Bemis Company Reports 2008 Second Quarter Results

NEENAH, Wis.—Bemis Company, Inc. has reported quarterly diluted earnings of $0.46 per share for the second quarter ended June 30, 2008, at the upper end of management’s guidance. This is compared to $0.47 per share for the same quarter of 2007. Net sales increased to a record $980.0 million for the second quarter of 2008, a 6.3 percent increase from $921.8 million for the same period of 2007. Currency benefits contributed 5.3 percent to net sales for the quarter.

“I am pleased to report that Bemis is regaining momentum in key markets where we have been investing in technology and processes,” said Henry Theisen, Bemis Company’s president and chief executive officer. “Rapidly rising raw material costs and global economic uncertainty have created a challenging operating environment for our industry. Our business teams are aggressively responding to volatile raw material cost increases while maintaining their dedication to cost management and customer service initiatives. Prudent management of purchasing, pricing, and customer relationships is key to our success during this period. While I am confident in our ability to meet these challenges, we are adjusting our total year earnings per share guidance to reflect this uncertain environment.”

Flexible packaging, which represented about 83 percent of total Bemis net sales during the quarter, reported net sales of $813.9 million in the second quarter, a 7.3 percent increase compared to net sales of $758.3 million for the second quarter of 2007. Currency related sales growth totaled 4.9 percent. Segment operating profit for the second quarter of 2008 was $88.9 million, or 10.9 percent of net sales. Segment operating profit for the second quarter of 2007 was $93.5 million, or 12.3 percent of net sales. Currency benefits added $2.9 million to operating profit in the second quarter of 2008. Lower operating profit in 2008 compared to the previous year reflects the impact of the time lag that occurs before higher raw material costs are reflected in increased selling prices.

Commenting on the flexible packaging segment results, Theisen said, “Net sales growth in this business segment was driven by a combination of volume growth in some markets and improved sales mix in other markets. While this challenging economic climate continues to create volatile business conditions, we are pleased with the strength of our business model and the benefits of our end market diversity. Solid sales growth in the European region, where we have introduced several new products, is providing positive profit momentum that we expect to be an important contributor going forward. Lower operating margins reflect the impact of higher raw material costs and inflationary pressures. In response, we are aggressively adjusting selling prices and maintaining a keen focus on cost management and process improvement. Prompt response to volatile market conditions will be vital to meeting our flexible packaging business goals for 2008.”

Net sales from the pressure sensitive materials business segment for the second quarter of 2008 were $166.1 million, a 1.6 percent increase from net sales of $163.5 million in the second quarter of 2007. Currency related sales growth totaled 7.2 percent. Segment operating profit for the second quarter of 2008 was $9.1 million, or 5.5 percent of net sales, compared to the second quarter of 2007 when segment operating profit was $10.2 million, or 6.2 percent of net sales. Currency benefits added $1.2 million to operating profit in the second quarter of 2008.

“Our North American label product business is delivering relatively stable results,” said Theisen. “We continue to experience lower sales volumes for our higher margin technical products sold into markets that are impacted by weakness in the housing and automotive sectors. Our global graphic products are also experiencing generally weak economic conditions and a negative change in sales mix. Our diligent cost management and attention to excellence in customer service are expected to improve performance in this business segment once the economy begins to strengthen.”

For the second quarter of 2008, other costs and income included $8.8 million of financial income compared to $7.6 million for the second quarter of 2007.

Total debt to total capitalization was 32.0 percent at June 30, 2008, compared to 32.9 percent at December 31, 2007. Total debt as of June 30, 2008 was $863.0 million, an increase of $19.7 million from the balance of $843.3 million at December 31, 2007. Cash flow from operations was $72.4 million in the second quarter of 2008. Increased working capital levels were driven by rising raw material costs and had a negative effect on cash flow from operations during the second quarter.