CCL Industries Inc. announced its full year 2012 results. Sales were $1,308.6 million in 2012, an increase of 3.2% compared to the $1,268.5 million in 2011. Excluding the impact of foreign currency translation, sales increased 5.3% organically and 0.5% from the acquisitions of Sertech in April 2011 and Graphitype in July 2012.
Operating income for 2012 was $178.4 million, an increase of 9.0% compared to $163.7 million for 2011; and an increase of 12.2% excluding the impact of foreign currency translation. This reflects solid improvements in all three of the company's segments: Label, Container and Tube.
Earnings before net finance cost, taxes, earnings in equity accounted investments, depreciation, amortization and restructuring and other items (EBITDA) was $254.6 million for 2012, an increase of 6.5%, compared to $239.1 million posted in 2011. Excluding the unfavorable impact of foreign currency translation, EBITDA increased by 9.5% over the prior year.
In addition to the improvements recorded at the business segments, net finance cost for the year decreased $0.5 million compared to 2011. The company's joint ventures in Russia, the Middle East and Chile contributed $2.2 million equity earnings compared to $1.2 million in 2011, due to particularly strong results at Pacman-CCL, despite the start-up costs at the new plant in Santiago.
Net earnings for 2012 increased 15.9% to $97.5 million, compared to $84.1 million for 2011, due to the improvement in operating income across all business segments, a reduction in net finance cost and a lower effective tax rate partially offset by an increase in corporate expenses and other selling, general and administrative expenses.
Sales for the fourth quarter of 2012 were $313.5 million, compared to $317.3 million in the prior year period. Excluding currency translation, sales for the fourth quarter in 2012 increased by 2.8% compared to the prior year period. This increase was due to 2.3% of organic growth and 0.5% impact from acquisitions. The Label segment increased revenue 3.9%, while the Container and Tube segments experienced a decline in revenue of 0.9% and 3.1%, respectively.
Operating income for the fourth quarter of 2012 was $38.6 million, an increase of 9.0% compared to $35.4 million for the comparable quarter of 2011. The Label segment posted a solid 12.9% increase in operating income while the Container segment was flat to 2011 and Tube segment declined.
EBITDA was $57.7 million for the fourth quarter of 2012, an increase of 5.5% compared to $54.7 million for the fourth quarter of 2011, and a 10.8% increase excluding the negative impact of currency.
The company's joint ventures in Russia, the Middle East and Chile contributed equity earnings of $1.1 million compared to $1.4 million for the 2011 fourth quarter, with the current period including start-up costs in Santiago.
Net earnings for the 2012 fourth quarter were $19.9 million, an increase of 8.2% compared to $18.4 million for the fourth quarter of 2011. Excluding foreign currency translation impact net earnings improved 18.9%.
"CCL's 2012 fourth quarter results represented the ninth consecutive quarter of year-over-year improvement in earnings, resulting in a record performance from operations in 2012 despite significant currency headwinds and a low growth global economic environment," said Geoffrey T. Martin, president and CEO. “Sales for CCL Label for the 2012 fourth quarter increased 3.9% in local currencies compared to a particularly strong prior year period where we had posted a 12.7% gain.
“For the year as a whole, organic growth was 5.9% with high single digit rates in North America, low single digits in Europe, flat in Latin America and strong double digit gains in Asia Pacific,” Mr. Martin added. “Operating income improved 20% for the quarter, excluding the impact of currency translation, and our return on sales margin for 2012 widened 50 basis points to an all-time high 14.6%. Europe was a major success story in the quarter as Home & Personal Care continued to progress in a tough market and Beverage outperformed on large export orders to new customers. Asia was also a highlight on a very strong performance in China and easier comparisons in Thailand due to the floods in the prior year. North America matched the unusually strong fourth quarter in 2011. Our joint ventures continued to progress with solid results in Russia, outstanding performance in the Middle East and lower start-up costs than expected in Chile. Growth in Santiago has exceeded expectations and a further $4 million has been invested in the venture between CCL and its partners.
"CCL Container delivered another significant step up in profitability in 2012 with record cash flow on the back of solid demand for aerosols and continuing operational improvement. In the fourth quarter some customers rescheduled deliveries into early 2013 and we temporarily shut down one of our lines in Mexico in December for a complete overhaul. Both factors contributed to a temporary modest revenue drop in the quarter. CCL Tube also reported a decline in sales and profitability against a particularly strong fourth quarter in 2011, but still recorded another stand-out year generating a 16.3% return on sales," Mr. Martin noted.
"We are very pleased with the company's performance in 2012,” Mr. Martin continued. “Despite three strong years since the economic crisis of 2008 and 2009, we still expect top line progress and bottom-line improvement to continue in 2013. Our order intake levels have been very solid so far in the current quarter. Foreign currency markets remain high on our watch list with 95% of our revenues derived from outside Canada and there are some early signs of returning commodity inflation."
"The company finished the year with a robust balance sheet, $189 million of cash on hand and a net debt to total book capitalization of 13.6%,” Mr. Martin concluded. “We have renegotiated our credit facilities in light of the planned Avery Dennison transaction with a $700 million package to finance the acquisition and provide for future flexibility. On a pro-forma basis, we still expect our net debt to EBITDA ratio to remain well below 2 times following the integration of the Avery Dennison business. Given our prospects for the coming year and the Company's commitment to increasing total shareholder return, your Board of Directors has declared an increase in the quarterly dividend of $0.02 per share, equating to 10.3% on the Class B shares. The new quarterly dividend of $0.215 per Class B non-voting share and $0.2025 per Class A voting share will be payable to shareholders of record at the close of business on March 15, 2013, to be paid on March 28, 2013. CCL has delivered dividends to shareholders without omission or reduction for over 30 years."