Packaging: Sales drop, profits rise, says report

Despite the drop in sales in Q3 2009, gross profit increased by a median of 5.2% among 17 of 30 companies (57%), noted BMO Capital Markets in their latest report. The Converter, which tracked 30 companies, noted that gross margin also increased among 26 out of 30 companies (87%) from a median of 17.8% in Q3 2008 to 19.5% in Q3 2009. Gross margin and gross profit increased in the rigid, flexible, and paperboard sectors, but decreased in the label sector. Labels had the largest gross profit decrease, largely driven by lower volumes. The rigid sector had the largest median gross profit increase at 10.2%.

Packaging M&A activity YTD was down globally by 24.4%. North American activity was off 16%; Europe’s M&A activity was off 30.8%; Latin America activity was down 50% and Asia’s packaging M&A activity YTD is off 20.5%.

November’s M&A highlights included Berry Plastics Corp., an Apollo Management and Graham Partners portfolio company, which announced the acquisition of Cumberland, MD-based Superfos Packaging Inc., an injection molder of open-top plastics containers and other plastic packaging products for the food, industrial, and household chemical, building material, and personal care markets worldwide. Superfos had 2008 revenues of $46.8 million, according to the report, adding that Berry will acquire the company for $82.0 million from Superfos A/S. The transaction was expected to be finalized during February 2010.

Alto Manufacturing Pty Ltd., a subsidiary of Pact Group Pty Ltd., announced the acquisition of Huhtamaki’s Australia-based Rigid Plastic Consumer Goods business for €33 million ($47 million). The acquired business provides rigid plastic packaging for the dairy, ice cream, and edible fats industries globally, and had 2008 revenues of approximately €50 million ($71.4 million).

Other acquisitions included the acquisition of Rexam Petainer, the European specialist PET container business of Rexam Plc, for €16.0 million ($20.2 million), by Next Wave Ventures Ltd. and WHEB Ventures; the acquisition of a manufacturing plant in France from Graham Packaging, a portfolio company of The Blackstone Group, by Serioplast; and the acquisition of the Film Division of Canada-based CPI Plastics Group by Mid America Bag LLC, a manufacturer of consumer and institutional trash bags, food storage bags, and waste management solutions serving the U.S. and Canada. —[email protected]