Q3 2010 Earnings Reports bode well for converters


As the US slowly but surely pulls out of The Great Recession (despite continued high unemployment), big-name converters are reporting strong (and even record) Q3 2010 results. Here’s a look at three of the first reports to appear.

MeadWestvaco
The Richmond, VA-based converter is showing higher year-over-year sales and profits from all its business segments. Profit increased 15% to $225 million in Q3 2010; profit from the company’s combined packaging platform grew 28% driven by continued growth in higher-value packaging markets, as well as from improved manufacturing productivity. On Sept. 30, MWV completed the sale of its media and entertainment packaging business for cash proceeds of $68 million.

For the Packaging Resources segment, profit increased to $91 million in Q3 2010. Sales increased to $703 million. Volume growth was driven by increased shipments of the company’s CNK®-branded coated unbleached kraft paperboard (+14%) from more normal customer purchasing patterns during the beverage season this year and from gains in retail food.

For the Consumer Solutions segment, profit increased to $38 million, while sales declined 2% to $455 million. Volume improvement was driven by continued growth in home and garden and in personal-care dispensing solutions, particularly higher value fragrance and airless products, and growth in adherence healthcare packaging.

International Paper
The Memphis, TN-based converter’s record quarterly sales were $6.7 billion compared with $6.1 billion in Q2 2010 and $5.9 billion in Q3 2009. Operating profits were $752 million in this third quarter, up from $443 million in the same period last year.

Industrial Packaging profits rose to $332 million versus $193 million in Q2 2010. North American ops generated record quarterly earnings, reflecting price increases for boxes and linerboard, fewer mill outages, improved input costs, and continued strong mill operations.

Consumer Packaging ops profits increased to $71 million compared with $49 million in the previous quarter. North American coated-paperboard business generated record quarterly earnings. Results benefited from higher volumes, price increases and fewer maintenance outages.

Avery Dennison
The Pasadena, CA-based pressure-sensitive materials specialist saw its total Q3 2010 sales climb 6% to $1.641 billion compared to the same quarter last year.

Pressure-sensitive roll-materials sales grew at 5%, reflecting strength in all regions. Operating margins declined as continued raw-material inflation outpaced pricing actions, and investments in growth more than offset the benefits from higher volume and productivity and restructuring initiatives.

Other Avery specialty-converting businesses reported sales growth of 3% primarily from increased demand for products for automotive apps, which was down sharply in Q3 2009. Operating margins fell due also to raw-material inflation, which was partially offset by increased volume.

My Thoughts: It was only a matter of time—as the economy recovers—that these and other packaging-converting companies would see their sales and profits rebound. As manufacturers of everything from toothpaste to refrigerators see demand come back for their products, someone has to supply the packaging and labeling to ship more of those things to market. Let’s hope that similar “good news” results will be released soon from the likes of Rock-Tenn, Caraustar, Multi-Color, Graphic Packaging, et al. It would mean only “good news” for the industry overall.

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