Sonoco Products Co
) recently provided an update on its outlook for fiscal 2012 and
2013 and highlighted its growth initiatives.
The company reiterated its guidance for the fourth quarter and
fiscal 2012. For the quarter, earnings are expected to be in the
range of 52 to 56 cents. The company will recognize about $12
million in additional tax expense in the fourth quarter, related
to the repatriation of cash held outside the United States.
However, this one-time charge is excluded from the guidance. On a
base of 46 cents per share earned in the fourth quarter of 2011,
the guidance depicts an annual growth rate of 13% to
Fiscal 2012 earnings are expected to be in the band of $2.17
and $2.21 per share. Compared with the prior-year earnings of
$2.29 per share, fiscal 2012 guidance represents a decline of 3%
to 5%, hurt by a difficult economic and operating environment.
The company has also initiated guidance for fiscal 2013 with
earnings in the range of $2.24 to $2.32.
The midpoint of fiscal 2013 guidance stands at $2.28, up 4%
from the fiscal 2012 guidance's midpoint of $2.19. Growth
drivers include modest volume growth, productivity improvements
and a slightly positive price/cost relationship. However, these
benefits will be offset by higher pension expenses.
The company expects to generate free cash flow of
approximately $90 million, after paying approximately $120
million in dividends in 2012. For 2013, free cash flow (after
dividends) is projected to increase to around $130 million.
Sonoco expects annual cash flow from operations to approximate
$460 million over the next several years.
Sonoco expects its top line to increase to $5.5 billion - $6.0
billion and earnings at compound rate of about 8% by 2015.
Organic sales growth, geographic expansion and strategic
acquisitions remain growth drivers for the company.
Among its growth initiatives highlighted by the company, in
the Rigid Paper and Closures segment, Sonoco is establishing a
new composite can production facility in Johor Bahru, Malaysia,
to cater to the growing demand for premium stacked chips in Asia.
Stacked chip capacity is likely to be added in 2013 in Brazil and
a review of growth opportunities in Eastern Europe is currently
In the Rigid Plastics segment, a new multilayer, trim-in-place
thermoforming line at the Waynesville, North Carolina facility
has been added to manufacture containers for chilled and
thermally processed shelf stable foods. The company has a $7
million investment in the pipeline to add a third multilayer,
barrier bottle production line for nutraceutical beverages at its
Columbus, Ohio production facility in 2013. In the third quarter,
Sonoco started commercial operation of a new $15 million
142,000-square-foot plant in New Albany, Ohio, to produce PET
personal care bottles.
In Flexible Packaging segment, a new rotogravure press will be
added to the company's Morristown, Tennessee facility in 2013. In
Display and Packaging segment, expanded packaging fulfillment
capacity in Brazil and a new in-distribution center facility
became operational in 2012. It is planning to infuse $15 million
in 2013 in the Protective Solutions segment to build two new
custom-molded foam fabricating facilities in the United States
and Mexico to serve the growing automotive component market.
Sonoco's recent acquisition of Tegrant, a leading provider of
highly engineered, protective, temperature-assured and retail
security packaging solutions, for $550 million is the largest in
the company's history will position it as the leader in
multimaterial protective packaging in North America. The combined
entity is estimated to generate sales of approximately $5 billion
in 2012. The integration of Tegrant is being executed smoothly
and Sonoco is looking for new growth opportunities.
However, volatile raw material prices and uncertainty among
its customers, given the slow recovery in the U.S and ongoing
European weakness, higher pension costs remain headwinds for the
company in fiscal 2012. Sonoco retains a short-term Zacks #3 Rank
Hartsville, South Carolina-based Sonoco is a global
manufacturer of consumer and industrial packaging products. The
company has around 349 operations in 34 countries throughout
North and South America, Europe, Australia, and Asia. The company
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