Packaging Corporation of America Q3 results
its third quarter net income, citing rising costs as a major
factor.
Packaging Corporation of America has reported a significant drop in its third quarter net income, citing rising costs as a major factor.
Income fell to $15 million (€15.3m) in the third quarter, compared to $29 million in the third quarter of 2001. This result came despite the fact that sales for the third quarter rose to $456 million compared to $455 million in the third quarter of 2001.
Net income for the first nine months of 2002 was $36 million, or $0.33 per share, compared to $88 million. Net sales for the first nine months of 2002 were $1.3 billion compared to $1.4 billion in 2001.
Price, volume and recycled fibre costs were the major factors that affected third quarter earnings compared to last year. Lower prices for both containerboard and corrugated products reduced earnings by 13 cents per share and higher recycled fibre costs reduced earnings by three and one-half cents per share. Higher corrugated products sales volume and higher mill production volume increased earnings by four cents per share.
PCA's corrugated products sales volume per workday was up 6.5 per cent compared to last year's third quarter and was up 4.2 per cent year-to-date to 30 September 2002. With the higher corrugated demand, PCA's containerboard mill production in the third quarter was 578,000 tons, or 17,000 tons above last year's third quarter.
Paul Stecko, CEO of PCA, said, "We're pleased with our strong third quarter corrugated products volume, which allowed us to increase mill production while maintaining inventory at targeted levels. Containerboard and box prices also improved during the quarter although not as fast or by as much as originally announced."
Stecko added: "Looking forward to the fourth quarter, we should realise a full quarter's benefit of the recent price increases and we expect lower recycled fibre costs which will also help earnings. Compared to our very strong third quarter volume, we expect lower containerboard and corrugated products volume in the seasonally slower fourth quarter, and mill manufacturing costs will also increase with colder weather."
PCA is the sixth largest producer of containerboard and corrugated packaging products in the United States with sales of $1.8 billion in 2001. PCA operates four paper mills and 65 corrugated product plants in 25 states across the country.
