Markets
SON

Sealed Air Gains on Sale of European Food Trays Business

Sealed Air CorporationSEE has agreed to sell its European food trays business to Faerch Plast A/S, a European food packaging solutions provider. Shares of Sealed Air have gained 3% since the announcement.

The sale includes Sealed Air's manufacturing facilities in Poole, UK and Bunol, Spain. The transaction, however, is dependent on customary closing conditions which are expected to occur in the fourth quarter of 2015. The European food trays businesses generated approximate sales to the tune of $71 million in 2014.

The sale is in sync with Sealed Air's commitment to transform itself into a knowledge-based company and in line with its Get Fit and Change the Game strategy. Sealed Air wants to focus on its core businesses as well as growth opportunities. Accordingly, in April the company sold its North American foam trays and absorbent pads business to NOVIPAX. Although the company occupied the leading position in food grade absorbent pads, this business was becoming quickly commoditized and faced significant competitive pricing pressures. Moreover, the business was heading below 10% profit margin.

Shedding non-core assets that are not performing as per expectations will aid growth. Moreover, the company's ongoing Earnings Quality Improvement Program (EQIP), an initiative to deliver meaningful cost savings and network optimization, is estimated to generate annualized savings of approximately $90-$110 million by the end of 2016. Reduced interest levels, savings from other restructuring programs and favorable material costs will boost earnings.

On the flip side, economic uncertainty and unfavorable foreign currency translation will continue to affect the company's results in 2015. Persistent decline in the beef market and high debt levels also remain concerns.

Sealed Air currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include UFP Technologies, Inc. UFPT , Graphic Packaging Holding Company GPK and Sonoco Products Co. SON . While UFP Technologies sports a Zacks Rank #1 (Strong Buy), Graphic Packaging and Sonoco hold a Zacks Rank 2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SONOCO PRODUCTS (SON): Free Stock Analysis Report

SEALED AIR CORP (SEE): Free Stock Analysis Report

GRAPHIC PKG HLD (GPK): Free Stock Analysis Report

UFP TECH INC (UFPT): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SON UFPT GPK SEE

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More