Sonoco Reports Numbers for Quarter

Sonoco reported sales for the second quarter were $709.3 million, versus $712.4 million for the same period in 2002. Net income for the second quarter of 2003 was $22.8 million, versus $37.7 million in the second quarter of 2002. Net income for the second quarter of 2003 included restructuring charges, primarily related to the company's recently initiated plant closings in Europe, of approximately $7.8 million, compared with restructuring charges of $1.7 million ($1.1 million after tax) in 2002.

Cash generated from operations for the second quarter was $43.8 million, compared with $76.3 million for the same period in 2002. Second quarter 2003 cash generated from operations, which included the impact of funding benefit plans of $2 million, was used to partially fund capital expenditures of $27.4 million and to pay dividends of $20.3 million.

For the first six months of 2003, sales were $1.39 billion, versus $1.37 billion in the same period last year. Net income for the first half of 2003 was $51.8 million, versus $71.3 million for the first six months of 2002. Net income for the first six months included charges related to restructuring actions of $9.2 million ($8.8 million after tax) and $3.2 million ($2 million after tax) in 2003 and 2002, respectively.

Also, for the first six months of 2003, cash generated from operations was $84.5 million, compared with $115.3 million for the same period in 2002. Cash generated from operations in the first half of 2003, which included the impact funding of benefit plans of $2.9 million, was used to partially fund capital expenditures of $52.8 million and to pay dividends of $40.5 million.

"Sales for the second quarter were basically flat, compared with the same period last year, primarily reflecting lower volumes in most of the company's businesses, offset by higher average selling prices and the favorable impact of foreign currency exchange rates," said DeLoach.

"To help counter the adverse impact on margins from continued general economic weakness and, most importantly, to enhance Sonoco's sustainable earnings growth capability, the company will substantially further reduce its cost structure. Since early 2001, the Company has reduced its overall cost structure by approximately $60 million, including the closing of 18 plants. We are developing plans targeted to eliminate an additional $60 million or more in annualized costs, including the closing of a similar number of additional plants. Excluding the restructuring charges, these actions are expected to have a modest positive impact in the fourth quarter and an accelerating impact in the first half of 2004," he stated.

In the industrial packaging segment second quarter sales were $366 million, versus $362.8 million in the same period of 2002. Second quarter operating profit was $32.7 million, versus $41.8 million in the same period of 2002.

"Second quarter sales in the industrial segment increased slightly, compared with the same period last year, primarily due to higher sales prices and favorable foreign exchange, partially offset by lower volume.