* Protective Packaging sales increased 14% and volumes increased 12%
* Total volumes increased 5%
* European volumes increased 5%, with growth in all businesses in the region
* Prior pricing actions started to benefit results in May
* Resin costs higher than projected but margins comparable to prior year
* Free cash flow of $181 million for the first six months of 2010
For second quarter 2010, Sealed Air Corporation (NYSE:SEE) reported diluted net earnings per common share (EPS) of $0.38, compared with $0.33 in 2009. Adjusted EPS was $0.35, compared with $0.34 in 2009.
Sales increased 6% to $1.09 billion reflecting approximately 5% higher volumes and 3% favorable foreign exchange, partially offset by 1% lower price/mix. The Protective Packaging segment led the volume growth with a $33 million, or 12%, increase reflecting improved end-market demand in all regions through the quarter. Price/mix primarily reflects the timing of contract price adjustments for resin costs in our North American Food Packaging business. We expect these prices to continue to adjust favorably in the third quarter. Gross profit increased 4% to $301 million, or 27.6% of net sales, while operating profit increased 9% to $129 million, or 11.9% of net sales.
Commenting on our operating performance, William V. Hickey, President and Chief Executive Officer, stated:
Second Quarter Segment Review
The following year over year net sales discussions exclude the impact of currency translation, which we define as “constant dollar,” a non-U.S. GAAP measure. The balance of the discussion is presented on a U.S. GAAP basis.
Food Packaging Segment
Sales decreased 2% on a constant dollar basis, with approximately 3% lower price/mix due to the timing of North American contract price adjustments for resin. Volumes were higher by 2%, led by increased demand in Latin America and Europe. We held North American volumes steady, while customer production rates declined versus prior year. These production rates are projected to improve in the second half of 2010. Operating profit decreased 8% to $58 million, or 12.5% of net sales.
Food Solutions Segment
Sales increased 1% on a constant dollar basis from higher volumes as demand increased in all regions. Operating profit increased 3% to $23 million with a comparable operating margin of 10.1% of net sales.
Protective Packaging Segment
Sales increased 12% on a constant dollar basis from higher volumes, led by increased demand in North America and Europe. Operating profit increased 39% to $45 million, or 14.1% of net sales.
Other Category
Sales increased 5% on a constant dollar basis from higher volumes, led by a 15% volume increase in the Specialty Materials business. Operating profit increased 100% to $3 million, or 3.7% of net sales.
Other Matters
* We recorded $7 million of foreign currency exchange gains related to our subsidiary in Venezuela. In 2010, we are excluding any foreign currency exchange gains or losses relating to our Venezuelan subsidiary in our adjusted EPS calculation due to our expectation of significant unstable currency fluctuations in that country.
* Related to our GMS program, we recognized an additional $1 million of charges in cost of sales in the quarter, primarily due to our previously announced plan to cease certain operations at one of our German locations. We anticipate an additional $2 million of associated costs through the second half of 2010, marking the completion of GMS. We continue to expect to realize an incremental $10 million of benefits in 2010, bringing the program’s full annual estimated benefit run rate to $55 million.
* Our Board of Directors increased the quarterly cash dividend by 8% to $0.13 per common share. This dividend is payable on September 17, 2010 to stockholders of record at the close of business on September 3, 2010.
No Comment Received
Leave A Reply