Sealed Air profits slump
The company said the costs amounted to $20.7m after the acquisition of Diversey and $17.5m for food packaging, $5.3m of which was due to a factory closure.
The closure relates to the Cryovac division factory in Rochester, US which produced food packaging and will close this month.
The packaging giant also admitted year net sales were unlikely to meet initial guidance of around $8.3bn due to weak European market conditions.
However, it reported Q1 sales increased 70% to $1.92bn, driven by a 66% increase related to the purchase of Diversey.
Segment analysis
In the food packaging segment, sales increased 3% largely from prior North and Latin American pricing actions.
Volumes increased 6% in Australia and New Zealand and 3% in EMEA but decreased in North American by 2% due to lower customer production rates.
Food packaging operating profit decreased 4% to $60m, due to $5m in charges relating to the Rochester plant closing.
Volume in the North America protective packaging segment increased 5% due to ongoing gradual economic recovery but Europe, the Middle East and Africa (EMEA) volumes declined 3% because of economic weakness in Southern Europe.
Market uncertainty
In a conference call, William V. Hickey, president and chief executive of Sealed Air, said: “Although still early and ahead of plan, our food and beverage team has already signed over 10 customers that include large multinationals and local regional food processors in four regions of the world.
"While we are encouraged by our progress to date and are tracking close to plan in the first quarter, we are cautious on the macroeconomic outlook for the balance of the year…”
For Diversey, sales decreased 2% to $751m in the quarter, which would have compared to $764m in 2011, and operating profit was $1m, which compares with $13m in 2011.
The company said North American volumes were impacted by the closure of a customer involved in cleaning and sanitation for manufacturers of lean, finely textured beef.
Hickey added the firm had a separate “bankruptcy just under $1m, about $800,000” from a customer due to lack of demand for finely textured beef.
In an earlier statement, Hickey added: “We remain on track toward achieving our 2012 adjusted EBITDA and year-end net debt targets despite the uncertainty of the European economy and the uneven recovery in the US.
"We anticipate that our net sales will be at the lower end of our initial guidance range of $8.2bn to $8.3bn due to European economic conditions.”
