Segment reporting

12 Months Ended

Dec. 31, 2019

The Group’s reportable business segments are as follows:


•	Reynolds Consumer Products — Reynolds Consumer Products is a manufacturer of branded and store brand consumer products such as aluminum foil, wraps, trash bags, food storage bags and disposable tableware and cookware.

•

Pactiv Foodservice — Pactiv Foodservice is a manufacturer and supplier of foodservice products. Pactiv Foodservice offers a comprehensive range of products including tableware items, takeout service containers, clear rigid-display packaging, microwaveable containers, foam trays, dual-ovenable paperboard containers, cups and lids, molded fiber and plastic egg cartons, meat and poultry trays, absorbent tray pads, plastic film and aluminum containers.


•	Graham Packaging — Graham Packaging is a designer and manufacturer of value-added, custom blow-molded plastic containers for consumer products.

•

Evergreen — Evergreen is a vertically integrated manufacturer of cartons for fresh beverage products, primarily serving the juice and milk end-markets. Evergreen supplies integrated systems, which include cartons, spouts and filling machines for fresh beverages. Evergreen produces liquid packaging board for its internal requirements and to sell to other manufacturers. Evergreen also produces paper products for commercial printing.

The Chief Operating Decision Maker does not review the business activities of the Group based on geography.

The accounting policies applied by each segment are the same as the Group’s accounting policies. Results from operating activities represent the profit earned by each segment without allocation of central administrative revenues and expenses, financial income and expenses, and income tax benefit or expense.

The performance of the operating segments is assessed by the Chief Operating Decision Maker based on Adjusted EBITDA. Adjusted EBITDA is defined as net profit before income tax expense or benefit, net financial income or expenses, depreciation and amortization, adjusted to exclude certain items of a significant or unusual nature, including but not limited to acquisition costs, non-cash pension income or expense, restructuring costs, related party management fees, unrealized gains or losses on derivatives, gains or losses on the sale of non-strategic assets, asset impairments and write-downs and equity method profit not distributed in cash.

Segment assets and liabilities exclude intercompany balances as a result of trade and borrowings between the segments. Other/Unallocated includes operations which do not meet the quantitative threshold for reportable segments. It also includes holding companies and certain debt issuer companies which support the entire Group and which are not part of a specific segment, as well as eliminations of transactions between segments.

As discussed in notes 2.6 and 7, the North American and Japanese closures businesses of the former Closures segment have been presented as discontinued operations. Closures is a manufacturer of plastic and aluminum beverage caps, closures and high speed rotary capping equipment.

Business segment reporting



	For the year ended December 31, 2019
(In $ million)	Reynolds Consumer Products		Pactiv Foodservice		Graham Packaging		Evergreen		Other /Unallocated		RGHL Total
Total external revenue	2,881		3,275		1,924		1,483		153		9,716
Total inter-segment revenue	151		442		—		123		(716	)	—
Total segment revenue	3,032		3,717		1,924		1,606		(563	)	9,716
Gross profit	867		639		259		204		12		1,981
Operating expenses and net other income (expenses)	(315	)	(316	)	(214	)	(80	)	(233	)	(1,158	)
Earnings before interest and tax ("EBIT") from continuing operations	552		323		45		124		(221	)	823
Financial income											145
Financial expenses											(651	)
Profit (loss) from continuing operations before income tax											317
Income tax (expense) benefit											(134	)
Profit (loss) from continuing operations											183

Earnings before interest and tax (“EBIT”) from continuing operations	552		323		45		124		(221	)	823
Depreciation and amortization from continuing operations	99		247		270		71		11		698
Earnings before interest, tax, depreciation and amortization (“EBITDA”) from continuing operations	651		570		315		195		(210	)	1,521



	For the year ended December 31, 2019
(In $ million)	Reynolds Consumer Products		Pactiv Foodservice		Graham Packaging	Evergreen	Other /Unallocated		RGHL Total
Earnings before interest, tax, depreciation and amortization (“EBITDA”) from continuing operations	651		570		315	195	(210	)	1,521
Included in EBITDA:
Asset impairment charges, net of reversals	—		2		33	—	66		101
(Gain) loss on sale or disposal of businesses and non-current assets	—		20		—	—	10		30
Non-cash pension expense, net of settlement gain	—		—		—	—	58		58
Operational process engineering-related consultancy costs	2		26		—	1	—		29
Related party management fee	—		—		—	—	27		27
Restructuring costs, net of reversals	—		1		17	—	3		21
Strategic review costs	33		—		—	—	7		40
Unrealized (gain) loss on derivatives	(9	)	(4	)	—	—	—		(13	)
Other	—		4		5	5	(3	)	11
Adjusted EBITDA from continuing operations	677		619		370	201	(42	)	1,825

