Owens-Illinois, Inc., the world’s largest glass container manufacturer, announced it has expanded its 50-50 joint venture with Constellation Brands in Coahuila, Mexico, which implies a new investment of approximately US$ 140 million.
The joint venture operates a glass container production plant in the Municipality of Nava, Coahuila that provides bottles exclusively for Constellation's adjacent brewery, which brews a leading portfolio of Mexican beer brands for export to the United States, the fastest growing category in beer in the U.S.
The newly-expanded relationship provides for the addition of a fifth furnace at the plant and extends the term of the joint venture agreement ten years, to 2034.
The original joint venture agreement included the expansion of the glass production plant from one furnace to four furnaces by 2018. The initial expansion plans have been progressing as scheduled, with three furnaces currently in operation. The fourth furnace is expected to be operational in the first half of 2018.
To meet rising demand from Constellation's adjacent brewery, the newly-expanded relationship provides for the addition of a fifth furnace, which is expected to be operational by the end of 2019. Following the installation of the fifth furnace, the Nava plant will be the largest, most modern glass container factory in the world.
This capacity expansion, which is estimated to cost approximately US$ 140 million, will be financed by equal contributions from both partners.
"This investment will allow both companies to realize additional attractive opportunities in Mexican beer exports to the US, leveraging the success at the joint venture's factory in Nava, while bolstering O-I's relationship with a key strategic customer," Owens-Illinois CEO Andres Lopez said in a statement.
In its financial results for the third quarter ended September 30, 2017, the company reported net sales of US$ 1.8 billion, an increase of almost 5% compared to the prior year third quarter, primarily due to favorable currency translation. Price increased 1% on a global basis, while shipments were on par with the prior year.
Earnings from continuing operations before income taxes were US$ 172 million, an increase of 12% compared with the same period in 2016.