PCA reports profitable Q1 2019

Lake Forest, Illinois-based Packaging Corporation of America (PCA) has reported first quarter 2019 net income of $187 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of more than $370 million, which represents a 15.1 percent rise compared to the first quarter of 2018.

PCA says its first quarter 2019 net sales were $1.73 billion in 2019, a 2.4 percent increase compared to $1.69 billion in 2018. The company is crediting “higher prices and mix in both our Packaging and Paper segments” for the positive results.

In PCA’s Packaging segment, total corrugated products shipments and shipments per day were up 0.7 percent over 2018’s first quarter. Containerboard production for the quarter checked in at 1.037 million tons. In PCA’s Paper segment, sales volume was 21 percent lower and production volume was 14 percent lower, primarily because of discontinuing production at PCA’s Wallula, Washington, mill.

“In our Packaging segment, we had record first quarter volumes in both our containerboard mills and corrugated products plants, as well as higher prices and mix, compared to the first and fourth quarters of 2018,” remarks Mark W. Kowlzan, chairman and CEO of the firm.

“We ran our containerboard system to demand, and our production allowed us to supply the necessary containerboard to achieve a first quarter record for box shipments per day. In our Paper segment, prices and mix continued to move higher due to the successful execution of our announced price increases, and sales volume improved as we moved out of the seasonally slower fourth quarter. Overall, we were able to exceed our expected results even though we had to overcome significant weather-related challenges across the company that negatively impacted us during the quarter.”

Looking ahead to the second quarter of 2019, Kowlzan remarks, “In our Packaging segment we expect seasonally higher containerboard and corrugated products shipments, with lower prices as a result of the published domestic containerboard price decreases and lower export prices. In our Paper segment, volume should be similar to the first quarter and we will continue implementing the previously announced paper price increases, but scheduled outage costs will be higher due to the annual shutdown at our International Falls [Minnesota] mill.”

The company predicts recycled fiber prices “should be slightly lower” in the second quarter while it also anticipates “slightly higher” freight costs.

PCA describes itself as the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America. The company operates eight mills and 95 corrugated products plants and related facilities.