Mead Reports First Quarter Results, A Loss of $47 Million
Press release from the issuing company
DAYTON, Ohio, April 18 -- The Mead Corporation (NYSE: MEA) today announced a net operating loss of $36.6 million or 37 cents per share in the first quarter of 2001 versus net operating income of $23.2 million or 22 cents per share in the same period a year ago. Mead reported a net loss of $47.0 million or 47 cents per share in the first quarter of 2001 versus net income of $20.8 million or 20 cents per share in the first quarter of 2000.
The net loss included 10 cents per share for the cumulative effect of an accounting change related to Statement of Financial Accounting Standards No. 133. Net sales for the first quarter of 2001 were $944.5 million compared to $953.6 million in 2000.
"Our first quarter is seasonally weak, but even so it was disappointing. Sales and earnings were affected by continued weak market conditions, which led to a decline in prices for coated paper and corrugating medium from the prior year quarter," said Jerry Tatar, Mead chairman, president and chief executive officer. "Other external factors affecting us included higher energy-related costs and the impact of foreign currency exchange rates. In addition, we experienced significant productivity issues at our Ohio mill."
Tatar added, "We are meeting these challenges head-on by intensifying our efforts to improve productivity and customer satisfaction, and we are taking prudent measures in capital spending, working capital management, purchasing and cost controls."
The Paper segment had an operating loss of $6.3 million in the first quarter of 2001 compared to earnings of $48.5 million in the first quarter of 2000. Sales were $476.3 million versus $468.6 million in the same period a year ago. The segment's loss was primarily due to lower prices for coated paper, which resulted from pricing pressure brought on by rising imports.
Paper segment results in the first quarter of 2001 included a negative impact of $15 million pretax due to operating issues at Mead's Ohio mill. The mill experienced lower productivity related to the conversion to alkaline papermaking chemistry on two of the mill's paper machines.
Mead expects energy-related costs to continue to affect earnings across
the company's businesses. In the first quarter of 2001, these costs increased by approximately $20 million compared to the first quarter of 2000 on a pretax basis. The impact of higher energy-related costs is expected to continue in the second quarter of 2001.
Mead's more cyclical businesses -- containerboard and coated paper -- are expected to have lower prices and sales volume versus a year ago as a result of a weaker economy. In the second quarter of 2001, Mead expects to take production downtime of approximately 25,000 tons for corrugating medium and approximately 5,000 tons for coated paper.
Mead anticipates unfavorable currency exchange rates will continue to
impact the results of its international worldwide packaging systems business in the second quarter of 2001.
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