MeadWestvaco Posts 1Q Loss on Low Volumes
April 29, 2009 - MeadWestvaco Corp. today reported lower year-over-year earnings for the first quarter of 2009, reflecting reduced volumes for packaged goods, office supplies and specialty chemicals due to the weak global economic environment. The company is taking aggressive actions to strengthen its financial position and maximize performance by reducing corporate and business unit overhead costs, closing and restructuring manufacturing facilities and focusing on higher return growth opportunities in targeted packaging markets.
Cash flow from operations more than doubled to $90 million in the first quarter of 2009 compared to $40 million in the first quarter of 2008. MWV’s actions to continue to tightly manage working capital and reduce its cost structure, as well as higher cash flows from the company’s Community Development and Land Management business drove the improvement. As part of its Strategic Cost Management program, the company also realized over $14 million in cost savings in the first quarter of 2009 from reduced overhead expenses and manufacturing optimization initiatives, and is on track to achieve its 2009 savings goal of $125 million.
"We have taken a number of proactive steps at MWV to strengthen our overall performance and increase the value we create for customers and shareholders," said John A. Luke, Jr., chairman and chief executive officer. "This focused strategy has helped to stabilize our results as demand declined sharply for many of our products, and will provide better operating leverage to improve earnings when the economy recovers. MWV continues to capitalize on our strong financial position, leading market expertise, and disciplined approach to cost management as we target the most attractive growth opportunities in our global markets — making our company a valued partner for customers and a sound investment for shareholders."
First quarter 2009 net loss from continuing operations was $79 million, or $0.46 per share. Included in the results from continuing operations are after-tax restructuring charges of $51 million, or $0.30 per share, primarily related to employee separation costs, asset write-downs and facility closures. Sales were $1.35 billion in the first quarter of 2009 compared to sales of $1.52 billion in the first quarter of 2008.
First quarter 2008 net loss from continuing operations was $8 million, or $0.04 per share. Included in the results from continuing operations are after-tax restructuring charges of $5 million, or $0.03 per share, primarily related to employee separation costs, asset write-downs and facility closures, and after-tax bad-debt charges of $5 million, or $0.03 per share, related to two customer bankruptcies. Also included in the results from continuing operations is an after-tax gain of $6 million, or $0.04 per share, from the recognition of a curtailment gain associated with the company’s U.S. pension plan. First quarter 2008 income from discontinued operations was $4 million, or $0.02 per share, related to the sale of the company’s North Charleston, S.C., kraft paper mill and related assets on July 1, 2008, previously included in the Packaging Resources segment.
Given continued worldwide economic uncertainty, results for 2009 are difficult to predict. MWV is directly addressing the uncertain economic environment by remaining focused on the key items within its control that are expected to maintain the company’s solid financial position and maximize the company’s performance, including:
- continuing to rigorously review each business, including markets, products and customers, to ensure cost of capital returns;
- matching production to demand to conserve cash costs;
- vigilantly managing working capital usage and reducing discretionary spending;
- reducing capital expenditures by narrowing spending on more immediate, high-return investments; and,
- continuing to reduce the company’s overhead structure and rationalize manufacturing capacity.
MeadWestvaco provides packaging solutions to many of the world’s most-admired brands in the healthcare, personal and beauty care, food, beverage, media and entertainment, and home and garden industries. The company’s businesses also include Consumer & Office Products, Specialty Chemicals, and the Community Development and Land Management Group, which sustainably manages the company’s land holdings to support its operations, and to provide for conservation, recreation and development opportunities.
SOURCE: MeadWestvaco Corp.