Company Provides 2007 Update, 2008 Base Earnings Guidance
HARTSVILLE, S.C., December 7 /CNW/ - 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 outlined a
new five-year growth strategy and provided updated financial guidance for 2007
and 2008 at Sonoco's annual conference with the New York investment community.
2007 Base Earnings Updated; 2008 Guidance Projected
Sonoco expects base earnings per diluted share for fourth quarter and
full-year 2007 to be at the high end of the Company's previously announced
estimates of $.52 to $.55 per diluted share and $2.28 to $2.31 per diluted
share, according to Hupfer. Base earnings in 2006 were $2.13 per diluted
share. Base earnings, a non-GAAP financial measure, exclude restructuring
charges, asset impairment charges and certain other non-recurring or
infrequent and unusual items, as applicable. Additional information about base
earnings and base earnings per share, including why the Company uses such
measures, can be found in the Company's 2006 Annual Report and in its
quarterly earnings releases.
"Our base earnings guidance for 2008 is $2.44 to $2.47 per diluted share
which represents a year-over-year increase at the earnings before interest and
taxes (EBIT) line of approximately 10 percent, and at the base earnings per
share line of approximately 6.5 percent," said Hupfer, adding that the
guidance assumes an effective tax rate of approximately 32 percent. "This
means we are not projecting a recession for 2008--but we are not projecting
boom times either."
Growth Strategy Highlighted
DeLoach announced a new five-year strategic growth initiative called
"Progress Forward," which is aimed at continuing the Company's profitable
growth momentum established over the past five years as sales have grown from
$2.7 billion in 2002 to a projected $4 billion in 2007, for a compound average
growth rate of 8.1 percent.
According to DeLoach, Sonoco is targeting to grow sales to between $5.5
billion and $6 billion by the end of 2012. In addition, the Company has the
objective of improving EBIT margins from 9.3 percent to 11 percent. The
Company is also focused on increasing return on net assets employed from about
11 percent to 12.5 percent.
DeLoach said Sonoco intends to achieve its aggressive profitable sales
growth objectives by increasing organic sales; expanding geographically in
response to customer and market requirements; providing total solutions to its
consumer product company customers; developing new products and services; and
making strategic acquisitions.
"The steps we must take to profitably grow our business for the next five
years are similar to the successful path we have taken during the past five
years," said DeLoach. "Looking over what we have accomplished, we believe this
strategy is sound. Yet to meet our aggressive goals in the next five years, we
must sharpen our execution."
Consumer Packaging and Services Strategy
DeLoach said that Sonoco's growth will occur at the same time as the
Company continues to shift the historical ratio of sales generated by
businesses serving consumer and industrial markets. "We are focused on
changing the mix of our business from a current ratio of 51 percent consumer
and 49 percent industrial to approximately 60 percent consumer and 40 percent
industrial," he said.
Sonoco's Consumer Packaging and Services businesses are projecting to
grow at a compound average growth rate of approximately 6.5 percent over the
next five years, DeLoach said. This objective will be accomplished by
developing new, innovative products and services to meet changing consumer
needs; providing cradle-to-cradle sustainability solutions ranging from
providing more environmentally friendly packaging to improving recycling for
customers' manufacturing and distribution facilities; promoting cross-selling
of products and services from throughout Sonoco's diverse mix of businesses to
its large consumer product customers; and by pursing strategic acquisitions.
Through the third quarter of 2007, DeLoach said that Sonoco had generated
record sales from new products of approximately $70 million. "Our goal over
the next five years is to annually generate $125 million to $150 million in
new product sales," DeLoach said.
DeLoach showed a number of Sonoco's award-winning packaging innovations
for 2007 and new packaging launches planned for 2008 in flexible, rigid paper
and rigid plastic containers, ends and closures and packaging services. Some
of the new products and services introduced included:
-- SmartSeal(TM) packaging system, a second generation easy-open and
reclosable flexible packaging technology, which is being extended into many of
Kraft's Nabisco cookies in 2007 and 2008.
-- Ultrapeel(TM) retort membrane ends which are being introduced in
January 2008 on Campbell's Soup Company's popular Soup At Hand(R) product.
-- Sonoco Keating automated gravure engraving and pre-press graphics
management services, which doubled capacity in 2007.
-- Dor-Pak(R) rectangular composite pails used for large volume
packaging of Meow Mix(R) brand cat food.
-- LinearPak(R) paperboard cans that are being used by Cadbury Adams for
its Halls Cough Drops.
-- A new Sonoco composite can that is being used in the United Kingdom
to convert Farley's powdered infant formula from an existing metal can.
-- Award-winning retail merchandising displays developed for a
Jergens(R) moisturizer product launch.
DeLoach pointed out that Sonoco has substantially grown its rigid plastic
container business as a result of recent acquisitions of Clear Pack Company,
Matrix Packaging, Inc., and Caraustar Industries' plastic cartridge business.
"As a result of these acquisitions, along with growth in our base
business, we expect sales of rigid plastic containers to increase nearly
five-fold from 2006 through 2008, with sales approaching $300 million
annually," DeLoach said. "We now employ technologies covering blow-molding,
thermoforming, injection molding and extrusion. Because of these broad
capabilities, we are targeting aggressive growth in the retail food, health
and beauty, food service and medical products markets."
Industrial Products Group Strategy
DeLoach said the steps Sonoco is taking to further build its market
leading global tube, core and paper and other converting businesses include
protecting and growing the Company's base business while working to gain share
in key markets; growing sales through acquisitions, joint ventures and
alliances to satisfy customers' unmet needs; expanding geographically with
customers in underserved markets; developing new products and services; and
maximizing cash flow from operations by managing price, reducing structural
costs and improving productivity.
"We will continue to investigate strategic acquisitions globally to
consolidate mature markets and work with alliances to improve our service
offerings," DeLoach said. "Much like our consumer businesses, we are making
progress in developing new products to increase sales in existing markets. For
example, since 2005 we have nearly doubled the sale of new products in our
North American tube and core business to a projected $23 million in 2007."
"While we remain cautious about the North American economy as we enter
2008, we believe our strong mix of businesses will result in another record
year for Sonoco," DeLoach concluded. "We have never been more optimistic about
our ability to build and sustain profitable growth into the near future."
Founded in 1899, Sonoco is a $3.7 billion global manufacturer of
industrial and consumer packaging products and provider of packaging services,
with more than 330 operations in 35 countries, serving customers in 85
nations. Additional information about Sonoco is available at
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