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Packaging co MeadWestvaco reports 3Q profit

By Michael Felberbaum
AP Business Writer / October 26, 2011

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RICHMOND, Va.—Packaging company MeadWestvaco Corp. reported a profit for the third quarter on higher sales in packaging resources and specialty chemicals, but warned of a "modestly lower" fourth-quarter performance.

The Richmond company said its net income was $117 million, or 67 cents per share, for the period ended Sept. 30, in contrast to a net loss of $15 million, or 9 cents per share, a year ago. The year-ago period includes losses from its media and entertainment packaging business that it sold in September 2010, and the sale of its envelope products business that closed in February 2011.

Earnings adjusted for restructuring costs were 70 cents per share. Analysts polled by FactSet expected adjusted earnings of 64 cents per share.

Revenue rose 9 percent to $1.64 billion from $1.5 billion a year ago, driven by a strong performance in emerging markets and higher prices and productivity gains across most of its product lines.

The company said it was helped by gains in packaging markets for food, tobacco and beverages, as well as specialty chemicals for asphalt, adhesives, inks and oilfield drilling. Analysts expected revenue of $1.59 billion.

Its shares edged up 2 cents to $27.81 in midday trading Wednesday.

The company, which operates in 30 countries and has customers in more than 100 nations, has gone through a deliberate transformation over the last several years from a mill-centric paper supplier to global partner for brands like Procter & Gamble, Coca-Cola and Walmart. MeadWestvaco has said the changes have helped build a company that is more global, innovative and focused.

MeadWestvaco said profit for its specialty chemicals segment grew 27 percent in the latest quarter and profit from its packaging resources segment increased 12 percent. It saw profits for its consumer solutions segment, which include some paperboard and plastic packaging for beverage, tobacco, personal care, home and garden and health care markets, fall 29 percent due to higher supply costs.

"Our consistent financial improvement has come against the backdrop of an increasingly challenging economic environment," CEO John A. Luke Jr., said in a conference call. "It's fair to say all (of MeadWestvaco's business segments) have been impacted in some measure by cost inflation, lower consumer confidence and discretionary spending, especially in developed markets like Europe and North America."

But MeadWestvaco cautioned that its earnings in the fourth quarter will be "modestly lower" compared with a year ago due to a planned outage at its Covington paperboard mill and weaker consumer demand.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum.