Income from operations of the metal container business decreased $8.2 million in the third quarter of 2012 to $103.5 million as compared to $111.7 million in 2011, and operating margin decreased to 12.7 percent from 14.0 percent over the same periods. These decreases were primarily the result of the negative impact from lower absorption of overhead costs due to inventory reductions in the third quarter of 2012 in excess of reductions in 2011. Also contributing to this decline in income from operations were lower price realization in the European markets largely in exchange for improved customer credit terms negotiated earlier in the year, rationalization charges of $1.7 million in the third quarter of 2012 from the recently announced closing of the Kingsburg, California manufacturing facility and costs of $1.4 million associated with the start-up of new production facilities in eastern Europe and one new facility in the Middle East. These decreases were partially offset by an increase in unit volumes.
Net sales of the closures business were $182.7 million in the third quarter of 2012, a decrease of $6.8 million, or 3.6 percent, as compared to $189.5 million in 2011. This decrease was primarily the result of the impact of unfavorable foreign currency translation of approximately $10.9 million, partially offset by an increase in unit volumes.
Income from operations of the closures business for the third quarter of 2012 decreased $0.3 million to $24.1 million as compared to $24.4 million in 2011, while operating margin increased to 13.2 percent from 12.9 percent over the same periods. Volume improvements in the U.S. largely in the single-serve beverage market, improved manufacturing efficiencies and on-going operating cost savings were more than offset by declines in Europe resulting from on-going macroeconomic issues and higher rationalization charges.Plastic Containers Net sales of the plastic container business were $142.7 million in the third quarter of 2012, a decrease of $17.1 million, or 10.7 percent, as compared to $159.8 million in 2011. This decrease was principally a result of lower unit volumes partially due to planned third quarter shut downs by certain customers, lower average selling prices as a result of the pass through of lower resin costs and the unfavorable impact of foreign currency translation of approximately $0.5 million, partially offset by the inclusion of net sales from the plastic food container business acquired from Rexam PLC on August 30, 2012.
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