Packaging industry not spared by tough economy

The economy has not been exactly easy on American industry as of late. And, businesses in the package-printing industry are no exception to those dealing with the difficult times. With consumers and business partners cutting back on spending, it has been a rough few months. Some companies are still doing well, others are struggling, and some are closing their doors. packagePRINTING rounded up headlines reporting the impact that the economy is having on the package-printing industry—what companies and industry segments are being hit hard, which ones are still thriving, and where some opportunities may lie. Some strong results

• 3 Sigma Corp. has reported strong sales and profit growth in 2008. President Larry Slaven, commented: “During the year, the company made a number of process improvements and introduced new products which customers found very attractive. We grew in 2008 both by expanding business at existing customers and by developing new client relationships, all in a generally flat market.”

• In December, Aquaflex reported that 2008 sales revenue increased 73 percent compared to 2007. The number of presses sold internationally in 2008 increased four-fold.

• GMG increased its sales by more than 4 percent compared to 2007. The greatest increases were recorded in Benelux, Eastern Europe, Southeast Asia, and The Middle East.

• Flexotecnica has completed a number of installations in the U.S. in 2008 and has a backlog of orders for the beginning of 2009. As a result, its North American service infrastructure is being reinforced in 2009 to further support this growth.

• Cascades Inc. made its first investment of $5 million at its Norampac plant in Kingsey Falls, to streamline this linerboard facility. In Quebec, Cascades invested more than $50 million last year and about $175 million was allocated for fixed capital costs for its entire organization worldwide. In 2009, depending on the economy and the company’s financial performance, Cascades plans to invest about $100 million in capital costs.

• RockTenn saw net sales of $703.1 million for the first quarter of fiscal 2009, which increased $106.8 million (18 percent) over the first quarter of 2008 due to increased sales in corrugated packaging related to the Southern Container acquisition.

Making tough choices

• Color-Box will eliminate 74 jobs at its cardboard-packaging plant, based on filings with the Indiana Department of Workforce Development, according to the Indianapolis Star.

• The U.S. Forest Products iiStock Index of the 27 largest forest company says stocks fell 41 percent to 50.59 from the same period a year ago, Forestweb reports. Among the most active stocks is Smurfit-Stone Container Corp. (SSCC) at $0.04, almost a 100-percent drop from last year. Temple-Inland fell 74 percent to $4.46, and International Paper (IP) saw its stock price fall to $10.73, or a 66 percent year-over-year change. In addition, IP posted a loss of $452 million in the last quarter of 2008.

• SSCC’s U.S. and Canadian subsidiaries filed voluntary petitions for reorganization under Chapter 11 in U.S. Bankruptcy Court in Wilmington, Del.

• AP reported that Stora Enso’s fourth-quarter earnings will be hit hard by production cuts, and the company will continue to cut jobs and output in 2009. As a result, its operating profit from September through December will be negatively impacted and it will take a $890 million impairment charge in the fourth quarter.

• MWV plans to reduce corporate and business unit overhead expenses, generating $100 million in savings in 2009, and to close or restructure 12 to 14 manufacturing locations, creating a savings of $25 million. As a result, about 2,000 positions (10 percent of its global workforce) will be cut by year end, with about 800 of the reductions completed by the end of the first quarter.

• Multi-Color Corporation announced plans to consolidate its heat transfer label (HTL) manufacturing facility located in Framingham, Mass. into its other existing facilities.

• On Dec. 22, 2008, GIDUE S.p.A. filed for voluntary liquidation. Last year was its top-record year in sales, which were expected to grow 10 to 20 percent in 2009. But, the recession caused a downturn in sales, which are not enough to cover fixed costs. Nuova Castagnoli S.r.l., a former supplier for GIDUE, will take care of servicing presses, new sales, and existing customers. • Packaging Corp. of America reported that its full-year 2008 net income was $136 million compared to 2007’s record earnings of $170 million. Net sales for 2008 and 2007 were $2.36 billion and $2.32 billion, respectively.

• Sealed Air Corp. reported diluted net earnings per common share of $0.99 for the full year 2008. This compares with diluted net earnings per common share of $1.89 for the full year 2007.

Industry trends see mixed reports

• The Associated Press has reported that beer sales are down. According to AP, London-based SABMiller PLC—which brews Grolsch, Miller Genuine Draft, and Peroni Nastro Azzurro lagers—experienced a drop in beer shipments, and Carlsberg A/S, the Copenhagen-based maker of Carslberg beer, will cut 274 jobs to save on costs. And, recent figures show the market is continuing its downward trend, says AP.

• According to a Minneapolis Star Tribune article, “Wine, the ‘petty luxury,’ sparkles in a sour economy,” National unit sales of wine purchased in grocery, drug, and discount stores rose 7.9 percent in the 2008 fiscal year, ended Sept. 30. However, consumers are looking for sales and less expensive varieties.

• U.S. demand for high visibility packaging is expected to increase 4 percent annually to $8.5 billion by 2012, representing 34 billion units and creating a market for 1.1 billion pounds of plastic resins. Best opportunities are expected for carded clamshells and carded blister packs, according to Reportlinker.com’s “US High Visibility Packaging Market” study.

• Plastics Technology Magazine says that although output of injection-molded packaging decreased by 6 percent in 2008, and the decline accelerated as the year ended, it predicts that the market demand will stabilize in the first half of 2009 followed by a moderate increase in the second half. Overall production of molded packaging will rebound 3 percent in 2009, according to the magazine. (As reported in a Jan. 24 Pack Expo newsletter.) pP