investments in digitization, automation, and other efficiency measures. The company has a significant presence in the specialty can segment, which has grown at a faster rate than the standard can segment in recent years and which typically offers more attractive margins. In 2020, the specialty cans represented 43% of the company’s total can shipments, with strong representation in both the Europe and Americas segments. Specialty can expansion represents approximately 80% of the capacity expansion under the business growth investment program in our beverage can business, following which we expect specialty cans will represent approximately 55% to 60% of our total beverage can capacity. By increasing capacity, the company can be able to garner more profit and look into supplying to new customers which will also help in getting more profits.

2. Long term relationship with diverse blue chip companies: Ardagh Group supplies to some of the world’s best-known brands with innovative packaging solutions and have been recognized with numerous industry awards. They have longstanding relationships with many of our major customers, which include leading multinational, large national and regional beverage and food companies, as well as numerous local companies. Some of the company’s major customers include AB InBev, Britvic, Diageo, Heineken, Coca-Cola, Monster Beverage, PepsiCo and Grupo Petrópolis, among others. In recent years, in North America, in beverage cans, Ardagh Group has significantly diversified our customer base. Approximately three-quarters of the packaging giant’s revenues are derived from multi-year contracts of between two and ten years, most of which include input cost pass-through provisions. With such a diverse customer base the company is treading a safe track. The clientele ensures that the company has sufficient demand to supply its products and the contracts ensure that this is sustainable in the long term. Long term relationship with these companies ensures more loyalty which allows the company to retain competitive advantage against its competitors.

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Weakness

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Opportunity

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Threats

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Green-house gases emission should be on check and must be controlled: There is a growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather and precipitation patterns and the frequency and severity of extreme weather conditions and natural disasters. The impact of climate change may over time affect Ardagh’s operations and the markets in which it operates. This could include changes in weather, resulting in increased costs of such inputs or reduced availability of inputs such as water, or transitional risks such as technological development, policy and regulatory change, and market and economic responses. The glass production process generates significant CO2 emissions, while the vast majority of the metal packaging business’ Scope 3 emissions arise in the various stages of the manufacture of aluminum and steel coils, that the company purchases. The company has a plan to reduce these emissions. The companies operating in the packaging industry have to keep a check on their emission limits and this has to a part and parcel of the corporate’s long-term strategy of growth.