Sealed Air Sales Up 5% in 3Q

Sealed Air Corp., Elmwood Park, NJ, sales for the third quarter of 2008 increased 5% to $1.22 billion. Sales for the nine-month period increased 8% to $3.68 billion, compared with $3.4 billion for the same period in 2007.
 
In the third quarter, resin costs peaked and the North American and European economic environment deteriorated," said William V. Hickey, president and CEO. "Despite these conditions, our food packaging and medical businesses continued to show stable sales performance in the third quarter and year-to-date. Our protective packaging business was more affected by the economy, and unit volumes declined in the quarter, consistent with manufacturing output, shipments and retail sales.
 
"To offset peak resin costs, we continued to implement price increases in the quarter and realized benefits from our previously announced pricing initiatives. These actions recovered approximately two-thirds of our third quarter increase in resin costs, which were $53 million more than in the same period last year. Nonetheless, we experienced a reduction in our gross profit, which was also impacted by higher freight and energy costs in the quarter. In anticipation of continued economic weakness and to position ourselves for 2009, we implemented our previously announced cost reduction and productivity program in the quarter. We also continued to realize benefits associated with our global manufacturing strategy. "
 
The increase in sales resulted from a $47 million favorable effect of foreign currency translation, $27 million from product price/mix, and a $17 million net effect from acquisitions and divestitures, which were partially offset by a $34 million reduction in unit volumes. Excluding the $47 million favorable effect of foreign currency translation, net sales would have increased 1%.
 
Food Packaging Segment
The Food Packaging segment sales for the third quarter increased 3% to $480 million compared with $466 million last year. Excluding a $17 million favorable effect of foreign currency translation, segment net sales would have decreased 1%.
 
The decline in net sales primarily reflects a decrease in unit volumes in North America due to pre-buying in the second quarter before an SAP enterprise software launch on July 1 and a decrease in unit volumes in Latin America due to continued export issues related to Brazilian beef. This decline was partially offset by the positive impact of product price/mix.
 
Food Solutions Segment
The Food Solutions segment net sales for the third quarter increased 6% to $256 million compared with $242 million last year. Excluding a $12 million favorable effect of foreign currency translation, segment net sales would have increased 1%.
 
The sales growth primarily reflects the positive impact of product price/mix in North America and unit volume growth in the Asia-Pacific region, which was largely offset by a decline in unit volumes in North America due to a previously announced change in a packaging format at one retailer late last year.
 
Protective Packaging Segment
The Protective Packaging segment sales for the third quarter increased 2% to $377 million compared with $371 million last year. Excluding a $12 million favorable effect of foreign currency translation, segment net sales would have declined 2%.
 
The decline in net sales was primarily due to lower unit volumes in North America and Europe, which reflected weakening economic conditions in those regions.
 
Other Category
The Other Category sales for the third quarter increased 30% to $106 million compared with $82 million last year. Excluding a $6 million favorable effect of foreign currency translation, Other net sales would have increased 23%.
 
This increase was primarily due to the acquisitions of certain assets relating to Ethafoam and related polyethylene foam product lines in November 2007 and Alga Plastics in August 2007 and the positive impact of product price/mix.