It's been a good year for global packaging giant Pactiv. The firm recently acquired the plastic packaging assets of Rock-Tenn, and was even named as one of the US's safest companies in Occupational Hazards magazine. It would appear that 2003 has brought even more good news in the form of some satisfactory third quarter results.
"Our performance continues to be strong, driven by our strategy togrow internally and through acquisitions, along with productivityimprovements. Strength in our hefty??consumer business andfoodservice/food packaging business, the impact of new productintroductions, and successful pricing actions to offset higher raw materialcosts, particularly in foodservice/food packaging, helped to significantlyimprove margins sequentially," said Pactiv chairman Richard Wambold.
In the foodservice / food packaging sector as a whole, third quarter sales rose by 14 per cent to $351 million (€297.9m). The company claimed this was largely due to favourable pricing, the Jaguar acquisition, and volume growth in the base business. Growth in home meal replacement products, processor trays,aluminum products, and APET products was also impressive. The Jaguar acquisition accounted for $22 million in sales in the quarter and was accretive to earnings.
Nonetheless, most gains have been rather modest. Overall net income increased by 3 per cent to $61 million in the third quarter, though overall sales did rise by 9 per cent to $793 million. Adjusting for the impact of foreign currency exchange, sales rose 7 per cent, driven primarily by 5 per cent volume growth.
However, the higher cost of raw materials has impacted on some figures. The third quarter gross margin was 30.6 per cent compared with 31.4 per cent last year, while the operating margin was 15.4 per cent compared with 16.8 per cent. The company claims that the decrease reflects the impact not only of higher raw material costs but also lower noncash pension income.
There was more mixed news concerning the performance of specific product sectors. Third quarter sales of the company's Hefty?consumer products increased 6 per cent to $224 million, reflecting strong volume growth. However operating income of $48 million decreased 4 per cent. The company says that price increases to offset higher resin costs will not be fully effective until the fourth quarter.
Hefty? sales growth was led primarily by volume increases in tableware and waste bags. Pactiv says that the rollout of four new Hefty?products launched this year continues on track. Products introduced in the past two years -?The Gripper?tall kitchen bags and Zoo Pals?disposable children's plates,continued to show strong performance.
For protective and flexible packaging products, third quarter sales increased 4 per cent to $218 million. However, excluding the effect of foreign currency exchange, sales declined 1 per cent. Operating income was $15 million compared with $14 million last year.
Pactiv is a leading provider of advanced packaging solutions for the consumer, foodservice/food packaging and protective/flexible packaging markets. The company, which has annual sales of €2.5 billion currently operates 73 facilities in 14 countries around the world.