Berry Global Group, Inc. BERY is grappling with the adverse impacts of the increasing cost of sales, high debt levels and forex woes.

Based in Evansville, IN, Berry Global manufactures and distributes nonwoven specialty materials, engineered materials and consumer packaging products in the market. The company services personal care, healthcare, beverage and food markets in South America, North America, Asia and Europe.

Berry Global currently carries a Zacks Rank #4 (Sell). In the year-to-date period, the stock has declined 4.5% compared with the industry’s 14% fall.Zacks Investment Research

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Let’s discuss the factors that are likely to continue taking a toll on this company.

Rising Costs: BERY has been dealing with the adverse impacts of high costs and expenses. In the first quarter of fiscal 2025 (ended December 2024), the company’s cost of sales recorded a year-over-year increase of 1.4% due to increasing raw material costs. In the same period, BERY’s selling and administrative expenses increased 8.3% year over year. The impact of these costs is evident in the rise of the selling and administrative expenses, as a percentage of total revenues, which climbed 60 basis points to reach 9.4%. Escalating costs and expenses pose a threat to Berry Global’s bottom line.

High Debt Level: High debt is a major roadblock for the company. Berry Global’s long-term debt in the five fiscal years (2018-2022) witnessed a 9.7% CAGR. Its current and long-term debt remained high at $7.4 billion at the end of the first quarter of fiscal 2025. Such high debt levels raise concerns for the company.

Forex Woes: The company has a significant presence in the international markets. As a result, its financial performance is subject to various risks like the foreign currency exchange rate, interest rate fluctuations and hyperinflation in some foreign countries. The increased value of the U.S. dollar relative to the local currencies of the foreign markets may affect the company’s top line in the quarters ahead.

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Story Continues

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