Hartsville, South Carolina, USA 04 December 2009 -- (BUSINESS WIRE) -- Sonoco (NYSE: SON) executives Harris E. DeLoach, Jr., chairman, president, and chief executive officer,
Charles J. Hupfer, senior vice president and chief financial officer, today addressed the investment community in New York to review the company’s strategic initiatives, announce a raising of the company’s fourth quarter and full-year 2009 base earnings guidance, and establish a financial outlook for 2010.
Fourth Quarter and Full-Year 2009 Base Earnings Guidance Raised
Sonoco expects base earnings for the fourth quarter and full year of 2009 to be USD 0.49 to USD 0.52 per diluted share and USD 1.69 to USD 1.72 per diluted share, respectively. Sonoco had previously projected base earnings for the fourth quarter and full year of 2009 to be USD 0.42 to USD 0.47 per diluted share and USD 1.62 to USD 1.67 per diluted share, respectively. In 2008, fourth quarter and full-year base earnings per diluted share were USD 0.49 and USD 2.24, respectively.
Base earnings, a non-GAAP financial measure, excludes restructuring charges, asset impairment charges, and certain other nonrecurring or infrequent and unusual items, as applicable. Additional information about base earnings and base earnings per share, including why the company uses such measures, can be found in the company’s 2008 annual report and its quarterly earnings releases, available on its Web site.
“When we established our initial fourth quarter guidance on October 22, we assumed that the September operating run rates for our consumer and industrial businesses would hold steady into the fourth quarter while adjusted for scheduled holiday downtime by our customers,” said Hupfer. “Frankly, we had a solid month of October and while we don’t have the numbers yet, the month of November appears to be holding up reasonably well in most of our businesses.”
2010 Base Earnings Guidance Established
Sonoco expects 2010 base earnings per share to be in the range of USD 1.95 to USD 2.05. Hupfer said that the company’s 2010 guidance assumes lower estimated year-over-year pension expense of approximately 9 cents per share; savings from restructuring actions taken in 2009 of approximately 5 cents per share; offset by higher taxes of 2 cents per share. The remaining improvement in earnings is associated with an estimated 7.5% to 13.5% increase in profitability from operations.
Strategic Initiatives Highlighted
DeLoach said that Sonoco is “Lean, fit, and ready to grow” following one of the worst recessions that the company has experienced in its 111-year history. “Because of the recession, we focused on taking proactive actions to lean our business to meet the new realities of our served markets and used our strong cash flow to improve the financial fitness of the company. We enter 2010 ready to grow with the financial capability, proven strategy, and sales funnels that are full of expansion opportunities.”
New Product Sales to Reach Record in 2009
Through the first three quarters of 2009, Sonoco generated USD 124 million in sales from new products, compared with USD 136 million for all of 2008. DeLoach said he expects the company to set a record in new product sales for 2009, while generating greater than USD 100 million in new product sales for four consecutive years. DeLoach showed a number of Sonoco’s new packaging innovations for 2009 and new product launches to begin in 2010 in rigid paper and plastic containers, metal ends and closures, flexible packaging and point-of-purchase displays, protective packaging, and pallets.
Sonoco Awarded New Pack Center Business in United States, Mexico and Poland
DeLoach said that in 2010, Sonoco would be expanding its Global Packaging Services business in the United States, Mexico, and Poland.
In the third quarter of 2009, Sonoco took over operation of a distribution center for General Mills in Pennsylvania, and by the second quarter of 2010 the company will be opening a new 1.5 million-square-foot distribution center in Walton County, Georgia. “At this new dedicated center, we will be handling a number of services for General Mills’ family of food products for shipments throughout the Southeast, and for the first time we’ll be performing food filling services,” he said.
DeLoach also announced that Sonoco has entered into an agreement to provide packaging services for the LEGO Group at a new pack center that is scheduled to open in early 2010 in Monterrey, Mexico. Sonoco currently provides packaging services for LEGO in Poland, for various retail products, new product launches, and the company’s consumer on-line brick ordering service. In addition, Sonoco will be handling pack center work in Poland for Henkel Adhesive consumer products.
“We’ve built a business model that’s focused on reliably meeting the needs of our customers. Our services are cost effective, adaptable to various geographies around the world and can handle expedited turnaround times to startup,” he said.
DeLoach concluded his comments by saying, “I’m extremely proud of what our employees achieved in 2009 as we will clearly have better than expected results during one of the worst recessions in our history. Our cost structure remains in good shape and our balance sheet is as strong as it has ever been. Our operations are performing well and the strategy of growing our consumer focused businesses is likely to result in record operating profits in the Consumer Packaging segment in 2009, while providing strong growth prospects for the company going forward.”
“Coming out of the last recession, between 2003 and 2007, Sonoco grew from about USD 2.7 billion in sales to more than USD 4 billion, with base earnings growing annually at about a double-digit average rate,” DeLoach said. “It will not be easy reaching our goals of becoming a USD 6 billion company by 2014 with earnings growing at double digits annually. But we’ve shown our ability to grow before, and we believe we can do it again.”
A replay of the event will be available through midnight Eastern Time on 18 December 2009. The toll-free replay number in the United States is 877-660-6853 and the international replay number is +201-612-7415. The replay access code is account 286, ID 335382. The event also will be archived for 90 days on Sonoco’s Investor Relations Web site under conference calls.
Founded in 1899, Sonoco is a USD 4.1 billion global manufacturer of industrial and consumer products and provider of packaging services, with more than 300 operations in 35 countries, serving customers in some 85 nations. The company is a proud member of the Dow Jones Sustainability World Index. For more information on the company, visit http://www.sonoco.com.