Packaging Corp Reports Q3 Results Short of Expectations

October 18 00:00 2011

New York, October 18 ( – Higher costs and weaker sales mix and prices brought down Lake Forest-based Packaging Corporation of America’s (NYSE: PKG) Q3 earnings by 55 percent although volumes improved. Last year tax credits helped boost the bottom line. However, in the current quarter, the company forecasts earnings of 37 cents a share whereas analysts predict 36 cents a share.

Outside sales of containerboard were flat on the year but shipments of corrugated products were up 6.6 percent. But the main worry has been the continued cost inflation. Raw material costs kept climbing in the prior quarter too, as well as mill outages, but these factors were mellowed with higher prices and a stronger mix of containerboard and corrugated products.

There has been an improvement in demand for a few years and the recovery has been reflected in Packaging Corp.’s prices and volume. A profit of $41.8 million, or 42 cents a share, was posted by the company against a profit of $93.3 million, or 91 cents a share, a year earlier. Earnings have fallen to 43 cents from 60 cents a share, excluding items earnings.

Net sales have increased 4.4 percent to $670.8 million against analysts’ expectations of $664 million. Gross margin fell to 20.5 percent from 25.9 percent. Shares went up 1.4 percent at $25 after hours.