) has reported second-quarter 2012 adjusted earnings of 46 cents
per share compared with 43 cents in the year-ago quarter. The
adjusted earnings comfortably surpassed the Zacks Consensus
Estimate of 39 cents.
Adjusted earnings in the reported quarter exclude restructuring
charges of $4 million (or 2 cents a share). Including restructuring
charges, earnings were 44 cents per share in the quarter compared
with 40 cents in the year-ago quarter.
Total revenues in the reported quarter increased 3.5% year over
year to $1.42 billion, surpassing the Zacks Consensus Estimate of
$1.40 billion. The growth reflects higher volumes of high value
products in targeted packaging and specialty chemical markets and
higher land revenues.
Cost of sales increased 3.4% year over year in the quarter to $1.1
billion. Selling, general and administrative expenses also
increased 3.5% year over year to $179 million.
Food & Beverage
segment reported total revenues of $808 million in the second
quarter, up 0.7% year over year. The growth was driven by improved
pricing and product mix and sales volume growth. Operating profit,
however, dropped 5% to $100 million in the quarter.
Home, Health & Beauty
segment revenues increased 2% to $203 million. Improved volume in
healthcare, home, garden packaging, addition of new business in
caps and closures, as well as benefits from pricing and product mix
were partially offset by European folding carton sales declines in
the beauty and personal care packaging segments. Operating profit
jumped 37.5% to $11 million in the quarter.
Revenues from the
segment declined 17% year over year to $111 million. Volume growth
was more than offset by negative impacts of currency exchange.
Operating profit dropped 57% to $14 million in the quarter.
segment revenues increased 13.9% to $246 million. The growth was
fueled by the continuous success in penetrating higher value
markets for pine chemicals and carbon technologies.
Successful penetration in higher value pine chemicals end
markets of adhesives, asphalt and oilfield services led to pricing
and product mix improvement. However, these positives were
partially offset by the negative impact of currency exchange.
Operating profit increased 10.7% to $62 million in the quarter.
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MEADWESTVACO CP (MWV): Free Stock Analysis
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Community Development and Land Management
saw a whopping 86.7% increase in revenues to $56 million in the
second quarter. Operating profit soared 350% to $27 million in the
Cash and cash equivalents decreased to $531 million as of June 30,
2012, from $656 million as of December 31, 2011. Long-term debt
amounted to $1,866 million as of June 30, 2012, versus $1,880
million as of December 31, 2011.
Cash flow from continuing operations was approximately $110 million
in the first half of 2012, compared with $137 in the first half of
2011. Capital expenditure from continuing operations was
approximately $323 million in the first half of 2012 compared with
$258 in the first half of 2011.
The company has not provided any specific guidance for 2012. It is
hopeful about achieving annual sales growth of more than 5% and
earnings growth in the range of 7%-10% over the next 3 to 5 years.
MeadWestvaco is becoming more of a packaging company moving
forward. With the sale of its Envelope business and the spin-off of
the Consumer & Office Products segment, the company now focuses
more on packaging. Packaging is a large and growing global market,
particularly benefiting from the economic prosperity in emerging
markets around the world, particularly in Brazil, China and India.
MeadWestvaco faces intense competition in each of its businesses,
in both domestic and international markets. It has to contend with
many large, well-established companies like
). This could result in pricing and demand pressures, which will
adversely impact the company's operating results. Moreover, soft
global demand, unfavorable foreign currency and lower land sales
will pressure revenues moving forward.
MeadWestvaco retains a short-term Zacks #3 Rank (Hold). We
have a long-term Neutral recommendation on the stock.