Profits shrink despite ‘healthy’ flexible packaging sales for Huhtamäki
In its newly published interim report, the company said it grew net sales to €1.521bn within Q1-Q3, compared with €1.47bn in the same period of 2010, but earnings before interest and tax fell from €106.6m to €92.2m.
Within its flexible packaging division – which services the consumer food sector – Huhtamäki reported net sales of €436.1m within the first three quarters of 2011, up from €390.5m in the same period of 2010.
Divisional earnings before interest and tax totaled €28.6m, up from €24.7m in the same three quarters of 2010.
Loss-making plant shut
Sales growth in Europe accelerated in Q3 due to healthy volume development and a favourable product mix, while Asia saw strong sales growth driven especially by Thailand and Vietnam.
Huhtamäki has production plants in Europe, Asia, Oceania and South America, but the firm predicted that the closure of its loss-making plant in New Lynn, New Zealand, by the end of July 2012, would add around 5m to divisional earnings in H2 2012.
Within the US, where products include ice cream containers, Huhtamäki said net sales declined (€383.5m during Q1-Q3, €407.8m: 2010) due to adverse currency translations, while the consumer goods business “continued to suffer from softness in the ice cream market”.
Elsewhere, US firm Sonoco reported net sales up 7 per cent to $1.12bn in Q3 2011 up from $1.05bn during the same period in 2010, driven by volume growth in flexible packaging and rigid containers.
The firm’s consumer packaging segment saw operating profits in the quarter up slightly from Q3 2010 ($47.2m versus $46.3m), while sales rose to $466m in Q3 ($437m: Q3 2010).
However, Sonoco’s consolidated group profits (the firm also produces tubes, cores and paper and has a packaging services division fell slightly from $84.88m in Q3 2010 to $84.76m this year.
Sonoco CEO urges caution
Commenting on Sonoco’s results, chairman and CEO Harris DeLoach said that "improved productivity, volume gains and cost-reduction efforts offset a negative price/cost relationship”.
Looking to the turnover company’s future, DeLoach said Sonoco would “have to become more cautious about global economic conditions and the direction of consumer spending”.
Sonoco would take further proactive measures to cut operating costs, DeLoach said, and he added that Sonoco was moving quickly to integrate recent $550m acquisition Tegrant, whose stable includes temperature-assurance food packaging brand ThermoSafe.
“A joint integration team has been identified and will begin working after the closing to quickly bring our businesses together and realise identified synergies,” DeLoach said.
