Packaging Corp. of America Reports Fourth Quarter and Full Year 2016 Results
(USA, Jan. 31, 2017) Packaging Corporation of America (PKG) today reported fourth quarter 2016 net income of $111 million, or $1.17 per share and $1.23 per share excluding special items. Fourth quarter net sales were $1.5 billion in 2016 and $1.4 billion in 2015. Full year 2016 earnings were $450 million, or $4.75 per share and $4.88 per share excluding special items. Full year 2016 net sales were $5.78 billion compared to 2015 net sales of $5.74 billion.
Reported earnings include the impact of $.06 per share of special items expense in the fourth quarter of 2016 and $.01 per share of special items expense in 2015. Excluding special items, the $.15 per share increase in fourth quarter 2016 earnings compared to the fourth quarter of 2015 was driven primarily by higher containerboard and corrugated products volume ($.16), higher white paper prices and mix ($.03), lower fiber costs ($.06), and lower annual outage costs ($.09). These items were partially offset by lower containerboard and corrugated products prices and mix ($.04), lower paper volume ($.04), higher costs for labor ($.02) and repairs ($.02), higher expenses for depreciation ($.02) and interest ($.01), and a higher tax rate ($.04).
In the Packaging segment, total corrugated products shipments were up 9.7%, or 11.5% per workday, over last year’s fourth quarter. Packaging segment price and mix was lower compared to the fourth quarter of 2015 and up compared to the third quarter of 2016. Containerboard production was 962,000 tons, and containerboard inventory was flat compared to year-end 2015 levels.
Paper segment price and mix was higher than the fourth quarter of 2015 and flat compared to the third quarter of 2016. Paper volume was lower compared to the fourth quarter of 2015, primarily due to the previously announced fourth quarter shutdown of market pulp operations at our Wallula Mill, and down versus the seasonally stronger third quarter of 2016.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, said, “We had an excellent quarter as we quickly integrated our containerboard volume into the TimBar and Columbus Container acquisitions. Our containerboard mill and corrugated products plant volumes were new all-time records while inventories, including our new acquisitions, were flat with year-end 2015 levels. Packaging segment prices, which had been declining throughout the year, moved higher as we began implementing the announced price increases to our containerboard and corrugated products customers throughout the fourth quarter. Our Paper segment also performed exceptionally well, maintaining good cost control during the seasonally slower fourth quarter.”
“Looking ahead to the first quarter,” Mr. Kowlzan added, “we expect to realize the vast majority of our previously announced packaging segment price increases and we expect higher corrugated products shipments. We will have lower containerboard and paper production volume as we have scheduled maintenance outages on one of our machines at both the Counce and DeRidder packaging mills and on one of our machines at our Jackson, Alabama paper mill. We expect higher freight costs as well as higher labor and benefits costs with annual wage increases and other timing-related expenses. We also anticipate continued price inflation on recycled fiber, energy and certain chemicals, and seasonally colder weather will increase wood and energy costs. Considering these items, we expect first quarter earnings of $1.26 per share.”
PCA is the fourth largest producer of containerboard and corrugated packaging products in the United States and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 95 corrugated products plants and related facilities. To learn more, please visit: www.packagingcorp.com (Source: Packaging Corporation of America)