The net loss was mainly due to non-recurring charges of $7.4 million, project charges of $900,000 and impairment charges of $1.6 million, said the company's chief financial officer, John Hamilton. The company recorded a profit of $10.5 million in the first quarter of 2004.
Net sales amounted to $620.5 million in the first quarter of 2005, an increase of $360.2 million compared to the same period last year. Operating income was $42.5 million for the first quarter 2005, up $9.3 million. The figures include the non-recurring charges.
The sales and operating income increases were attributed mainly to the results from Owens-Illinois' plastic blow-moulded container unit, which Graham Packaging bought last November. Owens-Illinois has since changed its name to O-I. The acquired business accounted for $303.6 million of the net sales increase in first quarter net sales. Rising prices for resin accounted for the rest of the gains, the company said.
First-quarter sales in North America were up $324.1 million, including net sales of $283.7 million attributable to the O-I business. Net sales were up 80 per cent in Europe and 76 per cent in South America.
"This is now our second quarter as a combined company, and we are starting to see the results of our integration," said Hamilton.
Graham Packaging's chairman and chief executive officer, Philip Yates, said the integration of the O-I business with Graham Packaging should be completed within the next 18 months. The company estimates it will add about $70 million to its operating income and save about $100 million in costs when the integration is complete.
One-time costs to achieve the saving could eventually add up to about $160 million, according to company forecasts.
"The company believes that the cost savings will be partially offset by the expected sales run-offs in the acquired business, performance issues in the combined household category and continued softness in the overall automotive lubricants market," the company stated in a press release.
Graham Packaging is the operating subsidiary of Graham Holdings. Graham Packaging doubled in size as a result of the $1.2 billion acquisition of the O-I business last year. The company makes blow moulded plastic containers for the food and beverage, household, specialty containers and automotive lubricants markets.