Chesapeake, the Virginia-based supplier of speciality paperboard and plastic packaging, slipped into the red in the first quarter of 2002 with net losses of $0.3 million (€0.34m) compared to profits of $0.3 million a year earlier.
The decline was due mainly to a change in the group's accounting procedures, which meant that figures exclude the amortisation of goodwill. Excluding this change, first quarter profits would have been a rather more healthy $3.0 million.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) were $22.9 million for the first quarter of 2002 compared to $25.4 million for the first quarter of 2001, and the company said the decline was due principally to reduced sales volumes in premium branded, luxury and technology packaging markets, reduced operating margins in the food and household markets and increased interest expense.
Net income of $ 131.2 million for the first quarter included a gain on the sale of discontinued operations of $130.9 million, the company said.
Net sales for the first quarter of 2002 were down 8 per cent compared to net sales for the first quarter of 2001. On a local currency basis, which reflects 2002 results using 2001 foreign currency translation rates, net sales decreased 4 per cent. The decrease in local currency sales was due primarily to reduced sales volumes in the paperboard packaging segment.
Net sales for the paperboard packaging segment dropped 10 per cent to $155.0 million in the first quarter of 2002 (or 7 per cent on a local currency basis). The decrease in net sales was due primarily to reductions in sales volumes in the premium branded, luxury and technology packaging markets.
However, although sales at the plastic packaging unit were down by 3 per cent in the quarter to $25.2 million, on a local currency basis they were ahead 12 per cent, helped by strong sales in the specialty chemicals market and the African beverage market.
The company said it expected sales for the year as a whole to be around $780 million to $820 million, while profits should also increase as a result of improved operating results. Further restructuring efforts during the year - such as the closure of a food and household plant in the UK - will lead to increased charges but should bear fruit in the long term, the company said.