DOW JONES NEWSWIRES
Pactiv Corp.'s (PTV) fourth-quarter net income increased 17% on
a slight bump in sales as raw material costs declined.
The company said it expects the difficult economic situation to
continue at its current level throughout the year but to be
partially offset by soft raw material costs.
In addition, it projected first-quarter earnings above analysts'
estimates, but its sales forecast for the year falls far short of
Wall Street's view.
Pactiv, which makes Hefty bags and consumer packaging products,
reported net income of $69 million, or 52 cents a share, up from
$59 million, or 45 cents a share, a year ago.
The latest quarter's results included a 1-cent restructuring
charge. Excluding the charge, earnings were 53 cents a share.
In October, the company estimated per-share earnings to be 46
cents to 52 cents.
Total sales rose 0.8% to $883 million on favorable pricing,
which offset a volume decline and unfavorable foreign exchange.
Analysts polled by Thomson Reuters expected sales of $923
million.
Gross margin rose to 29.4% from 27.3%, reflecting the difference
between selling prices and raw material costs.
Sales rose 4% in the Hefty consumer products segment and were
down 1% in the food-service/food-packaging business.
Looking ahead, the company expects first-quarter per-share
earnings to be 44 cents to 48 cents, compared with the analyst
estimate of 39 cents.
Pactiv sees full-year per-share earnings to be $1.80 to $2 on a
sales decline of 12% to 15%. Wall Street projected per-share
earnings of $1.97 on a 1% sales drop.
Last month, KeyBanc Capital Markets lowered its investment
rating on Pactiv to hold from buy, citing the company's recent
outperformace in the sector, an expected decline in the food
service industry which could hurt volumes and its growing pension
obligations. According to Michael A. Moran, a strategist at Goldman
Sachs Group Inc., Pactiv is on a list of companies with the highest
pension obligations relative to their sizes.
Shares were up 0.9% at $21.64 in after-hours trading. Pactiv's
stock has dropped 14% this month and is down 27% from its 52-week
high in February.
-By John Kell, Dow Jones Newswires; 201-938-5285;
john.kell@dowjones.com
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