Packaging Corp. of America 4th Quarter Earnings Fall
Jan. 23, 2006 (Press Release) - Packaging Corporation of America today reported fourth quarter 2005 net income of $2 million, or $0.02 per share, compared to fourth quarter 2004 net income of $38 million, or $0.36 per share. Fourth quarter 2004 earnings included income of $17 million, or $0.16 per share, from a dividend paid to PCA by Southern Timber Venture. Net sales for the fourth quarter were $473 million, compared to $493 million in the fourth quarter of 2004.
Full year 2005 net income was $53 million, or $0.49 per share, compared to $69 million, or $0.64 per share, in 2004. As shown in the attached table, adjusted net income, which excludes special items, was $47 million, or $0.44 per share, in 2005, compared to $52 million, or $0.48 per share, in 2004. Net sales for 2005 and 2004 were $2.0 billion and $1.9 billion, respectively.
The reduction in fourth quarter earnings, compared to last year's adjusted net income, was driven primarily by higher transportation, fuel and electricity costs of $0.09 per share, lower pricing of $0.06 per share, and higher labor and benefit costs of $0.02 per share. Lower earnings for the full year, compared to 2004, were driven by the same cost items that affected the fourth quarter and, for the most part, were offset by higher pricing and volume.
PCA's corrugated products shipments were up 4.8% compared to last year's fourth quarter and up 4.6% for the full year. Excluding our Midland Container acquisition, fourth quarter and full year shipments were up 3.0% and 3.4%, respectively. Containerboard production in the fourth quarter was 596,000 tons, down 0.6% compared to last year's fourth quarter, and 2,347,000 tons for the year, up 1.2% compared to 2004.
Paul T. Stecko, Chairman and CEO of PCA, said, "Our mill efficiency, production and costs were outstanding in the fourth quarter. We were able to support our strong corrugated products growth, up 4.8%, while at the same time, reduce natural gas consumption in our mills to just over 3% of purchased fuels compared to 9% in the fourth quarter of 2004. This is a remarkably low number, which we believe gives us a rather unique, low cost, energy position within our industry."
"Looking ahead", Mr. Stecko added, "our biggest challenge will be to maintain adequate containerboard inventories in our box plants in order to support corrugated products growth. We expect higher prices for both containerboard and corrugated products as a result of previously announced price increases. Our October price increases should be fully realized in the first quarter while our January price increases will not be fully realized until the second quarter as the flow-through to box prices is completed. Our Counce, TN linerboard mill undergoes its annual maintenance outage in March, which will reduce production and increase costs, and we also expect seasonally higher energy consumption. All in all, we currently expect first quarter earnings of about $0.08 per share."
PCA is the sixth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.0 billion in 2005. PCA operates four paper mills and 68 corrugated product plants in 27 states across the country.
SOURCE: Packaging Corporation of America