Packaging Corp. of America Posts Lower 4Q 2011 Earnings
Jan. 23, 2012 - Packaging Corporation of America reported fourth quarter 2011 net income of $39 million, or $0.40 per share. Reported results for the fourth quarter of 2010 were $53 million, or $0.52 per share, excluding income from biofuel tax credits and asset disposal charges.
Lower earnings per share, compared to last year’s fourth quarter, were driven by cost inflation ($0.10), lower containerboard export prices ($0.03), increased depreciation ($0.02) and other items ($0.02). These items were partially offset by lower energy and chemical usage ($0.03) and higher corrugated products volume ($0.03).
Excluding special items, full year earnings were $162 million, or $1.61 per share, compared to 2010 earnings of $166 million, or $1.62 per share. Price and mix ($0.38), higher volume ($0.17) and cost reduction benefits ($0.06) improved earnings per share, but was offset by cost inflation ($0.56) and higher depreciation expense ($0.05).
Net sales in the fourth quarter were $654 million, up 4% compared to fourth quarter 2010 net sales of $627 million, and full year net sales were a record $2.6 billion, up 8% over 2010.
Corrugated products shipments were up 9.0% per workday and total shipments were up 7.2%, with one less workday, compared to last year’s fourth quarter. Outside sales of containerboard were essentially equal to last year. Containerboard production was 640,000 tons, up 2,000 tons over the fourth quarter of 2010, and PCA ended the year with its containerboard inventories about 11,000 tons below 2010 year-end levels.
Mark W. Kowlzan, CEO of PCA, said, “Operationally, we had an exceptional quarter setting records for both containerboard production and corrugated product shipments. We also completed the major energy projects at our Counce, Tennessee and Valdosta, Georgia linerboard mills, started up a new corrugated products plant in Reading, Pennsylvania and acquired a corrugated products plant in Denver, Colorado. While our domestic pricing for containerboard remained essentially unchanged from last year’s fourth quarter and this year’s third quarter, pricing for export linerboard did fall during the fourth quarter.”
“Looking ahead to the first quarter,” Mr. Kowlzan added, “corrugated product shipments should be higher with four more shipping days compared to the fourth quarter. We also expect a full quarter’s earnings benefit from our major energy projects. Costs will be higher with colder weather, our normal annual maintenance outages at the Counce and Valdosta mills, timing related benefit expenses and a higher tax rate and pension expense. Average export prices for containerboard should be lower reflecting the full impact of the fourth quarter price changes. Considering all of these items, we currently estimate our first quarter earnings at about $0.40 per share.”
PCA is the fifth largest producer of containerboard and corrugated packaging products in the United States with sales of $2.6 billion in 2011. PCA operates four paper mills and 71 corrugated products plants in 26 states across the country.
SOURCE: Packaging Corporation of America