Dow Jones Newswires | Packaging Corp. of America’s fourth-quarter profit declined 25% due to lower product prices and higher recycled fiber and pulpwood costs, which offset higher revenue.

The paper-products company projected second-quarter earnings of about 30 cents a share, below Wall Street’s target of 33 cents, according to a poll by Thomson Reuters. Lake Forest-based Packaging Corp. attributed the view to higher pricing, although it said most of the increases wouldn’t be realized until the third quarter. Meanwhile, three mills are expected to be down for maintenance outages during the quarter, which will reduce production and increase costs.

Shares fell 2.4% to $24.10 in after-hours trading amid the weak view.

The company, which operates four paper mills and 68 corrugated-product
plants in 26 states, has noted improved demand and lower costs have
helped offset, in part, the impact of lower containerboard prices over
the past year. Meanwhile, the company has less exposure to price hikes
for waste paper than competitors as it uses fewer of those products to
produce containerboards.

Packaging Corp. posted a profit of $19.2 million, or 19 cents a share,
down from $25.7 million, or 25 cents a share, a year earlier. Excluding
an alternative fuel-mix tax credit and a charge related to asset
disposals and the closure of a sawmill, the company earned 12 cents in
the latest quarter. In January, the company projected earnings of about
12 cents a share, below analysts’ expectations at the time.

Revenue climbed 7.5% to $550.7 million, above Wall Street’s view of $539
million.

Gross margin declined to 15.8% from 21.5%.

Outside sales of containerboard surged 48%, with corrugated product
shipments up 14%.

On Monday, Chief Executive Paul T. Stecko said containerboard and
corrugated products demand continued to strengthen and were up
significantly over last year.