HARTSVILLE, S.C., Dec. 1 /PRNewswire-FirstCall/ -- Sonoco (NYSE: SON)
Chairman, President and Chief Executive Officer Harris E. DeLoach, Jr., and
Charles J. Hupfer, senior vice president and chief financial officer, today
provided an update on the Company's growth initiatives and financial
expectations at Sonoco's annual meeting with the investment community in
New York City.
(Logo: http://www.newscom.com/cgi-bin/prnh/19991006/SNCLOGO )
According to Hupfer, Sonoco expects base earnings per diluted share for
2007 of $2.28 to $2.31, compared with the Company's previously announced
2006 base earnings per diluted share estimate of $2.11 to $2.13. Both
years' estimates do not assume any restructuring or other one-time charges
or a significant change in general economic conditions that might impact
the Company's operating results. Sonoco previously estimated fourth quarter
2006 base earnings per diluted share to be in a range between $.53 and $.55
per diluted share.
Stock Repurchase
DeLoach announced that Sonoco intends to repurchase approximately 1.5
million shares of outstanding common stock from available cash in open
market transactions during 2007. "The company had previously announced its
intent to repurchase, from time to time, at least enough common stock to
offset the dilution from options," said DeLoach, adding that the Company
repurchased 2.5 million shares of common stock during the first four months
of 2006 at a cost of about $83 million.
Following the 2006 stock repurchase, Sonoco's Board of Directors
authorized the repurchase of up to five million more shares. As of
September 24, 2006, Sonoco had about 99.6 million shares of common stock
outstanding.
Growth Strategy Highlighted
DeLoach pointed out that Sonoco has grown top-line sales at about a 6
percent compound annual average growth rate since 2000, up from 4.6 percent
from the prior five years, excluding divested businesses. In commenting on
Sonoco's growth strategy, DeLoach said, "We have made significant progress
in growing our top-line over the past several years by focusing on making
strategic acquisitions and joint ventures; geographic expansion in response
to customer and market requirements; providing total solutions to consumer
product companies' packaging supply chain requirements; and strengthening
our organic sales growth funnel while developing new products and services
to meet changing consumer needs."
Sonoco Acquires Clear Pack Company and Remaining Interest in Demolli
Joint Venture
DeLoach said about 60 percent of Sonoco's sales growth since 2000 has
come from acquisitions and joint ventures, including 18 transactions
completed since 2004 and six transactions in 2006. DeLoach announced the
completion of one of those transactions today as Sonoco's wholly owned
subsidiary, Sonoco- Alcore, S.a.r.l, acquired the remaining 75 percent
interest in Demolli Industria Cartaria S.p.A., Italy's largest manufacturer
of tubes, cores and recycled paperboard.
Demolli has annual sales of approximately $60 million and the
transaction is expected to be slightly accretive to Sonoco's earnings in
2007. Demolli operates three tube and core manufacturing facilities and a
recycled paperboard mill, serving markets in Italy and southern Europe. In
commenting on the transaction, DeLoach said, "This transaction further
strengthens our competitive position in Europe, allowing us to fully
integrate our European operations and better leverage our worldwide tube,
core and paper manufacturing capabilities."
As previously reported, Sonoco purchased from Ahlstrom Corporation of
Finland its 35.5 percent interest in Sonoco-Alcore, S.a.r.l. in October
2006. This transaction, combined with the Demolli acquisition, gives Sonoco
100 percent interest in 30 tube and core plants and seven paper mills in
Europe.
DeLoach also reviewed the recent acquisition of Clear Pack Company, a
privately held manufacturer of thermoformed and extruded plastic materials
and containers, based in Franklin Park, Ill., just outside Chicago. Clear
Pack has annual sales of $45 million and operates a large manufacturing and
warehouse facility in Franklin Park that produces thermoformed and extruded
plastic containers used for single-serve condiments, fresh produce and
other food service packaging. In commenting on the transaction, DeLoach
said, "This is a strategic acquisition that will significantly expand
Sonoco's rigid plastics capabilities."
