Packaging converters see sales, profits rise in Q1 2012

BMO Capital Markets’ just-released issue of The Converter shows plenty of positive financial news for its universe of 16 converted-packaging companies with publicly available quarterly data. Q1 2012 was characterized by stronger sales and nominal gross profit across all packaging sectors—91% of the companies experienced sales increases.

Sales Growth

  • Overall, Q1 2012 sales increased by a median of 6.6% over Q1 2011, and also increased across each packaging sector. Favorable volume and pricing trends were key drivers of the higher sales, along with a large number of recent significant acquisitions.
  • With an 11.9% growth rate, flexible-packaging and label converters had the highest growth in the period, lead by Multi-Color and Sealed Air, 78.2% and 69.9%, respectively.
  • The paperboard sector had a quarter-over-quarter growth rate of 6.7%. Top gainers were Rock-Tenn (187.9%) and Cascades (15.1%).
  • Fourteen converters experienced Q1 2012 sales increases, while only two saw a decline.

Gross Profit & Margin

  • Both nominal gross profit and gross margin increased for the overall packaging industry in Q1 2012, by 8.0% and 0.1% respectively.
  • Flex-pack makers and label converters again had the highest median gross-profit growth with a 17.7% increase.
  • The paperboard sector saw an 8.1% profit rise but gross margin fell 0.3%.

My Thoughts: A variation of the “80-20” rule applies here, in that these nearly 20 business clearly dominate the converted-packaging field—although they don’t account for 80% of total industry sales, but maybe 40%, especially in the flex-pack and corrugated areas. So that’s good news overall. But a closer look at paperboard shows that seven out of the eight converters grew primarily through acquisitions. That can’t continue for much longer; who’s left for them to buy but each other.  

This entry was posted in coating/laminating, flexible packaging, labels, paper/paperboard/cartons and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

1 Response to Packaging converters see sales, profits rise in Q1 2012

  1. Pingback: Packaging converters see sales, profits rise in Q1 2012 | Converting Guide

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