Sonoco Products Co. (SON) has announced plans to close the Carrickmacross facility. Changing market conditions, a difficult financial state and stiff competition forced the company to make this decision.
The Carrickmacross plant, which manufactures thermoformed packages for Ireland and other parts of Europe, will close down on Nov 1, 2013. Sonoco’s decision is based on volume loss and weak profits, experienced by the plant over the past several years, which will continue in 2013 as well.
Sonoco will consult with the workforce of the plant regarding the shut down of operations to find ways to avoid repercussions. The closure is expected to put 49 jobs at risk. But Sonoco is committed to find alternatives to redeploy the employees at other operations. The company also has options of retirement and voluntary redundancy under conisderation.
The company is chalking out plans for a smooth closure with minimal disruption to the plant’s quality and service. Sonoco does not expect the job reduction to occur until Oct 2013. Carrickmacross operations are expected to continue at their normal pace up to that time and gradually slowdown thereafter.
Sonoco’s first quarter results were disappointing as revenues fell 3% year over year to $1.179 billion and adjusted earnings per share decreased 4% to 50 cents primarily due to lower volume and selling prices in the Consumer Packaging and Paper and Industrial Converted Products segments, partially offset by volume improvement and sales price gains in the Display and Packaging and Protective Solutions segments.
Sonoco Products, which is a global manufacturer of consumer and industrial packaging products along with Bemis Company, Inc (BMS), AptarGroup, Inc. (ATR) and Berry Plastics Group, Inc. (BERY), expects to increase sales to $5.5 billion to $6 billion over the next three to four years. However, slow recovery in the U.S. and the ongoing European weakness are headwinds to the company.
South Carolina-based Sonoco is a global provider of a variety of consumer packaging, industrial products, protective packaging and packaging supply chain services. Sonoco is also the largest producer of paper-based tubes and cores in North America.
Sonoco Products currently retains a short-term Zacks Rank #3 (Hold).
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