Containerboard manufacturer, Packaging Corp of America, (NYSE: PKG) reported late last evening that fiscal second quarter net income increased 43%, aided by both rise in the shipments and prices of corrugated products.
Shares of Packaging Corp climbed about 3.50% in afterhours trading on Tuesday as the Company also handed upbeat earnings outlook for the current quarter.
For the fiscal third quarter, the Company anticipates earnings of 88 cents while analysts polled by Thomson Reuters had forecasted it at 87 cents a share. The Company said that increase in prices of containerboard and corrugated products will boost the margin in the current quarter.
The Lake Forest, Illinois-based Company has been consistently reporting growth both in sales volume and revenue in the recent past; however, higher raw material costs have put pressure on the bottom line.
For the recently concluded quarter, Packaging Corp reported a net income of $64.5 million or 66 cents a share compared to a profit of $45.2 million or 46 cents a share, in the year-earlier quarter. After adjusting onetime items, non-GAAP earnings stood at 71 cents a share up from 49 cents.
Earlier, the Company provided earnings guidance of 62 cents a share. The Company feared that planned maintenance and outages at three out of its four mills will hurt profit.
Sales climbed 12% to $800.2 million, edging past analysts’ consensus estimate of $770 million.
Gross margin also improved to 24% from 22.2%, in the same quarter of last year, as costs declined.
Commenting over the results, Packaging Corp’s CEO Mark W. Kowlzan said that both higher price and increase in sales-volume of corrugated products helped driving up the bottom line. Kowlzan added that mills were working efficiently and productivity also reached at its record high level, which in turn helped the Company to drive up sale-volume.
The Company said that shipments of corrugated products also 6.8% while production of containerboards fell 9,000 to 629,000 tons in the recently concluded quarter.
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