Company Provides 2007 Update, 2008 Base Earnings Guidance
HARTSVILLE, S.C.--(BUSINESS WIRE)--Dec. 7, 2007--Sonoco (NYSE:SON)
Chairman, President and Chief Executive Officer Harris E. DeLoach,
Jr., and Charles J. Hupfer, senior vice president and chief financial
officer, today outlined a new five-year growth strategy and provided
updated financial guidance for 2007 and 2008 at Sonoco's annual
conference with the New York investment community.
2007 Base Earnings Updated; 2008 Guidance Projected
Sonoco expects base earnings per diluted share for fourth quarter
and full-year 2007 to be at the high end of the Company's previously
announced estimates of $.52 to $.55 per diluted share and $2.28 to
$2.31 per diluted share, according to Hupfer. Base earnings in 2006
were $2.13 per diluted share. Base earnings, a non-GAAP financial
measure, exclude restructuring charges, asset impairment charges and
certain other non-recurring or infrequent and unusual items, as
applicable. Additional information about base earnings and base
earnings per share, including why the Company uses such measures, can
be found in the Company's 2006 Annual Report and in its quarterly
earnings releases.
"Our base earnings guidance for 2008 is $2.44 to $2.47 per diluted
share which represents a year-over-year increase at the earnings
before interest and taxes (EBIT) line of approximately 10 percent, and
at the base earnings per share line of approximately 6.5 percent,"
said Hupfer, adding that the guidance assumes an effective tax rate of
approximately 32 percent. "This means we are not projecting a
recession for 2008--but we are not projecting boom times either."
Growth Strategy Highlighted
DeLoach announced a new five-year strategic growth initiative
called "Progress Forward," which is aimed at continuing the Company's
profitable growth momentum established over the past five years as
sales have grown from $2.7 billion in 2002 to a projected $4 billion
in 2007, for a compound average growth rate of 8.1 percent.
According to DeLoach, Sonoco is targeting to grow sales to between
$5.5 billion and $6 billion by the end of 2012. In addition, the
Company has the objective of improving EBIT margins from 9.3 percent
to 11 percent. The Company is also focused on increasing return on net
assets employed from about 11 percent to 12.5 percent.
DeLoach said Sonoco intends to achieve its aggressive profitable
sales growth objectives by increasing organic sales; expanding
geographically in response to customer and market requirements;
providing total solutions to its consumer product company customers;
developing new products and services; and making strategic
acquisitions.
"The steps we must take to profitably grow our business for the
next five years are similar to the successful path we have taken
during the past five years," said DeLoach. "Looking over what we have
accomplished, we believe this strategy is sound. Yet to meet our
aggressive goals in the next five years, we must sharpen our
execution."
Consumer Packaging and Services Strategy
DeLoach said that Sonoco's growth will occur at the same time as
the Company continues to shift the historical ratio of sales generated
by businesses serving consumer and industrial markets. "We are focused
on changing the mix of our business from a current ratio of 51 percent
consumer and 49 percent industrial to approximately 60 percent
consumer and 40 percent industrial," he said.
Sonoco's Consumer Packaging and Services businesses are projecting
to grow at a compound average growth rate of approximately 6.5 percent
over the next five years, DeLoach said. This objective will be
accomplished by developing new, innovative products and services to
meet changing consumer needs; providing cradle-to-cradle
sustainability solutions ranging from providing more environmentally
friendly packaging to improving recycling for customers' manufacturing
and distribution facilities; promoting cross-selling of products and
services from throughout Sonoco's diverse mix of businesses to its
large consumer product customers; and by pursing strategic
acquisitions.
Through the third quarter of 2007, DeLoach said that Sonoco had
generated record sales from new products of approximately $70 million.
"Our goal over the next five years is to annually generate $125
million to $150 million in new product sales," DeLoach said.
DeLoach showed a number of Sonoco's award-winning packaging
innovations for 2007 and new packaging launches planned for 2008 in
flexible, rigid paper and rigid plastic containers, ends and closures
and packaging services. Some of the new products and services
introduced included:
-- SmartSeal(TM) packaging system, a second generation easy-open
and reclosable flexible packaging technology, which is being
extended into many of Kraft's Nabisco cookies in 2007 and
2008.
