Wednesday, packaging materials maker Sealed Air Corporation (SEE) reported a decline in profit for the second quarter, as net sales fell 20% on lower volumes and unfavorable currency. The company also reaffirmed its previously announced full year earnings guidance.
For the quarter, the Elmwood Park, New Jersey-based company's net earnings attributable to shareholders were $60.5 million or $0.33 per share as against $62.6 million or $0.34 per share in the prior-year quarter.
On an adjusted basis, earnings were $0.34 per share compared to $0.38 per share in the previous-year period. On an average, 11 analysts polled by Thomson Reuters expected Sealed Air to earn $0.34 per share. Analysts' estimates typically exclude special items.
Net sales for the period plunged 20% to $1.03 billion from $1.28 billion in the second quarter of fiscal 2008, primarily due to a $158 million reduction in unit volumes in protective packaging and a $117 million unfavorable effect of currency translation, partially offset by a $24 million favorable effect of product price or mix primarily in food packaging. Analysts expected the company to generate revenues of $1.06 billion in the quarter.
On a segmental basis, revenues from food packaging were $448.7 million compared to $518.9 million, revenues from food solutions slid to $220.2 million from $259.4 million. Protective packaging revenues were $281.8 million as against $391.6 million, and other revenues fell to $77.3 million from $108.9 million a year ago.
William Hickey, president and chief executive officer, said, "We did achieve a 2% year over year increase in our consolidated operating profit excluding the impact of currency translation, which was largely based on the strength of our food businesses. While our food businesses' combined operating profit increased 23% excluding currency translation, this gain was offset by the ongoing impact of the global recession on our Protective Packaging and Specialty Materials businesses."
For the six months ended June 30, net income attributable to shareholders was $118.6 million or $0.65 per share compared to $123.4 million or $0.67 per share in the same period last year. Adjusted earnings declined to $0.67 per share from $0.73 per share in the year-ago period. Net sales for the year-to-date period decreased to $2.02 billion from $2.46 billion in the comparable period prior year.
Looking ahead, Hickey said, "We look to a seasonal volume increase in our food businesses in the third quarter and a slow recovery in our Protective Packaging and Specialty Materials businesses later this year and into 2010."
The company also reaffirmed its previously announced full year 2009 earnings guidance of between $1.17 and $1.37 per share, including charges of $20 million or $0.08 per share expected to be incurred due to its GMS program. Excluding the charge, Sealed Air expects its full year earnings guidance to continue to be in the range of $1.25 to $1.45 per share. For the full year, analysts expect the company to earn $1.40 per share on revenues of $4.28 billion.
SEE is currently trading at $19.86 per share, down 7.54%, on the New York Stock Exchange.
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