Graphic Packaging ‘well-positioned’ for 2012 after strong 2011 finish

By Mark Astley

- Last updated on GMT

A series of acquisitions and partnerships have left the company "well positioned" for 2012.
A series of acquisitions and partnerships have left the company "well positioned" for 2012.
Global packaging provider Graphic Packaging believes it is “well-positioned” for growth in 2012 after a series of strategic acquisitions and partnerships in 2011 and strong Q4 results.

The prediction follows a solid year for the company, which saw it record a net sales increase of 4% for the period between October and December 2011 compared with the same period in 2010 - growing from $1.01bn to $1.05bn.

The sales boost has been attributed to good results in the company’s flexible and paperboard packaging segments and an increase in sale price.

Results from the company’s beer can and folding carton segment, however, dropped off in Q4 – with a market decline of 1.6% in its folding carton business alone.

Full year adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) was $591.3m – up on $573.9m in 2010.

Well positioned for 2012

“Flexible packaging sales increased 4% in the quarter due to increased pricing and the additional of the joint venture of course in December,”​ said Graphic Packaging CEO David W. Scheible.

In December, the company combined its specialty plastic packaging business with the multi-wall bag business of Delta Natural Kraft and Mid-America Packaging – collectively known as DNK.

Scheible added that “this new joint venture with Delta Natural Kraft and Mid-America Packaging should enhance both the growth and profit profile of this business.”

“These types of small tuck-under acquisitions or combinations are an important part of our growth and optimization strategy going forward, and we will continue to look for similar opportunities.”

The company added that is remains focused on product innovation.

The new Kraft Food Capri Sun juice pouch, which it began supplying in November 2011, is one example.

Elsewhere, the company increased its exposure to the fast-growing craft beer and wine box markets through its acquisition of Sierra Pacific in April 2011.

Folding carton decrease

Elsewhere in the business, paperboard packaging sales, which accounted for 83.4% of total fourth quarter net sales, increased 4% in Q4 compared to the same period of 2010.

Graphic Packaging’s beverage can business recorded a soft drinks sales increase of around 3%, with a beer sales decline of around 4.5% in the quarter bringing down the average.

The company also recorded a volume decrease in its folding carton segment of around 1.6% in Q4.

“This modest decline was consistent with the third quarter, as we were able to offset continued softness in end market demand to growth in Asia Pacific region, new customer wins, new product launches and substrate substitutions,”​ added Scheible.

“Looking forward, we finished 2011 strong and we are very well-positioned heading into 2012. We have a strong pipeline of new business ramping up early in 2012 that should help offset any general on-going weakness in the macro folding carton markets”

“The new business is the combination of new innovative products such as our new Capri Sun launch, share gains in frozen drive foods, pasta and food service, spread between price and cost reduction and inflation should be positive in 2012, and we expect to see continued expansion in our margins,” ​he added.

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