PCA posts record fourth quarter profit on pricing
Jan. 22, 2007 - Packaging Corporation of America today reported fourth quarter 2006 net income of $40 million, or $0.38 per share, compared to fourth quarter 2005 net income of $2 million, or $0.02 per share. Fourth quarter net sales were $553 million compared to fourth quarter 2005 net sales of $473 million.
Full year 2006 net income was $125 million, or $1.20 per share, compared to $53 million, or $0.49 per share, in 2005. Full year net income for 2005 included income of $0.06 per share from a Southern Timber Venture dividend. Net sales for 2006 and 2005 were $2.2 billion and $2.0 billion, respectively.
The increase in fourth quarter earnings, compared to last year's fourth quarter, was driven primarily by better pricing and mix which together improved earnings by $0.43 per share. Partially offsetting these earnings improvement items were higher labor and benefit costs of $0.05 per share, and transportation costs of $0.02 per share. Higher earnings for the full year, compared to 2005, were impacted by the same items as the fourth quarter.
PCA's corrugated products shipments per workday were down 0.5% compared to last year's record fourth quarter shipments, and for the year, per workday shipments were up 0.8% compared to 2005. Containerboard production in the fourth quarter was 613,000 tons, and 2,404,000 tons for the year. PCA ended the year with containerboard inventories slightly below year-end 2005 levels.
Paul T. Stecko, Chairman and CEO of PCA, said, "We had an outstanding fourth quarter. Mill production and earnings per share, excluding any special items in prior quarters, were both fourth quarter records, inventories remained stable, and corrugated products volume came within one-half percent of last year's all time record volume. December box volume per workday was particularly strong, beating last year's record December by 1.5%."
"Looking ahead to the first quarter," Mr. Stecko added, "we expect our total corrugated products volume to be higher than the fourth quarter. Both our Counce and Valdosta linerboard mills will be down, as normal, for their annual maintenance outages, which will negatively impact earnings by about $0.06 per share. Certain timing-related benefit costs are the highest in the first quarter, and we also expect slightly higher energy and fiber costs. Finally, any earnings improvement that could result from previously announced price increases that are implemented this quarter would not, for the most part, be realized until the second quarter. Considering all of these items, we currently expect first quarter earnings of about $0.31 per share."
PCA is the sixth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.2 billion in 2006. PCA operates four paper mills and 68 corrugated product plants in 26 states across the country
SOURCE: Packaging Corp. of America