Segment assets as of December 31, 2019 (excluding intercompany balances)	4,424		4,891		3,888	1,246	1,808		16,257
Included in segment assets are:
Additions to property, plant and equipment, excluding right-of-use assets	102		200		172	90	38		602
Additions to intangible assets	11		37		6	1	3		58
Segment liabilities as of December 31, 2019 (excluding intercompany balances)	807		1,144		805	434	11,090		14,280



	For the year ended December 31, 2018
(In $ million)	Reynolds Consumer Products		Pactiv Foodservice		Graham Packaging		Evergreen		Other /Unallocated		Total
Total external revenue	2,980		3,267		2,087		1,504		221		10,059
Total inter-segment revenue	164		511		—		99		(774	)	—
Total segment revenue	3,144		3,778		2,087		1,603		(553	)	10,059
Gross profit	849		606		265		233		20		1,973
Operating expenses and net other income (expenses)	(289	)	(293	)	(404	)	(65	)	(125	)	(1,176	)
Earnings before interest and tax ("EBIT") from continuing operations	560		313		(139	)	168		(105	)	797
Financial income											41
Financial expenses											(865	)
Profit (loss) from continuing operations before income tax											(27	)
Income tax (expense) benefit											(2	)
Profit (loss) from continuing operations											(29	)

Earnings before interest and tax (“EBIT”) from continuing operations	560		313		(139	)	168		(105	)	797
Depreciation and amortization from continuing operations	83		204		253		63		12		615
Earnings before interest, tax, depreciation and amortization (“EBITDA”) from continuing operations	643		517		114		231		(93	)	1,412



	For the year ended December 31, 2018
(In $ million)	Reynolds Consumer Products		Pactiv Foodservice	Graham Packaging		Evergreen		Other /Unallocated		Total
Earnings before interest, tax, depreciation and amortization (“EBITDA”) from continuing operations	643		517	114		231		(93	)	1,412
Included in EBITDA:
Asset impairment charges, net of reversals	—		7	229		—		4		240
(Gain) loss on sale or disposal of businesses and non-current assets	—		23	—		—		(31	)	(8	)
Non-cash pension expense	—		—	—		—		56		56
Operational process engineering-related consultancy costs	—		14	—		—		—		14
Related party management fee	—		—	—		—		27		27
Restructuring costs, net of reversals	—		2	7		—		5		14
Unrealized (gain) loss on derivatives	14		6	—		2		—		22
Other	(5	)	—	(1	)	(3	)	3		(6	)
Adjusted EBITDA from continuing operations	652		569	349		230		(29	)	1,771

Segment assets as of December 31, 2018 (excluding intercompany balances)⁽¹⁾	4,108		4,702	3,958		1,129		2,281		16,178
Included in segment assets are:
Additions to property, plant and equipment	82		243	130		65		45		565
Additions to intangible assets	1		16	2		—		3		22
Segment liabilities as of December 31, 2018 (excluding intercompany balances)⁽¹⁾	593		880	705		371		12,003		14,552

(1) Other/Unallocated includes the former Closures segment.



	For the year ended December 31, 2017
(In $ million)	Reynolds Consumer Products		Pactiv Foodservice		Graham Packaging		Evergreen		Other /Unallocated		Total
Total external revenue	2,807		3,237		2,147		1,448		306		9,945
Total inter-segment revenue	152		492		—		114		(758	)	—
Total segment revenue	2,959		3,729		2,147		1,562		(452	)	9,945
Gross profit	853		721		323		276		32		2,205
Operating expenses and net other income (expenses)	(283	)	(319	)	(188	)	(79	)	(160	)	(1,029	)
Earnings before interest and tax ("EBIT") from continuing operations	570		402		135		197		(128	)	1,176
Financial income											49
Financial expenses											(739	)
Profit (loss) from continuing operations before income tax											486
Income tax (expense) benefit											(65	)
Profit (loss) from continuing operations											421

