2012 performance not what we expected – Sonoco CEO
The firm announced it would be building on its composite can, rigid plastics and flexible packaging segments next year.
Chairman and chief executive officer Harris E. DeLoach said: "Obviously, our performance in 2012 is not what we expected when we began the year.
“That said, we have weathered a difficult economic and operating environment and made changes we believe will improve our performance in the future."
Sonoco experienced longer than expected downtime due to unscheduled maintenance at three North American uncoated recycled paperboard mills earlier this year.
2013 plans
The company is establishing a new composite can production facility in Johor Bahru, Malaysia, to meet the growing appetite for premium stacked chips throughout Asia, in the Rigid Paper and Closures segment.
Stacked chip capacity is likely to be added in 2013 in Brazil and a review of growth opportunities in Eastern Europe is underway.
In Rigid Plastics the company plans to invest $7m in 2013 to add a third multilayer, barrier bottle production line for nutraceutical beverages at its Columbus, Ohio, production facility.
"At this point in the quarter, we have not seen any significant changes in business conditions that would cause us to revise guidance, but customer order patterns remain somewhat erratic and overall economic activity is uncertain," said vice president and chief financial officer Barry L. Saunders.
"Sonoco expects to recognize about $12m in additional tax expense in the fourth quarter of 2012, associated with the repatriation of cash held outside the United States. This one-time charge is excluded from the Company's base earnings projections.”
In Flexible Packaging investment is being made to add a new rotogravure press to the Morristown, Tennessee facility in 2013.
Continued investment
President, chief operating officer and CEO-elect M. Jack Sanders added: "In addition, we plan to continue investing in our targeted growth businesses while optimizing operations in our more mature businesses.
“For 2013 through 2015, our remaining available cash is expected to total approximately $260m and be available for targeted acquisitions and/or share repurchases."
Sanders concluded: "2013 is projected to be a better year, but again we don't expect any real help from the global economy.
“To fully meet our financial targets we may need to make some minor course corrections along the way, including considering how we are organized so we can better satisfy the customer.”
The firm also announced personnel changes with John Colyer becoming senior vice president, Global Industrial Products and Protective Solutions, Rob Tiede to be senior vice president, Global Consumer Packaging and Services, Rodger Fuller, group vice president, Paper/Tubes and Cores, North America and Howard Coker as group vice president, Global Rigid Paper and Plastics from 1 January 2013.
