Packaging Corporation of America Reports 4Q, Full Year 2018 Results

Packaging Corporation of America reported fourth-quarter 2018 net income of $205 million, or $2.16 per share and $2.17 per share excluding special items. Fourth quarter net sales were $1.75 billion in 2018 and $1.68 billion in 2017. Full-year 2018 net income was $738 million, or $7.80 per share and $8.03 per share excluding special items. Full-year 2018 net sales were $7.01 billion compared to 2017 net sales of $6.44 billion.
 
“Our containerboard mills established a new fourth quarter production record while reducing our containerboard inventory by 26,000 tons from the end of the third quarter,” Mark Kowlzan, chairman and CEO, said. “We ran our system to demand and managed natural gas supply issues that negatively impacted production at our Wallula Mill.
 
“Our containerboard production allowed us to maintain our industry-leading integration rate by supplying the necessary containerboard to achieve a new all-time quarterly record for box shipments per day,” Kowlzan reported. “Additionally, in 2018, we established new annual records for containerboard shipments, total box shipments and box shipments per day. Volume in our Paper segment was seasonally lower as expected, but our market conditions were very good and our prices and mix came in better than anticipated. The benefits of market conditions and good operational execution in both of our segments helped us offset higher inflation in many of our operating and converting costs as well as higher freight and logistics expenses.”
 
“Looking ahead as we move into the first quarter of 2019,” Kowlzan added, “we expect continued strong demand in our Packaging segment for both containerboard volume and corrugated products volume, and we expect strong market conditions in our Paper segment to continue. We anticipate higher labor and benefits costs with annual wage increases and other timing-related expenses. Although we expect costs for freight and recycled fiber to be fairly flat, we do anticipate some inflation with most of our chemical and repair and materials costs, while seasonally colder weather will increase energy usage and wood costs. We also expect our tax rate to be slightly higher. Finally, the recent decrease in the published price for the domestic medium will have a minimal effect on earnings. Considering these items, we expect first-quarter earnings of $1.97 per share.”