MWV Announces Program to Accelerate Profitability and Cash Flow
*Targets Incremental Annual Cost Savings of $100 to $125 million, with at
Least $75 million to be Realized in 2014
*Expects to Return $700 million to Shareholders, including Proceeds from
the Forestland Assets Sale
*Fourth Quarter EPS Expected to be in Line with Current Analyst Consensus
RICHMOND, Va. -- January 15, 2014
MeadWestvaco Corporation (NYSE: MWV) today announced a new program to generate
increased earnings and cash flow from its packaging businesses. The program is
expected to deliver annual pre-tax cost savings of $100 to $125 million by the
end of 2015, with at least $75 million expected to be realized in 2014. Key
elements of the program include:
*Implementing a leaner organization design across the packaging businesses
to simplify the structure and speed decision making
*Aligning the corporate infrastructure to the revenue base
*Reassessing participation to focus on business lines and markets within
packaging that provide the greatest opportunity for profitable growth
*Prioritizing capital on the highest return projects to improve free cash
“Wehave made good progress andcontinue to see significant potential in
driving profitable growth in our targeted markets through our four growth
pillars - commercial excellence, innovation, emerging markets and expanded
participation,” said John A. Luke, Jr., chairman and chief executive officer
of MWV. “We are eager to accelerate our progress and substantially improve our
margins and cash flow through a more streamlined and efficient organization
and cost structure. We are seeing measurable success with our previously
announced cost reduction initiatives, and this new program will further
improve our performance in packaging.
“These initiatives, coupled with the increasingly strong performance in our
Specialty Chemicals business, will generate significant progress this year in
the form of increased earnings and free cash flow, as well as solidify the
establishment of a leading business platform that we expect will deliver
consistently growing returns to shareholders,” added Luke.
The program savings are in addition to MWV’s previously announced overhead
reduction actions targeting $75 million to $80 million by the end of 2014.
Total combined annual cost savings from the two programs is expected to reach
more than $200 million (before program-related charges) by the end of 2015,
with at least an additional $75 million expected in 2014 from the new program.
Free cash flow (cash flow after capital expenditures) is expected to increase
by at least $100 million in 2014 from higher expected after-tax earnings and a
$50 million reduction in capital expenditures to approximately $350 million.
By the end of 2015, MWV expects to have significantly improved the EBITDA
margins of the Food & Beverage and Home, Health & Beauty packaging segments.
Industrial Packaging, after initial start-up costs associated with the
expansion of the Tres Barras mill in Brazil, is performing well and is
expected to achieve EBITDA margins of at least 25 percent by the end of 2014.
MWV has already begun implementing key components of the program, which the
company began formulating in connection with the sale of its forestland assets
to Plum Creek Timber Company, Inc. (Dec. 6, 2013). Dr. Robert K. Beckler, who
recently relocated to Richmond, Va., from Brazil to assume broader business
responsibilities within MWV, is leading all aspects of the new program.
Beckler has been with MWV for more than 26 years, including as president of
MWV Rigesa and president of MWV Specialty Chemicals.
“Bob’s success in leading MWV’s business expansion in Brazil and
transformation of our Specialty Chemicals segment to an industry leading,
market-focused business positions him well for these important initiatives,”
MWV is increasing to $700 million (previously $665 million) the amount of
value it expects to return to shareholders, primarily from the recently closed
forestland assets sale. In the fourth quarter of 2013, the company repurchased
3.75 million shares of common stock for $131 million. The company will provide
details on the form of shareholder returns for the remaining $570 million in
the near term.
Preliminary Fourth Quarter Results
The company also expects fourth quarter earnings per share from continuing
operations excluding special items to be in line with current analyst
consensus expectations. The company will discuss in greater detail its 2013
fourth quarter and full year results on Jan. 29, 2014.
MeadWestvaco Corporation (NYSE:MWV) is a global packaging company providing
innovative solutions to the world’s most admired brands in the healthcare,
beauty and personal care, food, beverage, home and garden, tobacco, and
agricultural industries. The company also produces specialty chemicals for the
automotive, energy, and infrastructure industries and maximizes the value of
its development land holdings. MWV’s network of 125 facilities and 16,000
employees spans North America, South America, Europe and Asia. The company has
been recognized for financial performance and environmental stewardship with a
place on the Dow Jones Sustainability World Index every year since 2004. Learn
more at www.mwv.com.
Certain statements in this document and elsewhere by management of the company
that are neither reported financial results nor other historical information
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. Such information includes, without limitation,
the business outlook, assessment of market conditions, anticipated financial
and operating results, strategies, future plans, contingencies and
contemplated transactions of the company. Such forward-looking statements are
not guarantees of future performance and are subject to known and unknown
risks, uncertainties and other factors which may cause or contribute to actual
results of company operations, or the performance or achievements of each
company, or industry results, to differ materially from those expressed or
implied by the forward-looking statements. In addition to any such risks,
uncertainties and other factors discussed elsewhere herein, risks,
uncertainties, and other factors that could cause or contribute to actual
results differing materially from those expressed or implied for the
forward-looking statements include, but are not limited to, events or
circumstances which affect the ability of MeadWestvaco to realize improvements
in operating earnings from the company’s ongoing cost reduction initiatives;
the ability of MeadWestvaco to close announced and pending transactions;
competitive pricing for the company’s products; impact from inflation on raw
materials, energy and other costs; fluctuations in demand and changes in
production capacities; relative growth or decline in the United States and
international economies; government policies and regulations, including, but
not limited to those affecting the environment, climate change, tax policies
and the tobacco industry; the company’s continued ability to reach agreement
with its unionized employees on collective bargaining agreements; the
company’s continued ability to reach agreement with its unionized employees on
collective bargaining agreements; the company’s ability to maximize the value
of its development land holdings; adverse results in current or future
litigation; currency movements; volatility and further deterioration of the
capital markets; and other risk factors discussed in the company’s Annual
Report on Form 10-K for the year ended December 31, 2012, and in other filings
made from time to time with the SEC. MeadWestvaco undertakes no obligation to
publicly update any forward-looking statement, whether as a result of new
information, future events or otherwise. Investors are advised, however, to
consult any further disclosures made on related subjects in the company’s
reports filed with the SEC.
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