MeadWestvaco Corp. (MWV) reported that its first-quarter net income attributable to the company rose to $11 million or $0.06 per share from $49 million or $0.28 per share in the prior year quarter.
Income from continuing operations attributable to the company in the first quarter of 2013 was $11 million, or $0.06 per share, compared to $50 million, or $0.29 per share in the year ago quarter. The latest-quarter result included after-tax restructuring charges of $18 million, or $0.10 per share. The prior year result included after-tax restructuring charges of $7 million, or $0.04 per share.
Adjusted income and adjusted earnings per share from continuing operations, excluding after-tax restructuring charges, were $29 million, or $0.16 per share, for the first quarter of 2013 compared to $57 million, or $0.33 per share, for the first quarter of 2012.
Sales from continuing operations in the first quarter of 2013 were $1.34 billion compared to $1.31 billion in the first quarter of 2012. The company reported a 2 percent sales increase for the first quarter of 2013 (3.6 percent on a constant currency basis), primarily reflecting higher volumes in targeted markets for food, tobacco, industrial, personal care and healthcare packaging, as well as increased volumes of higher value specialty chemical solutions. The company's sales also benefited from the additions of the recently acquired corrugated business in India (Ruby Macons) and the pine chemicals business in Brazil (Resitec).
Analysts polled by Thomson Reuters expected the company to report earnings of $0.23 per share on revenues of $1.36 billion for the quarter. Analysts' estimates typically exclude special items.
The company said it will exit the beauty and personal care folding carton business in Europe and Brazil. In Europe, the company is assessing strategic options to accomplish an exit through the sale of this business. In Brazil, the company will repurpose its folding carton operation during the second half of 2013 to manufacture high value, differentiated beauty and personal care dispensing products to meet significant market growth opportunities.
The company noted that it is undertaking an enterprise-wide overhead cost reduction plan, which is expected to result in annual cost savings between $65 and $75 million by the end of 2014. To achieve these savings, the company is refocusing and streamlining its operations, as well as consolidating general and administrative support across the organization. A substantial portion of the actions will be completed this year and the company expects benefits of $25 to $30 million in 2013.
In the second quarter of 2013, MWV expects earnings to be lower compared to year-ago levels on a continuing operations basis. The company expects continued momentum with its profitable growth strategies to drive volume improvement across its targeted Packaging and Specialty Chemicals businesses. In addition, the company is expecting to generate product pricing improvement and to benefit from its recent acquisitions in the Industrial and Specialty Chemicals businesses. These benefits are expected to be more than offset by a planned major cold outage at the Covington, Virginia paperboard mill and lower land sales.
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