Geographic Expansion
DeLoach said that Sonoco continues to focus on geographic expansion as
an important growth tool, especially in response to customer or market
needs. "We recently started up a new protective packaging line in Kaiping,
China, for use by a large exercise equipment manufacturer and are testing
development of a similar production line in Turkey for a large European
appliance maker," DeLoach said. "In addition, we recently received a
five-year contract to provide fulfillment services to the LEGO Group, which
we are performing at a temporary facility in Poland. In the first quarter
of 2007, we expect to be in a new leased Service Center in Strykow, Poland,
where we will handle the LEGO business and European promotional packaging
for Gillette Personal Care."
Sonoco to Add New Blow-Molded Rigid Plastic Production Capacity in 2007
Highlighting Sonoco's sales growth through organic and new product
development, DeLoach said that Sonoco recently obtained a multiyear supply
agreement with Abbott Laboratories' Ross Products Division to supply eight-
ounce blow-molded, rigid plastic bottles for Ensure(R) Nutritional Drinks,
beginning in March 2007.
"The first phase of this expansion will have us producing blow-molded
bottles from our existing Wausau, Wis., plant by the end of the first
quarter of 2007," said DeLoach. "The second phase will have us starting up
a new plant with multiple blow molders in Columbus, Ohio, by the end of
December 2007. We are excited about this new business development and the
further expansion of our rigid plastic capabilities."
DeLoach said that through the third quarter of 2006, Sonoco had
generated sales from new products of approximately $66 million, up 15
percent from the same period in 2005. "Our goal over the next few years is
annual sales from new products in the $100 million to $125 million range,"
he said.
DeLoach showed a number of Sonoco's award-winning packaging innovations
for 2006 and new packaging launches planned for 2007 in flexible, rigid
paper and rigid plastic packaging. Some of the new products discussed
included:
- The revolutionary Snack 'n Seal(TM) easy-opening and reclosing flexible
packaging, developed in coordination with Kraft Foods and currently in
seven lines of its Nabisco-brand Chips Ahoy!(R) and Newtons(R) cookies.
The unique packaging received several awards in 2006, including the
DuPont Gold Award for Packaging Innovation. A second generation
technology for this packaging, which is proprietary to Sonoco, is
currently undergoing testing and is expected to be used in other Kraft
cookie lines in 2007.
- A high-barrier, single-serve flexible package for Procter & Gamble's
recently launched Pringles(R) minis potato crisps.
- The first commercial application of Sonoco's shatterproof coating used
in the Company's Sonotort(TM) retort pouches, which will be introduced
in 2007 for Mississippi-based Now Foods' new heat-and-eat Rice Now!(R).
The high-barrier technology is resistant to flex cracking, an unsightly
phenomenon in which the laminate becomes marked with stress fractures
as a result of handling during converting, packaging and distribution.
- Dor-Pak(R) rectangular composite pails used by Preen(R) Lawn Fertilizer
as well as other applications. The popular Dor-Pak technology was
acquired as part of the Company's October 2006 acquisition of Cin-Made
Packaging of Cincinnati.
- Sonoco's popular Sono-wrap(R) single-wrap paperboard packaging being
used by United Kingdom-based Aimia Foods' Galaxy(R) Hot Chocolate Bliss
drink mix.
- A new consumer-friendly composite can conversion from an all-metal can
for Leite Gloria, a popular powdered milk beverage made and marketed in
Brazil by Parmalat. Sonoco has made a number of conversions of milk-
based products to paper cans during 2006 as a result of customers'
increased preference for a cost-effective alternative to all-metal cans
due to higher steel and aluminum prices.
- DryTech(TM) water-repellant covering for newsprint roles introduced by
the Cascade Sonoco joint venture.
- Sonoco's new Duro-Block(TM) pallet blocks, which are manufactured using
recycled treated wood, and provide twice the durability of standard
wood blocks to help extend the life of pallets.
