Packaging Corporation of America (PKG) reported net sales of $665 million in the second quarter of 2011, up 8% from the year-earlier quarter.
Shipments for corrugated products improved 3.2% from the year-earlier quarter. Outside sales of containerboards were up 22,000 tons from the year-earlier quarter. Containerboard production increased 2.9% from the year-earlier quarter to 606,000 tons.
Exiting the quarter, the company’s containerboard inventories were down 18,000 tons from the previous quarter.
Gross margin declined to 20.6% from 21.4% in the year-ago quarter. Net income (excluding one time items) came in at $39.6 million or 39 cents per share, compared with $39.1 million or 38 cents per share in the year-earlier quarter. The result beat management’s expectation of 35 cents and the Zacks Consensus Estimate of 34 cents.
Results benefited from the strong demand of containerboard and corrugated products, as well as steady pricing, improved mix (which were partially offset by higher costs for chemicals), transportation, labor, energy and recycled fiber.
Management stated that the company performed well amid impediments such as planned outages at four mills and energy project work at the Counce and Valdosta mills.
For the third quarter of fiscal 2011, the company projects earnings of 43 cents per share, including the impact of increased cost for recycled fiber, fuels and electricity. Management also expects a rise in sales volumes and increase in mill production supported by a lesser downtime.
Packaging Corporation is the fifth largest producer of containerboards and corrugated packaging products in the United States. The company competes with International Paper Co (IP) and Rock-Tenn Co. (RKT).
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