Graham Packaging has reported a significant gain in operating income for its first quarter of 2003, reflecting increased sales and gains from restructuring, but continues to run at a loss.
"Given how slow the US economy has been and all that has happened to world markets in the last three months, we are pleased that we have still been able to increase sales, boost our unit output, and continue to improve our operating income," chief executive Philip R. Yates said.
Chief financial officer John E. Hamilton said operating income increased to $28.4 million (€24.8m) for the quarter ended March 30, 2003, up from $25.6 million for the quarter ended March 31, 2002. Hamilton said covenant compliance EBITDA was $48.9 million for the first quarter of 2003, compared to $46.7 million for the first quarter of 2002.
The company reported that net sales for the first quarter were $232.7 million, an increase of $1.2 million, or 0.5 percent, on a 1.1 percent gain in units sold, compared to the first quarter last year. "We continued to feel the effects of our ongoing European restructuring during the first quarter, including the planned sale of two plants in Germany," Hamilton explained.
"Excluding business impacted by the European restructuring, both our sales and unit volume in the first quarter would have increased by approximately 6 per cent compared to the first quarter of last year," Hamilton added. "The good news is that the restructuring is nearly complete and will be finished by the end of this year."
Hamilton said, however, that the company sustained a net loss of $4.6 million in the first quarter of this year, compared to net income of $3.2 million in the first quarter of last year. This is primarily the result of an additional $8.9 million of interest costs associated primarily with the write-off of debt issuance fees related to the refinancing of the company's senior credit agreement in February.
This new agreement increased liquidity and extended terms. Hamilton noted, "The refinancing also caused us to reclassify into expense amounts that had previously been recorded in other comprehensive income related to certain interest rate swap agreements."
Graham Packaging, based in Pennsylvania, US, is a worldwide leader in the design, manufacture and sale of customised blow-moulded plastic containers for the branded food and beverage, household and personal care, and automotive lubricants markets. The company employs approximately 3,900 people at 55 plants throughout North America, Europe and South America. It produced more than nine billion units and had total worldwide net sales of $906.7 million in 2002.