Pactiv Corp. reported a 14 percent drop in third-quarter earnings on prior-year earnings from discontinued operations as the maker of Hefty garbage bags and other packaging products reported higher volume but lower margins on a jump in raw-material costs.
The company in August agreed to be acquired by New Zealand’s Rank Group Ltd. in a deal valued at about $4.4 billion. Pactiv will become part of Rank’s Reynolds Group Holdings subsidiary, which makes food and beverage packaging and storage products, including Reynolds aluminum foil.
Pactiv in recent quarters have been doing a balancing act between reporting increased volume but higher raw-material costs. Volume rose 6 percent in the latest quarter from a year earlier minus acquisitions and divestitures. Hefty had 9 percent growth, but lower prices.
Earnings fell to $81 million, or 60 cents a share, compared with $94 million, or 70 cents a share a year earlier. Earnings from continuing operations were flat at 59 cents.
Revenue increased 13 percent to $944 million.
Analysts’ mean estimates, according to a survey by Thomson Reuters, were for earnings of 59 cents on revenue of $939 million.
Operating margin fell to 12.3 percent from 17.6 percent. But that was offset by income-tax costs slumping 71 percent on a favorable tax rule that added 16 cents a share to the bottom line.
Pactiv’s shares closed Friday at $33.17