-- Ultrapeel(TM) retort membrane ends which are being introduced
in January 2008 on Campbell's Soup Company's popular Soup At
Hand(R) product.
-- Sonoco Keating automated gravure engraving and pre-press
graphics management services, which doubled capacity in 2007.
-- Dor-Pak(R) rectangular composite pails used for large volume
packaging of Meow Mix(R) brand cat food.
-- LinearPak(R) paperboard cans that are being used by Cadbury
Adams for its Halls Cough Drops.
-- A new Sonoco composite can that is being used in the United
Kingdom to convert Farley's powdered infant formula from an
existing metal can.
-- Award-winning retail merchandising displays developed for a
Jergens(R) moisturizer product launch.
DeLoach pointed out that Sonoco has substantially grown its rigid
plastic container business as a result of recent acquisitions of Clear
Pack Company, Matrix Packaging, Inc., and Caraustar Industries'
plastic cartridge business.
"As a result of these acquisitions, along with growth in our base
business, we expect sales of rigid plastic containers to increase
nearly five-fold from 2006 through 2008, with sales approaching $300
million annually," DeLoach said. "We now employ technologies covering
blow-molding, thermoforming, injection molding and extrusion. Because
of these broad capabilities, we are targeting aggressive growth in the
retail food, health and beauty, food service and medical products
markets."
Industrial Products Group Strategy
DeLoach said the steps Sonoco is taking to further build its
market leading global tube, core and paper and other converting
businesses include protecting and growing the Company's base business
while working to gain share in key markets; growing sales through
acquisitions, joint ventures and alliances to satisfy customers' unmet
needs; expanding geographically with customers in underserved markets;
developing new products and services; and maximizing cash flow from
operations by managing price, reducing structural costs and improving
productivity.
"We will continue to investigate strategic acquisitions globally
to consolidate mature markets and work with alliances to improve our
service offerings," DeLoach said. "Much like our consumer businesses,
we are making progress in developing new products to increase sales in
existing markets. For example, since 2005 we have nearly doubled the
sale of new products in our North American tube and core business to a
projected $23 million in 2007."
Conclusion
"While we remain cautious about the North American economy as we
enter 2008, we believe our strong mix of businesses will result in
another record year for Sonoco," DeLoach concluded. "We have never
been more optimistic about our ability to build and sustain profitable
growth into the near future."
About Sonoco
Founded in 1899, Sonoco is a $3.7 billion global manufacturer of
industrial and consumer packaging products and provider of packaging
services, with more than 330 operations in 35 countries, serving
customers in 85 nations. Additional information about Sonoco is
available at http://www.sonoco.com.
Forward-looking Statements
Statements included herein that are not historical in nature, are
intended to be, and are hereby identified as "forward-looking
statements" for purposes of the safe harbor provided by Section 21E of
the Securities and Exchange Act of 1934, as amended. The words
"estimate," "project," "intend," "expect," "believe," "consider,"
"plan," "anticipate," "objective," "goal," "guidance" and similar
expressions identify forward-looking statements. Forward-looking
statements include, but are not limited to, statements regarding
adequacy of cash flows, anticipated amounts and uses of cash flows,
financial strategies and the results expected from them, continued
payments of dividends, stock repurchases and producing improvements in
earnings.
These forward-looking statements are based on current
expectations, estimates and projections about our industry,
management's beliefs and assumptions made by management. Such
information includes, without limitation, discussions as to guidance
and other estimates, expectations, beliefs, plans, strategies and
objectives concerning our future financial and operating performance.
These statements are not guarantees of future performance and are
subject to risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual results may differ materially from those
expressed or forecasted in such forward-looking statements.
The Company undertakes no obligation to publicly update or revise
forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional information concerning some of the factors that could
cause materially different results is included in the Company's
reports on forms 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission. Such reports are available from the Securities
and Exchange Commission's public reference facilities and its Web
site, http://www.sec.gov, the Company's investor relations department
and the Company's Web site, http://www.sonoco.com.
CONTACT: Sonoco
Roger Schrum, 843-339-6018;
roger.schrum@sonoco.com
SOURCE: Sonoco