Graphic Packing to close lamination plant

- Last updated on GMT

Related tags: Paperboard, Graphic design, Remainder

Faced with tough market conditions and mounting losses, Graphic
Packaging said yesterday it will close its Centralia, Illinois
laminations plant in the third quarter of 2005 and raise prices for
its board and resin products.

Graphic Packaging​ provides paperboard packaging to food and beverage processors, including Anheuser-Busch and Quaker Oats.The company expects to save $3 million annually with the closure of the plant.

The company reported a net loss of $24.7 million for the first quarter 2005 compared to a loss of $12.4 million in the first quarter of 2004. In a bid to claw its way out of thehole the company said it has increased carton sales in North American markets, made productivity improvements, cut costs raised the price of its containerboard products, the company's president andchief executive, Stephen Humphrey, said in a statement.

"Similar to the last couple of quarters, higher costs for key inputs like energy, fiber and chemicals squeezed our margins,"​ he said. "Unfortunately, weexpect higher costs to continue to negatively impact results over the remainder of 2005."

The company plans to raise prices for containerboard and resin products in its contracts with customers. It has also increased productivity in its beverage section with thepurchase of two new converting presses, which are now running at full capacity.

The company has also launched a number of new packages, including a basket carrier design for Anheuser-Busch's "B to the E" beer brand.

"In addition, our fridge vendor package is now making major inroads into the PET bottle market,"​ Humphrey said. "This is an extremely high growth marketfor us as our revenues for this relatively new segment were up approximately 160 per cent in the first quarter of 2005 from a small base in the first quarter of 2004."

The company's Composipac Z-flute carton brand was also used by Quaker Oats in the company's redesign of its Instant Quaker Oats brand.

"This innovative, patented carton has improved Quaker's point of sale impact by sharpening package graphics and by providing additional strength to protect the carton throughthe distribution chain," he said.

The company's net sales increased 1.2 per cent to $583m during the first quarter of 2005 compared to the first quarter of 2004. A 1.9 per cent increase in North American cartonsales was driven by higher volumes in both the beverage and the food and consumer product markets. The increase in domestic carton sales was partially offset by a year over year first quarter declinein both international volumes and domestic open market polyethylene bag film (rollstock) sales.

The company's total international sales were $96.9 million in the first quarter or about 16.6 per cent of total sales.

Graphic Packaging was formed in August 2003 as a result of the merger of Riverwood Holding, Inc. and Graphic Packaging International.

Related topics: Processing & Packaging

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