Ball (BALL) Q4 2025: EMEA Operating Earnings Jump 37% as Capacity Investments Fuel 2026 Leverage
Ball’s EMEA business posted standout 37% operating earnings growth, with volume and margin leverage outpacing global peers as new capacity comes online. While North America is now capacity constrained, disciplined capital returns and cost savings continue to underpin Ball’s EVA-first model. Investors should watch for the ramp of Millersburg and BenePak assets, which set the stage for operating leverage inflection in 2027.
Summary
- EMEA Margin Surge: European segment delivered exceptional operating leverage as capacity utilization climbed.
- North America Capacity Constraint: U.S. growth now limited by plant bottlenecks until Millersburg ramps in late 2026.
- 2027 Setup Emerges: Recent acquisitions and plant startups position Ball for profit acceleration next year.
Performance Analysis
Ball’s Q4 and full year 2025 results showcased the company’s ability to outperform global beverage can markets, especially in EMEA, where operating earnings soared 36.7% on high single-digit volume growth. The EMEA region, now bolstered by the BenePak acquisition, is driving above-algorithm volume and margin expansion, with management targeting 2x operating leverage for 2026. North and Central America posted 12% Q4 operating earnings growth, but management flagged that capacity constraints will keep growth at the low end of the 1% to 3% volume range until the Millersburg, Oregon facility ramps late in the year. South America maintained momentum with high single-digit Q4 volume growth, supporting full-year segment earnings up 10.5%.
Record adjusted free cash flow of $956 million and a 13% EPS increase highlight Ball’s disciplined capital allocation and cost focus. The company returned $1.54 billion to shareholders via buybacks and dividends, reduced net debt to EBITDA to 2.8x, and continued to prioritize EVA (Economic Value Added) as its guiding metric. However, temporary headwinds such as $35 million in startup and tariff costs are expected to weigh on North America in 2026, with the full benefit of new capacity and operating leverage likely deferred to 2027.
- EMEA Outperformance: Operating earnings and volume growth in Europe exceeded both internal and market benchmarks, driven by capacity fill and network optimization.
- North America Margin Pressure: Section 232 tariffs and production reshuffling add near-term cost headwinds, limiting operating leverage until Millersburg startup costs subside.
- Shareholder Returns: Aggressive buybacks and dividends underscore Ball’s commitment to capital returns, with shares outstanding reduced 16% over two years.
While Ball’s 2025 execution was strong, the full earnings impact of recent investments will not materialize until 2027, setting up a multi-year profit inflection as capacity constraints ease.
Executive Commentary
"Across our regions, we are consistently outpacing the can market in shipped volumes, supported by strong customer partnerships, innovation in formats, and a commercial and operational footprint that is unmatched... Our long-term volume range remains intact, and in 2025, we exceeded it."
Ron Lewis, Chief Executive Officer
"Since 2019, our EMEA and North American businesses have expanded profit per can by more than 30%, with EMEA reaching an all-time record. We achieved this through disciplined cost management and operational excellence, focusing on stability, standardization, and ensuring every plant is executing at a high level."
Dan Rabbitt, Chief Financial Officer
Strategic Positioning
1. EMEA: Margin Engine and Capacity Expansion
Ball’s EMEA business, beverage can packaging for Europe, Middle East, and Africa, is now the company’s most efficient margin generator. Operating leverage in 2025 far exceeded 2x as new capacity was absorbed, and the BenePak acquisition in Belgium and Hungary plugs critical network gaps, enabling Ball to serve strategic customers and exceed its 3% to 5% volume growth algorithm. Management expects another year of above-algorithm volume and margin expansion in 2026, with the full benefit realized as the new plants ramp into 2027.
2. North America: Growth Bottlenecked by Capacity
After a 4.8% volume rebound in 2025, Ball’s North American business is now capacity constrained, limiting 2026 growth to the low end of its long-term range. The Millersburg, Oregon facility, set to come online in the back half, is key to unlocking further growth. Until then, startup and tariff costs will pressure margins, and the company is unable to fully capture market demand despite strong customer relationships and category innovation, especially in energy drinks and non-alcoholic beverages.