- Sonoco's patented SonoPost(R) corner posts and braces, which have been
expanded into new applications to protect exercise equipment and office
furniture along with Sonoco's market-leading position in the appliance
sector.
Conclusion
"We have never been more optimistic about Sonoco's ability to sustain
profitable growth. We expect average annual cash flow from operations of
approximately $350 million to $400 million in 2006 and 2007 due to our
continued growth and efforts to reduce working capital. We are continuing
to improve margins by focusing on structural cost reductions and
productivity improvements. We are targeting cost reduction initiatives
primarily in our international operations, with particular emphasis on
Europe, which we expect will improve operating results," DeLoach said.
"Overall, I remain cautiously optimistic about the U.S. economy,
although some downturn, such as we are seeing in housing starts, is likely,
given higher interest rates," DeLoach concluded. "However, our paper mills
have been running full throughout 2006, and our tube and core volumes have
remained strong. And, I remain excited about the outlook for growing our
consumer businesses."
About Sonoco
Founded in 1899, Sonoco is a $3.5 billion global manufacturer of
industrial and consumer packaging products and provider of packaging
services, with more than 300 operations in 35 countries, serving customers
in 85 nations. Additional information about Sonoco is available at
http://www.sonoco.com.
Forward-looking Statements
Statements included herein that are not historical in nature, are
intended to be, and are hereby identified as "forward-looking statements"
for purposes of the safe harbor provided by Section 21E of the Securities
and Exchange Act of 1934, as amended. The words "estimate," "project,"
"intend," "expect," "believe," "plan," "anticipate," "objective," "goal,"
"guidance" and similar expressions identify forward-looking statements.
Forward-looking statements include, but are not limited to, statements
regarding offsetting high raw material costs, improved productivity and
cost containment, adequacy of income tax provisions, refinancing of debt,
adequacy of cash flows, anticipated amounts and uses of cash flows, effects
of acquisitions and dispositions, adequacy of provisions for environmental
liabilities, financial strategies and the results expected from them,
continued payments of dividends, stock repurchases and producing
improvements in earnings.
These forward-looking statements are based on current expectations,
estimates and projections about our industry, management's beliefs and
assumptions made by management. Such information includes, without
limitation, discussions as to guidance and other estimates, expectations,
beliefs, plans, strategies and objectives concerning our future financial
and operating performance. These statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions that
are difficult to predict. Therefore, actual results may differ materially
from those expressed or forecasted in such forward-looking statements. The
risks and uncertainties include, without limitation:
- Availability and pricing of raw materials;
- Success of new product development and introduction;
- Ability to maintain or increase productivity levels and contain or
reduce costs;
- International, national and local economic and market conditions;
- Fluctuations of obligations and earnings of pension and postretirement
benefit plans;
- Ability to maintain market share;
- Pricing pressures and demand for products;
- Continued strength of our paperboard-based tubes and cores and
composite can operations;
- Anticipated results of restructuring activities;
- Resolution of income tax contingencies;
- Ability to successfully integrate newly acquired businesses into the
Company's operations;
- Currency stability and the rate of growth in foreign markets;
- Use of financial instruments to hedge foreign currency, interest rate
and commodity price risk;
- Liability for remediation of environmental problems;
- Actions of government agencies;
- Loss of consumer confidence; and
- Economic disruptions resulting from terrorist activities.
The Company undertakes no obligation to publicly update or revise
forward- looking statements, whether as a result of new information, future
events or otherwise.
Additional information concerning some of the factors that could cause
materially different results is included in the Company's reports on forms
10-K, 10-Q and 8-K filed with the Securities and Exchange Commission. Such
reports are available from the Securities and Exchange Commission's public
reference facilities and its Web site, the Company's investor relations
department and the Company's Web site, http://www.sonoco.com.
SOURCE Sonoco
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CONTACT:
Roger Schrum of Sonoco, +1-843-339-6018, or
roger.schrum@sonoco.com
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