Cyrovac maker sees volume growth in emerging markets

By Dominique Patton

- Last updated on GMT

Related tags: United states dollar, Bubble wrap

Sealed Air, the producer of Cryovac food packaging, yesterday
reported strong growth in sales to food customers over 2007,
boosted by emerging markets as well as a favourable currency rate.

The food packaging segment that makes products for fresh and processed meats and cheeses increased sales by 10 per cent in the fourth quarter to $517 million, or 4 per cent when excluding a $27 million favorable effect of foreign currency translation. For the full year, the segment reported an 8 per cent increase in sales to $1.88 billion. "Sales growth in our food business segments accelerated during the year due to the strength of our broad range of packaging solutions,"​ said William Hickey, chief executive. The company's food packaging segment is its largest, accounting for about 40 per cent of sales. But food solutions, which makes food packaging technologies for meals served by food service or retailers, is seeing faster sales growth. Sales increased by 16 per cent in the fourth quarter, or 8 per cent without the currency benefits. Demand is largely coming from growing volumes in Europe and North America, as well as favorable product price/mix in Europe and Asia-Pacific, said the company. "Four-fifths of our sales growth stemmed from international markets, with net sales in developing regions such asBrazilandRussiagrowing at over 20 per cent in2007,"​ said Hickey. Both divisions have however seen operating profits fall as higher raw material and marketing costs eroded earnings. "Our fourth quarter operating performance reflected increases in raw material and energy costs to unprecedented levels,"​ according to the chief executive. "For the first nine months of 2007, our resin costs were trending upward, but were still favorable overall to our costs in the first nine months of2006. Inthe fourth quarter, we incurred an unfavorable variance of over $20 million in resin costs." ​ The firm increased prices in response to higher resin costs and sought to lower costs and boost cash flow. Sealed Air is expecting continued softness in the US economy and unfavourable pricing in raw materials and energy costs in the first half of 2008. It will be somewhat protected from the downturn in the US with less than a fifth of its revenue generated by the region's industry. "The development and commercialization of recent product launches, a strong product pipeline, contributions from recent acquisitions and new facilities in developing regions will enable us to deliver profitable growth in the year ahead." ​ Sealed Air also makes protecting packaging for medical and other consumer applications including the Bubble Wrap and Jiffy brands.

Related topics: Processing & Packaging

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