1. Business Segment Information
Ball’s operations are organized and reviewed by management along its product lines and geographical areas and presented in the four reportable segments outlined below.
Beverage packaging, North and Central America: Consists of operations in the U.S., Canada and Mexico that manufacture and sell aluminum beverage containers throughout those countries.
Beverage packaging, EMEA: Consists of operations in numerous countries throughout Europe, including Russia, as well as Egypt and Turkey, that manufacture and sell aluminum beverage containers throughout those countries.
The current global business environment is being impacted directly and indirectly by the effects of the Russian invasion of Ukraine. Ball has suspended future investments in Russia and is pursuing the sale of its aluminum beverage packaging business located in Russia. During the second quarter of 2022, Ball experienced deteriorating conditions and determined this constituted a triggering event for its Russian long-lived asset group. As a result, Ball performed an expected cash flow recoverability analysis to estimate the fair value of the long-lived assets, and recorded an impairment loss of $435 million.
As of June 30, 2022, Ball’s Russian aluminum packaging business does not meet the requirements for held for sale presentation in Ball’s unaudited condensed consolidated financial statements. The ongoing conflict continues to have the potential to increase Ball’s vulnerabilities to near-term, severe impacts related to its Russian business and facilities and it is not possible to accurately predict all future impacts of the invasion. The Russian government has made warnings to companies that cease operations during its invasion of Ukraine and the potential exists that Ball’s operations in Russia could be negatively impacted. As such, Russia’s invasion of Ukraine and the resulting effects have the potential to impact significant estimates used by Ball in the preparation of its consolidated financial statements, which could result in additional impairments.
Ball’s Russian business, which is presented in its beverage packaging, EMEA, reportable operating segment, represented approximately 4 percent of the company's total net sales and 8 percent of the company's total comparable operating earnings for the twelve months ended December 31, 2021. In addition, our plants in Russia accounted for approximately 5 percent of the company's 112.5 billion global beverage can unit shipments for the twelve months ended December 31, 2021. As of June 30, 2022, after the $435 million long-lived asset impairment charge, Ball’s Russian business had net assets of $380 million, which consisted primarily of working capital and goodwill that will be allocated to the disposal group upon a future disposal. As of June 30, 2022, in addition to the $380 million of net assets, Ball also had cumulative currency translation gains of $180 million, presented in accumulated other comprehensive earnings (loss) on Ball’s unaudited condensed consolidated balance sheets, that will be subject to release upon a disposal of the Russian business. These values are subject to change based on the Russian ruble exchange rate.
Beverage packaging, South America: Consists of operations in Brazil, Argentina, Paraguay and Chile that manufacture and sell aluminum beverage containers throughout most of South America.
Aerospace: Consists of operations that manufacture and sell aerospace and other related products and provide services used in the defense, civil space and commercial space industries.
Other consists of a non-reportable operating segment (beverage packaging, other) that manufactures and sells aluminum beverage containers; a non-reportable operating segment that manufactures and sells extruded aluminum aerosol containers and recloseable aluminum bottles across multiple consumer categories as well as slugs (aerosol packaging); a non-reportable operating segment that manufactures and sells aluminum cups (aluminum cups); undistributed corporate expenses; and intercompany eliminations and other business activities.
The company also has investments in operations in Guatemala, Panama, the U.S. and Vietnam that are accounted for under the equity method of accounting and, accordingly, those results are not included in segment sales or earnings.
During the first quarter of 2022, Ball sold its remaining 49 percent owned equity method investment in Ball Metalpack to Sonoco, a global provider of consumer, industrial, healthcare and protective packaging, for total consideration of approximately $298 million, which is presented in business consolidation and other activities in the unaudited condensed consolidated statement of earnings.
