) dipped 4.5% as the leading provider of industrial packaging
products and services trimmed its outlook for fiscal 2014. The
company now expects earnings to come within the $1.98 and $2.08 per
share range, down from the previous expectation of $2.48 to $2.80
per share set forth during its second-quarter conference call.
Greif expects higher SG&A expenses and slightly
lower-than-expected results from operations for the balance of the
The new guidance of $1.98 to $2.08 reflects a decline in the range
of 24% to 28% compared with $2.75 earned in fiscal 2013. In the
second quarter of fiscal 2014, Greif reported adjusted earnings of
57 cents per share, down 17.4% from 69 cents per share in the
year-ago quarter, due to disrupted production in its flexible
products manufacturing facility in Turkey as well as the negative
impact of inclement weather on the Paper Packaging and Rigid
Industrial Packaging segments.
During the conference call, Greif trimmed Earnings before interest,
taxes, depreciation and amortization (EBITDA) guidance in the range
of $475 million to $505 million from the previous band of $490
million to $540 million for fiscal 2014. Excluding timberland gains
of around $20 million or 20 cents per share, earnings per share was
also lowered to the band of $2.48 to $2.80 from $2.60 to $3.15.
After the second quarter, Greif continued to take actions to
strengthen its business portfolio, which led to non-cash asset
impairment charges of $15.4 million as well as $33 million of
non-cash allocations of goodwill for divestitures reducing book
gains and generating no tax benefits.
Greif anticipates a gradual global economic recovery during fiscal
2014, which should result in moderate sales and volume improvement
along with slightly higher raw material costs. The company expects
the Rigid Industrial Packaging segment to benefit from moderate
volume growth, especially in Europe.
In addition, Flexible Products segment is repositioned for
sustainable growth and profitability during the second half of 2014
depending on the implementation of specific actions regarding the
disrupted production in the manufacturing facility in Turkey.
The company is expected to benefit from the sale of select non-core
assets. Greif's plans to accelerate restructuring actions will also
drive growth. However, foreign exchange volatility as well as
social and political unrest, remain headwinds.
Delaware, OH-based Greif manufactures and sells industrial
packaging products, bulk containers, and containerboard and
corrugated products worldwide. The company provides services such
as blending, filling, packaging and recycling of industrial
containers for a wide range of industries. Greif also manages
timber properties in North America and offers land management
Greif currently carries a Zacks Rank #3 (Hold). Some better-ranked
stocks in the same sector include Sealed Air Corporation (
), Ball Corporation (
) and Graphic Packaging Holding Co. (
). While Sealed Air has a Zacks Rank #1 (Strong Buy), Graphic
Packaging and Ball Corporation carry a Zacks Rank #2 (Buy).
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