Bemis Reports Third Quarter Results
- Published: November 15, 2013
NEENAH, WI | Bemis Co. reported third quarter 2013 diluted earnings of $0.52/share on net sales of $1.3 billion. Excluding the effect of facility consolidation costs and the gain on sale of property…adjusted diluted earnings per share would have been $0.60 for the third quarter of 2013, consistent with the third quarter of 2012. Excluding the impact of currency, net sales for the quarter decreased by less than 1% compared to the Q3 2012.
“This quarter’s performance demonstrates the success of our strategy to improve sales mix and strengthen our return metrics,” says Henry Theisen, Bemis chairman and CEO. “We improved our gross margin to the highest level since 2009. Our US packaging segment maintained its healthy 2013 operating margin in spite of lower unit sales volume and higher than expected costs related to the transition of production equipment from recently closed facilities. Excluding currency translation, our Global Packaging segment achieved a 20 percent increase in operating profit driven by improved price/mix in our Latin American operations and improved unit volumes in our European flexible packaging operations.”
Theisen continues, “Performance in our Pressure Sensitive Materials segment has stabilized at operating margin levels consistent with last year. Our adjusted guidance for 2013 reflects the negative impact of currency translation, the lack of anticipated sales growth in the second half of the year, and the higher production equipment transition costs that are expected to end during the fourth quarter.”
On July 1, 2013, Bemis acquired Foshan New Changsheng Plastics Films Co., a specialty film manufacturer located in Foshan, China. NCS is a supplier to Bemis' food packaging plant in Dongguan, China, and other specialty film product customers. The acquisition is expected to be neutral to Bemis' earnings results for 2013. Incremental net sales from NCS are expected to be approximately $60 million annually, and the acquisition of this film platform is expected to provide cost and logistics benefits to support Bemis' broader Asia-Pacific growth strategy. Bemis’s recent facility consolidation activities included the closure of nine manufacturing locations and was designed to improve efficiencies and reduce fixed costs. The remaining consolidation activities, including the start-up of transferred production and relocated equipment, are expected to be completed during the fourth quarter of 2013. Once completed, this facility consolidation program is expected to save approximately $50 million in annualized costs.
Commenting on the outlook for the Q4, Theisen says, “Our outlook for 2013 unit sales volume has been revised down modestly given the fact that we have not seen the volume uptick that we had expected in the second half of the year. In addition, profit is negatively impacted by weakness in the Brazilian currency and increased costs associated with mechanical and electrical issues encountered during the transition of production equipment from plants closed as part of the facility consolidation. We are investing in our value-added growth opportunities and executing our strategy to deliver value to our shareholders with improved performance and strong cash flow.”
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