) announced that by Aug 31 it will shut down its Flexible Products
& Services (FPS) plant in the Kingdom of Saudi Arabia and
reallocate equipment to other Greif FPS facilities as part of a
In 2010, Greif had formed the Flexible Packaging joint venture with
Dabbagh and its subsidiary, National Scientific Company Limited.
The Flexible Packaging joint venture owns the operations in the
Flexible Products & Services segment, with the exception of the
North American multi-wall bag business.
The Flexible Products & Services segment is a global leading
producer of flexible intermediate bulk containers and manufacturer
of industrial and consumer shipping sacks and multiwall bag
products in North America. Its flexible intermediate bulk
containers consist of a polypropylene-based woven fabric that is
produced at its production sites as well as sourced from strategic
The Flexible Packaging joint venture strategically aims to
establish a global industrial flexible products enterprise through
a series of targeted acquisitions and major investments in plant,
machinery and equipment. The plant in Saudi Arabia contributes a
small portion to the joint venture's overall fabric production
Grief reported second-quarter fiscal 2014 (ended Apr 30, 2014)
adjusted earnings of 57 cents per share, down 17.4% from 69 cents
per share in the year-ago quarter, due to disrupted production at
its flexible products manufacturing facility in Turkey.
Revenues improved 1.1% year over year to $1,100.7 million from
$1,088.9 million. The year-over-year growth in net sales was
primarily attributable to increase in selling prices, partially
offset by the negative impact from foreign currency translation.
Sales from the Flexible Products & Services segment went down
6.3% year over year to $105.3 million. The decrease in net sales
was attributed to a decrease of 5.6% in selling price and 1.7% in
volume due to the disturbance at the manufacturing facility in
Turkey and product mix, partly offset by a 1% positive impact of
foreign currency translation. The segment reported an operating
loss of $10.3 million, compared with the prior-year profit of $0.8
For fiscal 2014, Greif trimmed its EBITDA guidance in the
range of $475 million to $505 million from the previous band of
$490 million to $540 million. Excluding timberland gains of around
$20 million or 20 cents per share, earnings per share were also
lowered to the new band of $2.48 to $2.80 from $2.60 to $3.15.
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
that the Rigid Industrial Packaging segment will benefit from
moderate volume growth, especially in Europe.
In addition, the 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 at 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 and 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
Crown Holdings Inc.
Graphic Packaging Holding Co.
Sonoco Products Co.
). All of these companies hold a Zacks Rank #2 (Buy).
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