Operating income in the first quarter of 2011 was $48.7 million, up 12 percent, from $43.3 million in the first quarter of 2010 and by 17 percent, excluding currency translation. All divisions posted improvements, excluding currency translation, over the prior year period. The majority of the growth was driven by the container division, which delivered solid profitability over a significant loss in the prior year first quarter.
The company’s label division was up 4 percent.
EBITDA for the first quarter of 2011 was $66.4 million, up 6 percent from the $62.8 million in the comparable 2010 period and up by 10 percent excluding currency translation. Net earnings in the first quarter of 2011 were $26.8 million, up 9 percent compared to $24.6 million in last year’s first quarter. In addition to the items described above, this increase reflects lower net finance cost, partially offset by higher corporate expenses, income taxes and unfavorable currency translation. Restructuring and other items had a $0.4 million negative impact on net earnings in the first quarter of 2011 compared to no impact in 2010.
“We are pleased to report that the company had a solid first quarter with organic growth in all of our business segments,” reports Geoffrey T. Martin, president and CEO. “Excluding currency translation, the container and tube divisions posted significant improvements in profitability compared to a year ago, while the Label Division experienced more moderate growth compared to a record quarter in the prior year.
“Sales in our label division, excluding currency translation, were up 4 percent for the first quarter,” he continues. “However, our North American business was impacted by softness in our higher margin healthcare sector, in part driven by an ongoing US FDA quarantine at one key customer. Healthcare order intake did normalize at the end of the quarter, which has continued through April. Our European business was solid across the board and we continued to see strong double digit growth rates from emerging market regions, particularly in Latin America and Asia. Many of our consumer customers, however, have seen their margins squeezed by the impact of rapidly rising commodity costs, exacerbated in the United States by the weak dollar. This seems to have led to lower spending on sales promotions and certain marketing initiatives, particularly in developed markets, than we saw in 2010.
“We remain cautiously optimistic for 2011, with the expectation of solid but moderating organic growth in the container and tube divisions, while the growth in the label division could improve if our North American healthcare business sustains its most recent trend,” Martin adds. “We believe we can manage our own supply inflation through cost reduction initiatives and pricing programs. The unknown surrounds the potential impact on overall demand as our customers are forced to price through their wide spread commodity inflation to consumers and retailers. The Canadian dollar continues to appreciate against the US dollar. In the coming quarter this could be partly offset by potential comparative gains for the euro following the crisis in certain European countries this time last year and continuing strength in a number of emerging market currencies. Overall though, we still expect currency translation to remain a challenge at today’s levels.”
Based in Toronto, ON, Canada, CCL Industries is the world’s largest converter of pressure sensitive and film materials for label applications. It employs 5,900 people and operates 62 production facilities around the world.