Packaging Corp. of America Posts 3Q Earnings
Oct. 19, 2009 - Packaging Corporation of America today reported third quarter 2009 net income of $73 million, or $0.71 per share. Third quarter earnings included income of $48 million, or $0.46 per share, from alternative fuel mixture tax credits for the period from July 1, 2009 through September 30, 2009. Net sales for the third quarter were $554 million compared to $621 million in the third quarter of 2008.
Excluding income from alternative fuel mixture tax credits, net income was $25 million, or $0.25 per share, versus third quarter 2008 net income of $38 million, or $0.37 per share. This $0.12 per share decrease in earnings, compared to last year, was driven by the downturn in the economy which lowered containerboard and corrugated products price and mix ($0.19), and volume ($0.06). These items were partially offset by lower costs for transportation ($0.05), energy ($0.05), recycled fiber ($0.02) and chemicals ($0.02).
Net income for the first nine months of 2009 was $207 million, or $2.03 per share, and excluding alternative fuel mixture tax credits, earnings were $80 million, or $0.78 per share, compared to $105 million, or $1.01 per share, in 2008. Year-to-date net sales were $1.62 billion compared to $1.81 billion in 2008.
Corrugated products shipments were down 4.8% and outside sales of containerboard were down about 6% compared to last year’s third quarter. Containerboard production was 588,000 tons after taking approximately 30,000 tons of market-related downtime. PCA ended the quarter with containerboard inventories about 8,000 tons lower than the second quarter.
Paul T. Stecko, Chairman and CEO of PCA, said, “Business conditions continued to improve with our corrugated products shipments up 1.5%, or 6,000 tons, and containerboard sales up 24%, or 24,000 tons, over the second quarter. This allowed us to increase mill operating rates to 95% and cut our market-related downtime in half, compared to the second quarter, while at the same time, reducing our containerboard inventories. While we continued to benefit from lower input costs, lower sales prices more than offset this benefit which reduced earnings.”
“Looking ahead to the fourth quarter,” Mr. Stecko added, “we expect lower volume due to three less shipping days along with normal seasonality. Prices are expected to be lower as a result of previously published containerboard price changes, and wood costs and energy usage are expected to be higher with colder and wetter weather. Considering these items, and excluding any income from alternative fuel mixture tax credits, we currently estimate our fourth quarter earnings at about $0.13 per share.”
PCA is the fifth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.4 billion in 2008. PCA operates four paper mills and 68 corrugated products plants in 26 states across the country.
SOURCE: Packaging Corporation of America