Richmond, Virginia, USA, 15 January 2009 -— MeadWestvaco Corporation (NYSE: MWV) announced today a series of broad actions that will address the current economic challenges, and also enable the company to capture the highest-value opportunities in targeted global packaging end markets. These actions include further reducing corporate and business unit overhead expenses, generating USD 100 million in cost savings in 2009, and closing or restructuring 12-14 manufacturing locations, creating a savings of USD 25 million, for a total of USD 125 million in pre-tax savings during the year. This will result in the elimination of approximately 2000 positions, or 10% of MWV’s global workforce, by year end, with approximately 800 of the reductions expected to be completed by the end of the first quarter.
In taking these actions, the company is accelerating a longer-term strategic cost management plan begun last year to reduce its overhead cost structure, optimize its manufacturing footprint, and realize sourcing savings throughout its supply chain. The combined effort, including the accelerated actions announced today, is expected to result in run-rate pre-tax savings of USD 250-300 million by mid-2010, in addition to ongoing productivity initiatives. The cost management efforts, which build on the company’s recent commercial alignment improvements, will enable the company to address current economic challenges and generate long-term profitability.
“We have been taking aggressive steps over the past several months to help ensure we perform in today’s uncertain environment, and are poised to take advantage of the stronger, more stable periods that are sure to come,” said John A. Luke, Jr., chairman and CEO. “Today’s actions, combined with our strategic focus on the most profitable opportunities in our packaging end markets, will help us further strengthen our financial position and deliver maximum value to shareholders.”
MWV will generate overhead savings through corporate and business staff reductions worldwide, lower discretionary spending, and a decrease in nonmanufacturing related expenses. In addition, the company will not provide 2009 pay increases for salaried employees. The manufacturing-related reductions will include savings from facility restructurings and closures, including the previously announced closure of packaging converting operations in Grover, North Carolina; and in Drunen and Uden, The Netherlands.
The company also has implemented salaried workforce reductions at its Sidney, New York, Consumer & Office Products facility. In taking these actions, MWV expects to incur principally noncash pre-tax restructuring and other charges of approximately USD 200-225 million.
The company is scheduled to announce its fourth quarter and full year 2008 earnings performance on 28 January. Additional details on MWV’s cost management and business performance initiatives will be shared at that time.
MeadWestvaco Corporation (NYSE: MWV), provides packaging solutions to many of the world’s mostadmired brands in the healthcare, personal and beauty care, food, beverage, media and entertainment, and home and garden industries. The company's businesses also include Consumer & Office Products, Specialty Chemicals, and the Community Development and Land Management Group, which sustainably manages the company’s land holdings to support its operations, and to provide for conservation, recreation, and development opportunities. With 22,000 employees worldwide, MWV operates in 30 countries and serves customers in more than 100 nations. MWV manages all of its forestlands in accordance with internationally recognized forest certification standards, and has been named to the Dow Jones Sustainability World Index for the fifth consecutive year.
For more information, visit www.mwv.com.