Graphic Packaging profit falls as input costs climb
Graphic Packaging reported nearly unchanged third-quarter sales but a steep decline in profit as commodity inputs and operating expenses rose. Net income fell to 22 million dollars from 142 million dollars a year earlier. The packaging company reduced net debt from the preceding quarter and cut capital expenditure, while maintaining its annual adjusted cash flow forecast.
Economics & Markets··Evening
Sales stay flat as profit declines
Graphic Packaging, a consumer packaging manufacturer, reported third-quarter sales of approximately 2.19 billion dollars. Adjusted earnings per share fell to 0.23 dollars from 0.58 dollars a year earlier. The company announced its quarterly results on November 3, reporting lower earnings despite sales remaining close to their year-earlier level.[1], [2]
Net sales were 2,192 million dollars against 2,190 million dollars. Volume and product mix added 19 million dollars to sales, while pricing reduced them by 15 million dollars and currency and other factors by 2 million dollars. Net income fell from 142 million dollars to 22 million dollars. Diluted earnings per share declined from 0.48 dollars to 0.07 dollars during the same period.[1]
Input and operating inflation weigh on margins
Adjusted earnings before interest, taxes, depreciation and amortization declined from 383 million dollars to 289 million dollars. Graphic Packaging attributed 83 million dollars of pressure on that measure to commodity input and operating inflation, with another 15 million dollars from unfavorable pricing. Its adjusted margin fell from 17.5 per cent to 13.2 per cent year on year, although it improved from the preceding quarter for a second consecutive period.[1]
Adjusted net income was 67 million dollars, down from 172 million dollars. Nonrecurring and special items together with amortization of purchased intangible assets affected net income by 45 million dollars, compared with 30 million dollars a year earlier. The adjusted net income calculation excludes those items. Quarterly capital expenditure fell from 267 million dollars to 64 million dollars, while regular dividends returned approximately 98 million dollars during the first nine months.[1]
Net debt falls from the previous quarter
Total debt ended the quarter at 5,520 million dollars and net debt at 5,183 million dollars. Net debt declined 300 million dollars from the preceding quarter, while net leverage rose from 3.8 times at year-end to 4.8 times. First-nine-month operating cash flow was 295 million dollars; adjusted cash flow reached 314 million dollars, an annual improvement of 646 million dollars. Management maintained annual adjusted cash flow guidance of 600–700 million dollars and expects capital spending below 450 million dollars.[1]
