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WestRock Co., Atlanta, has announced results for its fiscal second quarter of fiscal 2020, which ended March 31. WestRock achieved net sales of $4.45 billion in the second quarter of fiscal 2020. According to second-quarter earnings report, net sales decreased by 3.7 percent in the quarter compared with the same time frame in 2019. For the second quarter, the company reported 57 cents per diluted share and 67 cents of adjusted earnings per diluted compared with 62 cents per diluted share and 80 cents of adjusted earnings per diluted share in the second quarter of 2019.
However, the company reports it has strong segment margins. The company reports that it is executing its differentiated strategy with financial strength and substantial liquidity.
Given the uncertainties associated with COVID-19, WestRock says it is focused on meeting the needs of its customers and supporting the health and well-being of its employees by providing one-time recognition awards to its manufacturing and operations employees in the third quarter of fiscal 2020, continuing to match the company’s supply with its customers’ demand and decreasing salaries and retainers up to 25 percent for the company’s senior executive team and board of directors. Additionally, the company expects to use company stock to pay its annual incentive and company funded 401(k) contributions in 2020. The company is also reducing its fiscal 2020 capital investments by about $150 million to a level of about $950 million; it’s reducing its fiscal 2021 capital investments to a range of about $600 to $800 million.
“I am incredibly proud of the WestRock team that is focused every day on ensuring that the paper and packaging needed to keep critical supply chains operating during the pandemic are available for our customers and our communities,” says Steve Voorhees, chief executive officer at WestRock. “With operations around the world, we have been working steadily to help our team stay safe by implementing enhanced protection and sanitization measures across our company. We are relentlessly focused on ensuring the health and safety of our teammates.
“In the second quarter, WestRock delivered solid results with improved demand in select key markets as the pandemic impacted consumer buying habits, especially in March. We are adapting quickly to the uncertain economic and market demand conditions and taking steps that we expect will provide an additional $1 billion in cash available for debt reduction through fiscal 2021. We are confident in our differentiated strategy and value proposition and believe these steps will ensure that WestRock remains well positioned for long-term success.”
WestRock reports that it believes it “has substantial liquidity to navigate the current dynamic environment.” Its cash and cash equivalents and long-term committed available borrowings aggregated to more than $2.5 billion of liquidity as of March 31.
In addition, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allows employers to postpone paying their share of employment taxes incurred throughout the end of the 2020 calendar year. WestRock reports that it plans to postpone an estimated $120 million of these payments over the next three quarters and will be required to pay 50 percent of these amounts in December 2021 and the remaining 50 percent in December 2022.
For the company’s Corrugated Packaging segment, net sales declined $108 million primarily due to lower corrugated selling price and mix, partially offset by higher volumes. Segment income decreased by $66 million.
For the company’s Consumer Packaging segment, net sales declined by about $52 million, primarily due to lower selling price and mix, lower volumes and the unfavorable impact of foreign currency. Segment income increased about $6 million.
Response to COVID-19
The company reports that it has also taken steps to ensure the health and safety of its employees during the pandemic. Some of the measures the company has taken include:
• cleaning and disinfecting workstations and common surfaces frequently;
• implementing temperature screenings in compliance with applicable law;
• encouraging the use of face coverings generally and complying with specific requirements where use is mandated;
• enforcing quarantine guidelines for team members affected or potentially exposed to COVID-19;
• supporting flexible and alternative work arrangements, including a work-from-home strategy for employees whose jobs can be performed remotely; and,
• launching an online Coronavirus Resource Center to keep employees up to date on company and health authority information.