Packaging solutions provider MeadWestvaco Corp. (MWV), Wednesday reported a profit for the fourth quarter, compared to a loss last year, helped by higher revenues, better margins and an increase in income from alternative fuel mixture credits. Earnings, however, missed analysts' estimates by a penny. MeadWestvaco shares are currently trading down more than 6% on the NYSE.
The Glen Allen, Virginia-based company's net income for the fourth quarter was $51 million or $0.29 per share, compared to a loss of $16 million or $0.09 per share in the same quarter last year. Results for the quarter include net favorable after-tax items totaling $13 million or $0.07 per share.
On an adjusted basis, net income was $38 million or $0.22 per share, compared to net income of $17 million or $0.10 per share in the prior-year quarter.
On average, 12 analysts polled by Thomson Reuters expected the company to earn $0.23 per share for the quarter. Analysts' estimates typically exclude special items. Sales for the quarter were $1.64 billion, compared to $1.60 billion in the comparable quarter last year. Sales increased two percent as favorable foreign currency exchange was partially offset by lower volumes. Analysts expected the company to report revenues of $1.52 billion for the quarter.
By segment, sales from Packaging Resources increased to $637 million from $632 million a year ago as lower shipment volumes were more than offset by improvement in price and product mix and favorable foreign currency exchange.
Consumer solutions sales were $576 million, down from $596 million last year due to the implementation of the segment's transformation strategies, including overhead cost reductions, maximizing production efficiency and exiting unprofitable product lines.
Consumer and Office products sales increased to $306 million from $273 million in the previous year helped by the recent acquisition of Grafons, a Brazilian notebook and stationery company, as well as favorable foreign currency exchange.
Sales of Specialty Chemicals rose to $138 million from $123 million last year due to the better demand for asphalt solutions and printing ink resins due to increased holiday promotions by retailers.
Community Development and Land management sales were $43 million, up from $39 million a year ago. The segment sold about 12,600 acres for gross proceeds of $23 million in the fourth quarter of 2009, compared to about 7,300 acres for gross proceeds of $16 million in the fourth quarter of 2008. Corporate and other revenues declined to $10 million from $14 million last year.
Cost of sales declined to $1.34 billion from $1.38 billion in the previous year.
MWV noted that it exceeded its 2009 $125 million overhead savings target associated with the strategic cost management program it announced at the beginning of the year. Savings in 2009 were $154 million, reflecting actions that eliminated overhead costs and closed or restructured certain facilities.
Other income, which includes income from alternative fuel mixture credits, net of associated expenses, jumped to $96 million from $12 million in the prior-year quarter.
For fiscal 2009, net income was $225 million or $1.30 per share, up from $90 million or $0.52 per share a year ago. Adjusted net income for the year rose to $135 million or $0.78 per share from $108 million or $0.63 per share last year. Net sales for the year declined to $6.05 billion from $6.64 billion last year.
Analysts expected the company to report earnings of $0.76 per share, on revenues of $5.93 billion.
Looking forward, the company said it believes overall demand may have stabilized at current levels and is seeing volume growth opportunities in some markets and products, the resiliency and pace of these trends remains uncertain given continued weak economic conditions. It also expects to benefit from growing positions in developing regions and transformation strategies as well as ongoing cost reductions.
MWV is currently trading at $24.95, down 1.65 or 6.20%, on a volume of 963K shares on the NYSE.
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