By Kimberly Chin
Packaging Corp. of America expects to post a higher profit in the third quarter compared with a year earlier as the company sees continued strong consumer demand for its packaging and paper products.
The packaging-manufacturing company attributed the higher revenue in its second quarter to price increases across its products as well as higher volumes. The company will continue to implement its previously-announced price increases in its packaging and paper segments, it said.
The company projects third-quarter earnings around $2.37 a share. In last year’s third quarter, it reported earnings of $1.46 a share.
Regarding its packaging business:
“Demand in our Packaging segment remained very strong. Our mills and plants continued to do an outstanding job of meeting our customers’ needs while managing through certain material and chemical availability issues, a tight labor market, various freight and logistics challenges, as well as the planned maintenance outages at four of our mills during the second quarter,” Chairman and Chief Executive Mark Kowlzan said.
“We were also able to build some much-needed inventory; however, our weeks-of-inventory supply was at a new low for this time of year ahead of an expected very busy second half,” he added.
“We expect continued strong demand for containerboard and corrugated products with one additional day for box shipments,” he said.
Regarding its paper segment:
“Paper segment volume should be relatively flat, primarily due to the scheduled maintenance outage at the Jackson Mill,” Mr. Kowlzan said.
“Our annual outage costs will be lower with one outage in the third quarter versus four mill outages in the second quarter,” Mr. Kowlzan said.
“Inflation associated with most of our operating costs as well as freight and logistics expenses is expected to continue,” he said.
“Energy costs will also be impacted due to higher seasonal usage, and wood costs in our southern mills will be higher due to wet weather, low inventory and high demand,” Mr. Kowlzan warned.
Write to Kimberly Chin at email@example.com