MWV on course after record 2011

MeadWestvaco expects to achieve its three- to five-year targets of five percent-plus annual sales growth and 7-10 percent annual earnings growth, after reporting record full-year results in 2011.
 
Record full-year 2011 income from continuing operations of US$268 million was driven by strong profit growth in its packaging resources and specialty chemicals segments, while full-year 2011 sales grew six percent including continued strong emerging markets gains of 10 percent.
 
Full-year 2011 pre-tax income from the company’s business segments increased 15 percent to US$840 million led by significant profit improvements in packaging resources of 25 percent and specialty chemicals of 44 percent. Growth in global markets for food, beverage and tobacco, as well as in performance chemicals for adhesives, inks and oilfield markets drove the company’s improved full-year 2011 results.
 
MeadWestvaco chairman and chief executive officer John A. Luke, Jr., said: ‘Another year of record results in 2011 demonstrates that our market-focused strategies will deliver strong, sustainable financial returns for our shareholders. We are confident that our growth model centered on commercial excellence, innovation, emerging markets and expanded participation will extend and accelerate this outstanding progress over the next several years.
 
‘Even as our customers responded to slower economic conditions and weaker demand in the fourth quarter, the profitable growth strategies we have been implementing still had a positive impact on our results during this difficult period. We gained new brand-owner relationships and expanded existing ones in food, beverage, and beauty and personal care markets while also continuing to expand our business in key emerging markets.
 
‘We also added new capabilities and technologies to our platform with the acquisition of Polytop, a caps and closures business that will strengthen our position in food, beauty and personal care, and home and garden markets around the world. Our continued progress in each of these areas gives us great confidence that we will achieve our long-term revenue and earnings growth targets.’
 
In the fourth quarter, MeadWestvaco’s packaging resources segment, including high-quality packaging paperboard principally for global food and beverage, tobacco and commercial print markets, recorded a five percent growth in sales, and a 42 percent profit decline.
 
Profit was US$37 million in the fourth quarter of 2011 compared to US$64 million in the fourth quarter of 2010. Sales increased to US$698 million in the fourth quarter of 2011 compared to US$667 million in the fourth quarter of 2010. Sales growth was primarily due to improved paperboard pricing and better product mix across key packaging markets.
 
Total paperboard shipments were slightly lower in the fourth quarter. MeadWestvaco said the segment continued to outperform in targeted global food and beverage markets, as volumes in those markets outpaced industry trends and helped offset lower volumes in tobacco due to the timing of shipments and weaker demand in general packaging grades.
 
Profit performance in the fourth quarter of 2011 reflected the benefit of strong pricing and product mix improvement across key product lines. These benefits were more than offset by market-related downtime due to lower demand, input cost inflation for certain raw materials and freight, MeadWestvaco said, as well as incremental costs associated with the planned Covington mill outage in October 2011.
 
The consumer solutions segment, including paperboard and plastic packaging solutions for beverage, tobacco, beauty and personal care, home and garden, and healthcare markets, saw sales remain stable between the fourth quarter of 2010 and the same three-month period in 2011, with profit down 29 percent.
 
In the consumer solutions segment, profit was US$17 million in the fourth quarter of 2011 compared to US$24 million in the fourth quarter of 2010. Sales were US$437 million in the fourth quarter of 2011, which were even versus the fourth quarter of 2010.
Sales were said to be flat when compared with 2010 as improved pricing and product mix across key packaging markets and the favorable impact from the 2010 acquisition of Spray Plast were offset by overall volume declines and unfavorable foreign currency exchange.
 
Inventory management actions and global macroeconomic conditions negatively impacted overall demand in home and garden, beauty and personal care, and beverage packaging in North America and Europe. These declines were partially offset by solid volume growth in emerging beverage markets and in healthcare packaging.
Profit performance in 2011 primarily reflected volume declines as well as input cost inflation and unfavorable foreign currency exchange. These factors were partially offset by improved pricing and product mix, as well as productivity gains.
 
Looking ahead, MeadWestvaco said it continues to execute its profitable growth strategies focused on commercial excellence, innovation, emerging markets and expanded participation.
 
Near-term, the company remains cautious about weaker demand trends due to ongoing macroeconomic developments, particularly in Europe. The company also continues to experience significant inflation in certain raw materials. As a result, performance in the first quarter of 2012 is expected to be lower compared to year-ago levels. However, the company remains confident and is focused on executing its profitable growth strategies to achieve its three- to five- year targets of five percent-plus annual sales growth and 7 to 10 percent annual earnings growth.