Packaging Corp. 1Q profit soars 95%

By Dow Jones Newswires
Posted Monday at 4:37 p.m.

Packaging Corp. of America’s first-quarter profit soared 95 percent on higher containerboard and corrugated product pricing and volume, offsetting weather-related impacts and higher costs for transportation, chemicals and other expenses.

But the Lake Forest-based maker of containerboard and corrugated products also issued a weak second-quarter profit. It sees earnings of 35 cents a share for the current quarter, below the 45 cents projected by analysts surveyed by Thomson Reuters.

Packaging Corp. said the quarter would be affected by higher production losses as the company completes the bulk of its annual maintenance and major capital project work during the quarter. The higher production losses will also result in higher outage-related costs, while costs for chemicals, transportation and energy are also expected to rise.

The company operates four paper mills and 67 corrugated-product plants in 26 states. Packaging Corp. first saw demand pick up in the second quarter of 2009, so it has faced tougher year-over-year comparisons in the past several quarters. In a sign of strength, the company in February raised its quarterly dividend by a third and bolstered its share repurchase program by $100 million.

Packaging Corp. reported earnings of $37.4 million, or 37 cents a share, up from $19.2 million, or 19 cents a share, a year earlier. Excluding a prior-year alternative fuel tax credits and asset disposal charges during both periods, earnings rose to 39 cents a share from 12 cents. In January, the company forecast a profit of 42 cents, below analysts’ then estimates.

Revenue grew 14 percent to $629.5 million, above the $619 million projected by Wall Street.

Gross margin climbed to 21.1 percent from 15.8 percent.

Outside sales of containerboard increased 1 percent, with corrugated product shipments up 3.1%. Containerboard production was 602,000 tons, up 5.8 percent from a year ago.

Shares closed down 2.1 percent to $27.57 on Monday amid a broad market downturn. The stock was inactive after hours.

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