Pactiv earnings hit by raw material costs

By Jane Byrne

- Last updated on GMT

Related tags Material Price

Paper and plastic packaging supplier, Pactive Corporation, said that its third quarter (Q3) income from overall operations was $53m (€41m) - down $6m (€4.6m) on last year - reflecting higher raw material, energy, logistic and operating costs.

The company said that, in comparison with the 2007 third quarter, polystyrene rose in the region of 20 per cent, while polyethylene increased approximately 30 per cent.

However, the company claims that its fourth quarter earnings should be more robust following Q3 pricing actions and expected resin cost decreases.

And Richard Wambold, Pactiv CEO, said its food service and food packaging segment continues to grow market share, with sales for the period increasing by seven per cent from $546m (€425m) to $583m (€454m) as a result of factors such as five per cent favourable pricing and a one per cent volume increase.

Pactiv has not been alone in blaming reduced margins on spiralling input costs in the past year - many packaging manufacturers have reported pressure on margins as chemical firms pass on the costs of higher raw materials.


Crown Packaging Europe announced today that it is increasing its prices for tinplate food cans by 32 per cent from 1 January, 2009.

The company cited supply shortages and tinmill closures as having a negative impact on the commodity's pricing, and it said that it had no choice but to pass on the increases to its customers.


Last week, Graphic Packaging International, said prices for its Pearl-Kote and Omni-Kote coated folding carton grades used for food packaging would rise by $40 (€29) per tonne and the cost of its Aqua-Kote carrier grade used for beverage carriers to increase by $50 (€37) per tonne.

"Given the volatile costs for essential inputs like fibre, energy and chemicals in our manufacturing, we are taking action to continue to manage these uncertainties and provide innovative paperboard packaging to our customers under the current market dynamics, while also providing positive returns to our shareholders,”​ said CEO David Scheible.


Nampak Europe also recently announced a ‘double digit’ price increase to offset what it called 'unparalleled input costs', highlighting the rising price for polymers.

Elsewhere, Alcan Packaging, a supplier of flexible packaging for the food and beverage market, announced a five per cent price increase on all its products.

German chemical firm BASF upped the price of its Styrolux polymer last month by €150 (€117m) a tonne, after previously announcing in June that the price of the material had risen by €100 (€78m) a tonne.

However, the recent steep fall in price for crude oil looks set to result in savings for packaging and food manufacturing companies impacted by raw material price hikes over the past 12 months; oil prices tumbled yesterday to below $67 (€52m) a barrel, which was a 16-month low.

Related topics Processing & Packaging

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