Packaging

CCL Industries Reports a 9% Increase in First Quarter Net Earnings and Declares Dividend

Friday 06. May 2011 - CCL Industries Inc., a world leader in the development of labelling solutions and specialty packaging for the consumer products and healthcare industries, announced today its consolidated financial results for the first quarter ended March 31, 2011, in accordance with the newly adopted International Financial Reporting Standards ("IFRS"), and the declaration of its quarterly dividend.

First Quarter 2011
Sales for the first quarter of 2011 were $315.6 million, up 3%, from $307.1 million for the same period in 2010. Sales increased 7%, excluding the impact of currency translation, primarily due to organic growth recorded in all divisions for the quarter.
Operating income in the first quarter of 2011 was $48.7 million, up 12%, from $43.3 million in the first quarter of 2010 and by 17%, excluding currency translation. All divisions posted improvements, excluding currency translation, over the prior year period. The majority of the growth was driven by the Container Division, which delivered solid profitability over a significant loss in the prior year first quarter.
EBITDA for the first quarter of 2011 was $66.4 million, up 6% from the $62.8 million in the comparable 2010 period and up by 10% excluding currency translation.
Net earnings in the first quarter of 2011 were $26.8 million, up 9% compared to $24.6 million in last year’s first quarter. In addition to the items described above, this increase reflects lower net finance cost, partially offset by higher corporate expenses, income taxes and unfavourable currency translation. Restructuring and other items had a $0.4 million negative impact on net earnings in the first quarter of 2011 compared to no impact in 2010.
Basic earnings per Class B share were $0.81 in the first quarter of 2011 compared to $0.75 in the 2010 comparable period. Adjusted basic earnings per Class B share were $0.82 in the first quarter of 2011 compared with $0.75 in the prior year period.
Geoffrey T. Martin, President and Chief Executive Officer commented, “We are pleased to report that the Company had a solid first quarter with organic growth in all of our business segments. Excluding currency translation, the Container and Tube Divisions posted significant improvements in profitability compared to a year ago, while the Label Division experienced more moderate growth compared to a record quarter in the prior year.”
Mr. Martin also noted, “Sales in our Label Division, excluding currency translation, were up 4% for the first quarter. However, our North American business was impacted by softness in our higher margin Healthcare sector, in part driven by an ongoing U.S. FDA quarantine at one key customer. Healthcare order intake did normalize at the end of the quarter, which has continued through April. Our European business was solid across the board and we continued to see strong double digit growth rates from emerging market regions, particularly in Latin America and Asia. Many of our consumer customers, however, have seen their margins squeezed by the impact of rapidly rising commodity costs, exacerbated in the United States by the weak dollar. This seems to have led to lower spending on sales promotions and certain marketing initiatives, particularly in developed markets, than we saw in 2010.”
Mr. Martin added, “The Container Division continued its strong recovery in the first quarter with sales increasing over 20%, excluding currency translation, partly aided by pass through of rising aluminum costs. Profitability in the Division improved significantly compared to the loss in the prior year first quarter. Operations in the U.S. and Mexico were the main drivers of improved performance, with strong volumes, pricing initiatives and productivity gains. Profitability in our Canadian operation also improved but still posted a loss, albeit much reduced compared to the prior year. The comparative sales and volume outlook for the Division will moderate in coming quarters as the recovery in demand from the crisis was well underway at this time in 2010. However, previously announced price increases become effective in the second half of 2011 and additional productivity and cost reduction initiatives will be sustained and built upon.”
Mr. Martin continued, “The Tube Division continues to exceed expectations and posted another record quarter of profitability, with sales growth of 19%, excluding currency translation. The outlook for the year remains encouraging as the Division continues to enhance its market reputation for service, reliability and premium decoration capabilities.”
Mr. Martin stated, “We remain cautiously optimistic for 2011, with the expectation of solid but moderating organic growth in the Container and Tube Divisions, while the growth in the Label Division could improve if our North American Healthcare business sustains its most recent trend. We believe we can manage our own supply inflation through cost reduction initiatives and pricing programs. The unknown surrounds the potential impact on overall demand as our customers are forced to price through their wide spread commodity inflation to consumers and retailers. The Canadian dollar continues to appreciate against the U.S. dollar. In the coming quarter this could be partly offset by potential comparative gains for the euro following the crisis in certain European countries this time last year and continuing strength in a number of emerging market currencies. Overall though, we still expect currency translation to remain a challenge at today’s levels.”
Mr. Martin concluded, “The Company continues to have a strong financial position. Cash balances are solid with over $90 million at end of the first quarter and net debt to total capital remains at 25%, in-line with the level at the end of 2010. Based on our strong cash flow and continued positive outlook for 2011, your Board of Directors has declared a dividend at the same level as the dividend declared last quarter. The dividend rate of $0.175 for the Class B non-voting shares and $0.1625 on the Class A voting shares will be payable to shareholders of record at the close of business on June 16, 2011, to be paid on June 30, 2011. CCL continues its record of paying quarterly dividends without reduction or omission for over 25 years.”