Earnings before interest and tax (“EBIT”) from continuing operations	570		402		135		197		(128	)	1,176
Depreciation and amortization from continuing operations	86		205		257		59		21		628
Earnings before interest, tax, depreciation and amortization (“EBITDA”) from continuing operations	656		607		392		256		(107	)	1,804



	For the year ended December 31, 2017
(In $ million)	Reynolds Consumer Products		Pactiv Foodservice	Graham Packaging		Evergreen		Other /Unallocated		Total
Earnings before interest, tax, depreciation and amortization (“EBITDA”) from continuing operations	656		607	392		256		(107	)	1,804
Included in EBITDA:
Asset impairment charges, net of reversals	—		36	7		—		1		44
Non-cash pension expense	—		—	—		—		58		58
Operational process engineering-related consultancy costs	3		12	—		—		—		15
Related party management fee	—		—	—		—		29		29
Restructuring costs, net of reversals	5		8	4		2		2		21
Unrealized (gain) loss on derivatives	(4	)	2	—		1		—		(1	)
Other	—		12	(6	)	(1	)	6		11
Adjusted EBITDA from continuing operations	660		677	397		258		(11	)	1,981

Information about geographic area

The Group's revenue from continuing operations and information about its segment assets (total non-current assets excluding financial instruments, non-current receivables and deferred tax assets) by geographic origin are detailed below. In presenting information on a geographic basis, revenue and assets have been reported based on the location of the business operations.



(In $ million)	United States		Remaining North American Region		Asia	Europe	South America	Other	Total
Total revenue
For the year ended December 31, 2019
Reynolds Consumer Products	2,982		48		2	—	—	—	3,032
Pactiv Foodservice	3,359		351		7	—	—	—	3,717
Graham Packaging	1,664		95		1	116	48	—	1,924
Evergreen	1,408		34		164	—	—	—	1,606
Other/Unallocated	(713	)	(3	)	6	80	59	8	(563	)
Total	8,700		525		180	196	107	8	9,716
For the year ended December 31, 2018
Reynolds Consumer Products	3,081		61		2	—	—	—	3,144
Pactiv Foodservice	3,396		354		27	1	—	—	3,778
Graham Packaging	1,787		105		5	136	54	—	2,087
Evergreen	1,401		35		167	—	—	—	1,603
Other/Unallocated	(754	)	(20	)	16	113	82	10	(553	)
Total	8,911		535		217	250	136	10	10,059
For the year ended December 31, 2017
Reynolds Consumer Products	2,865		92		2	—	—	—	2,959
Pactiv Foodservice	3,299		345		28	57	—	—	3,729
Graham Packaging	1,790		116		29	155	57	—	2,147
Evergreen	1,371		36		155	—	—	—	1,562
Other/Unallocated	(720	)	(37	)	93	107	95	10	(452	)
Total	8,605		552		307	319	152	10	9,945

Non-current assets
As of December 31, 2019	11,503		187		74	134	41	10	11,949
As of December 31, 2018	11,664		266		176	159	57	23	12,345

There was no revenue from external customers in New Zealand, where the Company is domiciled, for any years presented. There were no non-current assets in New Zealand as of December 31, 2019 and 2018.

Information about major customers

The Group had revenue from transactions with a single external customer amounting to 10% or more of the Group's revenue. The revenue attributable to this customer for the year ended December 31, 2019 was $1,305 million (2018: $1,268 million, 2017: $1,163 million) and is reported in the Reynolds Consumer Products segment.

Information about major product lines

Supplemental information on net sales by major product line for continuing operations is set forth below:



	For the year ended December 31,
(In $ million)	2019		2018		2017
Reynolds Consumer Products
Waste and storage products	1,203		1,227		1,157
Cooking products	1,078		1,160		1,071
Tableware	751		757		731
Pactiv Foodservice
Foodservice products	3,717		3,778		3,729
Graham Packaging
Food and beverage containers	1,356		1,443		1,487
All other containers	568		644		660
Evergreen
Cartons for fresh beverage products	812		799		774
Liquid packaging board	446		438		453
Paper products	348		366		335
Other/Unallocated
Caps and closures	153		221		306
Inter-segment eliminations	(716	)	(774	)	(758	)
Total revenue	9,716		10,059		9,945