MINNEAPOLIS--July 22, 2004-- Bemis Company, Inc. today reported record quarterly diluted earnings of $0.42 per share for the second quarter ended June 30, 2004, a 16.7 percent increase compared to the prior year's earnings of $0.36 per share.
Second quarter net sales increased 6.4 percent to a record $713 million from $670 million in the prior year. Currency effects accounted for 1.8 percent of the increase. The impact from acquisitions was a 1.0 percent increase in sales.
"This quarter's record performance reflects the strength of our business strategy and effective cost management," said Jeff Curler, Bemis Company President and Chief Executive Officer. "We are enjoying strong unit volume growth in certain markets where packaging innovation offers increased market share to our customers as well as a competitive advantage to Bemis. This unit volume growth is substantially offset by decreases in unit volume for markets that rely less on packaging innovation and are more sensitive to changes in raw material prices. The result is improved sales mix and, combined with our ability to capture and maintain the cost savings associated with last year's restructuring activities, better operating profit margins."
Flexible packaging, representing about 79 percent of total company net sales, reported net sales of $564 million in the second quarter, an increase of 6.0 percent compared to the same quarter in 2003. Currency effects accounted for about 1.5 percent of sales growth. An investment in a Mexican joint venture in May 2004 contributed less than one percent to sales growth during the quarter. Operating profit for the second quarter was $78.6 million, up 13.3 percent from the second quarter of 2003. As a percentage of net sales, operating profit increased to 13.9 percent from 13.0 percent a year ago.
Commenting on the flexible packaging segment, Curler noted, "Sales mix upgrades are delivering improved performance in this business segment. Innovative new packaging for markets such as confectionery and snack foods, frozen foods and beverage multipacks have replaced declining unit volumes in markets for bakery and industrial products. Recent capital investments have had a positive impact on operating margins by improving production efficiency and adding capacity for our growth markets. New multilayer film lines starting up this year in our European plants are expected to provide additional opportunities for sales and operating margin growth beginning in the latter half of 2004."
Pressure Sensitive Materials
Second quarter net sales of the pressure sensitive materials business segment were $149 million, a 7.8 percent increase from the second quarter of 2003. Currency effects accounted for about 2.8 percent of this increase while a November 2003 graphics products acquisition accounted for about 2.7 percent. Operating profit of $9.3 million or 6.3 percent of net sales for the quarter improved from the second quarter of 2003 when operating profit was $6.0 million or 4.3 percent of net sales.
"Having substantially completed the restructuring activities for this business segment, we are focusing our efforts on pressure sensitive innovation," Curler said. "Our new high performance label products are receiving wide acceptance from our North American customers. Our European pressure sensitive business, which emphasizes the higher margin graphic products, is performing well. Successful cost management remains important to these improved operating profit margins in 2004."
Other Costs (Income), Net
Other costs and income includes a $2.3 million increase in equity income from the Company's Brazilian joint venture. This increase reflects improved profitability of the joint venture operations and an increase in equity ownership from 33 percent to 45 percent in January 2004.
Total debt was $568 million, compared to the year-end 2003 balance of $590 million. Debt to total capitalization was 29.4 percent at June 30, 2004, compared to 31.4 percent at December 31, 2003.
2004 Earnings Outlook
Bemis expects third quarter 2004 earnings per share to be comparable to the second quarter 2004 level. For the full year 2004, management continues to expect to achieve diluted earnings in the range of $1.62 to $1.70 per share.
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