MeadWestvaco Sees Q4 Profit In Line With View;announces Profit Acceleration Plan

(RTTNews) - Packaging company MeadWestvaco Corp. (MWV) said Wednesday that it expects fourth quarter earnings per share from continuing operations, excluding special items, to be in line with current analyst consensus expectations. Analysts polled by Thomson Reuters expect the company to report earnings of $0.24 per share for the fourth-quarter. Analysts' estimates typically exclude special items.

The company noted that it will discuss in greater detail its 2013 fourth quarter and full year results on January 29, 2014.

In addition, the company 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.

Under the program, the company will be 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, and prioritizing capital on the highest return projects to improve free cash flow.

The company said that the program savings are in addition to its 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.

The firm said it 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. Robert 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.

The company noted that it 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 firm noted that it will provide details on the form of shareholder returns for the remaining $570 million in the near term.