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CCL reports strong second quarter



Published August 7, 2012
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CCL reports its second quarter sales for 2012 were $337.1 million, an increase of 7.6% excluding the impact of foreign currency translation, compared to $318.9 million recorded in second quarter of 2011. For the six months ended June 30, 2012, sales increased 8.2%, excluding foreign currency translation, compared to the 2011 six-month period.

Operating income for the second quarter of 2012 was $47.9 million, an 11.1% improvement, from $43.1 million for the second quarter of 2011. Operating income improved 13.2%, excluding the negative impact of foreign currency translation for the comparative quarters. All three segments, Label, Container and Tube, contributed to the quarterly increase and to the 10.7% improvement in operating income for the six months ended June 30, 2012 compared to the first six months of 2011.

Earning before net finance cost, taxes, earnings in equity accounted investments, depreciation and amortization and other items was $66.9 million for the second quarter of 2012, an increase of 9.9% compared to $60.9 million for the second quarter of 2011. For the six-month period ended June 30, 2012, EBITDA was $138.1 million, an increase of 8.5% compared to $127.3 million in the comparable 2011 six-month period.

The overall effective income tax rate was 28.6% for the second quarter of 2012 almost flat compared to the second quarter of 2011. The overall effective income tax rate was 28.0% for the six-month period of 2012 compared to 27.1% in the six-month period of 2011. The increase in the effective tax rate is primarily due to a higher portion of the company's income being earned in high tax jurisdictions.

Geoffrey Martin, president and CEO, states, "We are pleased to report a strong second quarter despite softening global economic conditions with all of our operating segments outperforming the prior year period.CCL Label posted solid second quarter organic growth with sales in local currencies up 7% on a good prior year period. Double digit growth rates in North America and Emerging Markets were offset by low single digit gains in Europe. Profitability improvement, however, did not match up to regional sales trends. Despite the negative impact of foreign currency translation due to the weaker euro our European business drove much of the quarterly improvement in segment operating income on the back of cost reductions and turnarounds in underperforming business units.

"North American results were enhanced on translation by the stronger U.S. dollar but held back by start-up costs for new product lines and facilities plus pricing challenges in some consumer markets as economic conditions softened noticeably as the quarter progressed. Local currency profit gains in Latin America were eliminated on translation due to devaluations in the peso and the real but recovered from first quarter levels. Foreign exchange to the U.S. dollar eased related material cost pressures in Mexico and Brazilian results were aided by exceptional sales growth. Profits in Asia Pacific were below a very strong prior year quarter; held back by initiatives to reorganize our operations in Thailand to prepare for further expansion while performance in China was strong. A weak quarter in South Africa was mitigated by strong sales gains and a profitable result in Australia. Overall global profitability levels increased in line with sales and reached record levels for the second quarter. Contributions from our associate companies in Russia and the Middle East were largely offset by start-up costs at the new joint venture in Chile," Martin says.


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