) first-quarter 2013 adjusted earnings (excluding special items)
from continuing operations declined 51% to 16 cents per share
compared with 33 cents in the year-ago quarter. The results
missed the Zacks Consensus Estimate of 23 cents.
Results were affected by lower sales of beverage packaging,
home and garden packaging, and asphalt paving chemicals due to
colder weather in some key regions as well as lower consumer
spending in Europe which affected sales of beauty and personal
care folding carton packaging.
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On a reported basis, earnings declined nearly five-fold to 6
cents per share from the prior-year quarter's earnings of 29
cents. Earnings in the reported quarter include restructuring
charges of 10 cents per share compared with 4 cents in the
Total revenues increased 2% year over year to $1.34 billion in
the reported quarter, marginally missing the Zacks Consensus
Estimate of $1.35 billion. The year-over-year rise reflects
higher volumes in food, tobacco, industrial, personal care and
healthcare packaging markets along with higher value specialty
chemical solutions. Sales also improved from the additions of the
recently acquired corrugated business in India and the pine
chemicals business in Brazil.
Cost of sales increased 8.5% year over year to $1.1 billion in
the first quarter. Selling, general and administrative expenses
in the reported quarter went up 4.3% to $168 million from the
Food & Beverage:
Revenues in the segment went up 1.8% year over year to $761
million. The increase was driven by an overall paperboard volume
growth, including gains in food and tobacco packaging. Segment's
profit, however, declined 36% to $40 million in the reported
quarter from $60 million in the year-ago quarter.
Home, Health & Beauty:
Revenues in the segment dropped 6% to $188 million from $200
million in the prior-year quarter. The drop in revenues was due
to unusually cold weather in North America resulting in lower
than expected volumes in home and garden packaging as well as
lower volumes and pricing in beauty and personal care folding
carton packaging in Europe. The decline was partly offset by
gains in higher value beauty and personal care products including
fine mist dispensers and caps and closures. Profit for the
segment was $3 million in the first quarter compared with $12
million in the year-ago quarter.
Net sales in the reported quarter went up 15.8% year over year to
$132 million, driven by improved product pricing and mix in
Brazil along with contribution from the corrugated business in
India, partly offset by unfavorable foreign currency exchange.
However, profit declined to $11 million in the first quarter
compared to $19 million in the prior-year quarter.
The segment reported revenues of $226 million, up 9.1% from the
year-ago quarter, driven by growth in higher value end markets
for pine chemicals, including oilfield and adhesives, and carbon
technologies. The segment's profit was $49 million, down 15.5%
compared with the year-ago quarter.
Community Development and Land Management:
Revenues in the segment declined 15% year over year to $39
million. Profit for the segment inched up 14% to $16 million in
the reported quarter compared to $14 million in the prior-year
As of Mar 31, 2013, cash and cash equivalents amounted to $417
million versus $663 million as of Dec 31, 2012. Long-term debt
amounted to $2.08 billion as of Mar 31, 2013, compared with $2.1
billion as of Dec 31, 2012. The debt-to-capitalization ratio
expanded to 34.3% as of Mar 31, 2013 from 38.4% as of Dec 31,
2012. Cash flow used in operating activities was about $90
million during first quarter 2013 compared to $86 million in the
MeadWestvaco is planning to sell its beauty and personal care
folding carton in Europe and Brazil to improve margins in its
Home, Health & Beauty segment.
MeadWestvaco has embarked on an enterprise-wide overhead cost
reduction plan, which is expected lead to annual cost savings
between $65 and $75 million by the end of 2014. The company is
refocusing and streamlining its operations, as well as
consolidating general and administrative support across the
organization. A major portion of the plan will be completed this
year and the company expects benefits of $25 to $30 million in
MeadWestvaco expects lower revenues for the second quarter of
2013 compared to the year-ago quarter, driven by planned major
cold outage at the Covington, Virginia paperboard mill and lower
land sales, partly offset by its profitable growth strategies
which will improve volume across the Packaging and Specialty
Chemicals businesses. In addition, the company also hopes to
generate product pricing improvement and to benefit from its
recent acquisitions in the Industrial and Specialty Chemicals
MeadWestvaco will benefit from its new products, profitable
growth strategies, expansion in Brazil and benefits from acquired
businesses despite challenging economic conditions in Europe.
Richmond, VA-based MeadWestvaco is a global packaging company
providing innovative solutions to the world's most admired brands
in the healthcare, beauty and personal care, food, beverage, home
and garden, tobacco, and agricultural industries. The company
also produces specialty chemicals for the automotive, energy, and
MeadWestvaco currently retains a short-term Zacks Rank #3 (Hold).
Other companies in the containers and packaging industry with
favorable Zacks Ranks are
Graphic Packaging Holding Company
Bemis Company, Inc.
UFP Technologies, Inc.
); while UFP Technologies holds a Zacks Rank #1 (Strong Buy),
Graphic Packaging and Bemis carry a Zacks Rank #2 (Buy).