Cost cutting shores up Sealed Air, claims CEO
The company, which produces the Cryovac range of packaging, said its net income for the last three months of 2008 was $47.3m despite positive results from its food services and food packaging businesses; it earned $79.7m, in the same period a year earlier.
William Hickey, the company’s chief executive, maintains that the cost reduction procedures the company put in place in early 2008 prepared it for the challenging fourth-quarter environment and the tough economic climate it expects during 2009:
“These actions included our pricing initiatives, which we held through the fourth quarter and allowed us to recover approximately 95 per cent of our incremental resin costs for the year, but they also included our cost savings programmes and our expanded focus on operational efficiency.”
He added that planning for the year ahead is based on expectations of a very weak first half and a slow, but limited recovery later in 2009.
Sealed Air's net sales for the full year 2008 increased four per cent to $4.84bn, compared with $4.65bn in 2007; however, the company reported a 49 per cent decline in full-year net earnings.
The company said its protective packaging business dropped 14 per cent in the final three months of 2008, due to lower volumes in North America and Europe.
Hickey said that the food packaging side of the business finished the year with positive revenue growth and excluding a $31m unfavourable effect of foreign currency translation, this segment’s net sales would have increased three per cent.
He added that the food solutions segment showed strength through the fourth quarter across all products in the US, in ‘case-ready’ in Australia and in the pizza segment in Europe.
According to Hickey, the company anticipates moderate growth in its ready meals, case-ready, and display tray formats in the year ahead but expects flat to slight decline in equipment placements as customers conserve cash in the near term.