3. Operational Excellence and Cost Discipline
Ball’s Ball Business System, standardized manufacturing and process discipline platform, has delivered over three-quarters of a $500 million cost savings target in two years. Every plant globally now operates under standardized procedures, driving both cost savings and consistent quality. Management is doubling down on daily execution, with shift handover and pulse check meetings embedded into plant culture to sustain operational gains and fuel future growth reinvestment.
4. Capital Allocation: EVA as North Star
Every investment and capital return decision is filtered through Ball’s EVA, or Economic Value Added, lens. This discipline has led to a balanced approach: new plant construction, bolt-on M&A (like BenePak), and robust share buybacks, all while maintaining leverage targets. Management reiterated that growth CapEx is only deployed when backed by long-term customer agreements, ensuring returns above the cost of capital.
5. Commercial Excellence and Customer Lock-In
Ball’s commercial strategy emphasizes deep customer integration and long-term contracts, with many anchor customers contracted into the next decade. The company’s ability to offer a broad SKU and can size portfolio, combined with its unrivaled network, helps it consistently outgrow the underlying can market and “win with winners” in high-growth categories such as energy drinks.
Key Considerations
Ball’s 2025 results reflect a business at an operational and strategic crossroads, balancing capacity-driven constraints in North America with margin expansion and network growth in EMEA. The next 18 months will be defined by the pace of new plant ramp-ups and the company’s ability to translate cost savings into sustained margin gains.
Key Considerations:
- EMEA Asset Integration: Successful ramp of BenePak facilities will determine whether Ball sustains above-algorithm growth and margin expansion in Europe.
- North America Startup Costs: $35 million in one-time costs from Millersburg and tariff reshuffling will weigh on 2026 segment earnings, with leverage recovery expected in 2027.
- Operating Leverage Execution: Delivery of 2x operating leverage in EMEA and South America is a critical proof point for Ball’s margin thesis.
- Capital Returns Discipline: Commitment to 4% to 6% share buybacks and steady dividends provides a shareholder return floor, but future M&A or CapEx could test leverage limits.
Risks
Capacity ramp delays, inflation in startup or input costs, and slower-than-expected demand in North America represent the most acute risks to Ball’s 2026 margin and volume outlook. While pass-through contracts mitigate commodity and energy price swings, timing mismatches and tariff volatility could pressure near-term profitability. Execution on new plant integration and maintaining customer share in a consolidating market remain ongoing challenges.
Forward Outlook
For Q1 2026, Ball guided to:
- Volume growth at the low end of 1% to 3% range in North America due to capacity constraints
- Above 3% to 5% volume growth in EMEA, with 2x operating leverage targeted
For full-year 2026, management maintained guidance:
- 10%+ comparable diluted EPS growth
- Free cash flow above $900 million
- Share repurchases of at least $600 million and total capital return of $800 million
Management highlighted several factors that will shape the year:
- Millersburg and BenePak ramp-up costs weighted to back half of 2026, with full leverage in 2027
- Continued focus on EVA-based capital allocation and disciplined CapEx
Takeaways
Ball’s 2025 execution demonstrates the power of scale, disciplined capital allocation, and operational excellence, but also exposes the limits of growth without incremental capacity in North America.
- Margin Leadership in EMEA: Ball’s European business is now the company’s margin and growth engine, with new assets set to drive further upside in 2026 and beyond.
- North America Bottleneck: Until Millersburg ramps, Ball’s largest market is capped on growth, with near-term operating leverage muted by startup and tariff costs.
- 2027 Profit Inflection Potential: The full earnings impact of Ball’s recent investments will not be realized until 2027, positioning the company for a multi-year margin and volume acceleration if execution remains disciplined.
Conclusion
Ball delivered on its 2025 commitments, with EMEA driving margin expansion and North America constrained by capacity. The company’s EVA-centric discipline and network investments set the stage for a profit acceleration in 2027, but near-term growth is gated by plant ramp timelines and cost headwinds.
Industry Read-Through
Ball’s results highlight the critical role of network optimization, capacity discipline, and cost pass-throughs in the global beverage packaging sector. The EMEA margin surge underscores the value of filling latent capacity before adding new plants, while North America’s experience shows the downside risk of running at full utilization. For peers, the message is clear: disciplined capital allocation and operational standardization are essential for margin expansion, especially as input and tariff volatility persist. The sector’s shift toward long-term customer contracts and SKU innovation signals continued substrate share gains for aluminum packaging at the expense of legacy materials.