RICHMOND, Virginia — MeadWestvaco Corp. said Tuesday restructuring charges dragged first-quarter profits down more than 77 percent at the packaging company, despite rising sales.
The Richmond, Virginia, company reported earnings of $11 million, or 6 cents per share for the period ended March 31, down from $50, or 28 cents per share, a year ago.
Excluding one-time items, MeadWestvaco earned 16 cents per share, still well short of the 23 cents per share analysts had expected.
Revenue increased about 2 percent to $1.34 billion, just shy of the $1.36 billion that Wall Street was looking for.
MeadWestvaco shares rose 55 cents, or 1.6 percent, to $34.84 in morning trading.
In a conference call with investors, CEO John A Luke Jr. called the first-quarter results "disappointing," as colder weather affected its beverage, home and garden packaging volumes, as well as asphalt additives. It also noted poor economic conditions in some regions impacted its results. The company also said it experienced higher energy, raw materials and transportation costs.
Sales in its industrial segment grew about 16 percent to $132 million, sales in its specialty chemical business for asphalt, adhesives, inks and oilfield drilling increased about 9 percent to $226 million, and sales in its food and beverage packaging segment rose about 2 percent to $761 million. Sales in its home, health and beauty packaging segment fell 6 percent to $188 million and its land sales decreased 15 percent to $39 million.
MeadWestvaco said it's exiting its beauty and personal care folding carton business in Europe and Brazil as part of its plans to improve margins in its home, health and beauty segment.
The company also plans to undertake an overhead cost-reduction plan that it expects will result in an annual cost savings between $65 and $75 million by the end of 2014. It expects actions completed in 2013 will result in benefits of $25 to $30 million.
It also has retained Bank of America Merrill Lynch and Goldman Sachs & Co. to evaluate its land management business, which has a portfolio of 650,000 acres of land in five southeastern states.
Looking forward, the company said it expects that its second-quarter earnings will decrease and that volume growth, better pricing and benefits from recent acquisitions in its industrial and specialty chemical businesses will be more than offset by a planned outage at its Covington, Virginia, paperboard mill and lower land sales.
MeadWestvaco operates in 30 countries and has customers in more than 100 nations. In the last several years, it has gone from a mill-centric paper supplier to a global partner for brands like Procter & Gamble, Coca-Cola and Wal-Mart.
Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.