Archive for Wednesday, February 11, 1998

SEALRIGHT CO. LOSES $3.5 MILLION IN `97

February 11, 1998

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The company said prospects for a stronger 1998 were good as a new product line and increased efficiencies occur.

As expected, Sealright Co. of DeSoto reported a net loss of $3.5 million, or 32 cents a share, in the last three months of 1997.

The company, which designs and manufactures packaging and packaging systems for consumer products, took a big fourth-quarter loss for discontinued operations and expenses related to continuing restructuring.

Net sales for the quarter were $55.8 million, down slightly from $56.6 million a year earlier.

For the year, net sales were $255.2 million, down from $257.2 million in 1996. Net income for 1997 improved to $265,000, or 2 cents a share, compared with a net loss of $5.8 million, or 52 cents a share, in 1996.

The 1997 results included non-recurring gains of 11 cents a share on the sale of idle assets and other items. Adjusted for those gains, Sealright lost 9 cents a share from continuing operations. In 1996, earnings per share from continuing operations, adjusted for non-recurring restructuring expenses, were 21 cents a share. Consolidated gross margins were lower as a result of strategic pricing decisions and higher-than-expected plant operating costs.

Sealright also blamed high expenses and lower-than-expected sales, especially in the company's flexible packaging business. Sealright said inefficiencies at its Akron, Ohio, flexible-packaging plant significantly depressed the company's results.

In Sealright's core frozen dairy dessert packaging business, unit sales increased by 8.8 percent in 1997.

``We continue to win new business through strategic partnerships with key customers, and to serve these customers with greater efficiency,'' said Charles F. Marcy, president and chief executive officer. ``Moreover, we believe that pricing concessions required to maintain and grow customer accounts for the most part are behind us.''

Sealright said it expected 1998 sales to benefit from the introduction of its new Maximizer packaging system for frozen dairy desserts.

The company is installing a state-of-the-art lithographic press in Fulton, N.Y., which will shorten order times and reduce outside printing costs. Marcy said Sealright would maintain a sharp focus in 1998 on lowering costs and increasing operating efficiencies.

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