DOW JONES NEWSWIRES
Sealed Air Corp. (SEE) posted a 41% drop in fourth-quarter net income amid falling demand as it recorded restructuring charges and write-downs on auction-rate securities.
The maker of bubble wrap and plastic packaging also gave a 2009 forecast below Wall Street's expectations amid "a great deal of uncertainty about the severity of the economic downturn, as well as the timing and scope of a recovery in the global economy."
President and Chief Executive William V. Hickey said Sealed Air expects "a very weak first half and a slow, but limited recovery later in 2009." Volume is expected to fall by the low-single digits, resulting in earnings of $1.25 to $1.45 a share, excluding items. Analysts surveyed by Thomson Reuters were expecting $1.46.
Meanwhile, Sealed Air reported fourth-quarter net income of $47.3 million, or 26 cents a share, down from $79.7 million, or 43 cents a share, a year earlier. Excluding items including the charges and write-down, earnings fell to 39 cents from 45 cents.
Net sales fell 6.6% to $1.17 billion, with the stronger dollar reducing revenue by 2 percentage points. The sales figure was in line with the company's weak projection two weeks ago of $1.1 billion to $1.2 billion.
Gross margin fell to 26.3% from 27.5% on volume declines and the stronger dollar.
Sealed Air's results have been pressured the past several years by the increased cost of resin, a key product ingredient. As developed economies continue to suffer in the global economic slowdown, demand for protective packaging has slowed.
The company has responded by cutting cuts during the quarter, with Sealed Air on Monday saying moves should result in 2009 savings of up to $60 million. It also said capital spending will drop as much as 45% from 2008 to $100 million to $125 million.
Shares closed Friday at $13.70 and there was no premarket trading. The stock is down 45% since September.
-By Mike Barris, Dow Jones Newswires; 201-938-5658; mike.barris@dowjones.com
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