February 2006 - PowerPoint PPT Presentation

Loading...

PPT – February 2006 PowerPoint presentation | free to download - id: 922c-ZWNkM



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

February 2006

Description:

5%-8%, 3/1/06. 2005 A Strong Operating Performance. Double-digit increase in sales ... A sixth tube and core plant to open in 2006. Germany ... – PowerPoint PPT presentation

Number of Views:64
Avg rating:3.0/5.0
Slides: 45
Provided by: carr9
Category:
Tags: february | tube

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: February 2006


1
February 2006
2
Forward-looking Statements
  • Todays presentation contains a number of
    forward-looking statements based on current
    expectations, estimates and projections. These
    statements are not guarantees of future
    performance and are subject to certain risks and
    uncertainties. Therefore, actual results may
    differ materially.
  • Information about the Companys use of non-GAAP
    financial measures, why management believes
    presentation of non-GAAP financial measures
    provides useful information to investors about
    the Companys financial condition and results of
    operations, and the purposes for which management
    uses non-GAAP financial measures is included in
    the Companys Annual Report on Form 10-K filed
    with the Securities and Exchange Commission.
  • Pursuant to the requirements of Regulation G,
    the Company has provided definitions of the
    non-GAAP measures discussed during this annual
    meeting with the financial community as well as
    reconciliations of those measures to the most
    closely related GAAP measure on its Web site at
    www.sonoco.com.

3
Business Segments
Consumer
Tubes/Cores/Paper
Rigid Paper Plastic Containers
Global Paper
Global Tubes and Cores
Global Composite Cans
Plastic Containers
Flexible Packaging
Metal Plastic Closures
Services
Service Centers
Point-of-Purchase
All Other
Protective Packaging Paperboard
Specialties Wire and Cable Reels
Machinery Mfg Molded Extruded Plastics
Adhesives
4
Growth Initiatives
  • Change historical ratio of sales from industrial
    and consumer markets
  • Objective over next
  • 2000 2005
    several years
  • Industrial Consumer Industrial
    Consumer Industrial Consumer
  • 59 41 51 49
    45 55

5
Operating Environment (2005)
  • 2005
  • Increased costs for
  • Raw materials
  • Energy
  • Hedging natural gas
  • Positive price/cost relationship
  • Steel surcharge contractual price recovery began
    1/05
  • Paperboard increase
  • 30-40/ton, 6/13/05
  • Tube and core increase
  • Up to 5, 6/27/05
  • Tube and core energy surcharge
  • 1.375, 9/19/05
  • Paperboard energy surcharge
  • 10/ton, 9/16/05
  • Flexible Packaging increase
  • 7 9, 10/5/05
  • 2006
  • Expect continued pressure on raw materials and
    energy costs
  • Hedging natural gas
  • Will continue aggressively managing price/cost
  • N.A. paperboard increase
  • 30-40/ton, 2/6/06
  • N.A. tube and core increase
  • 6, 2/20/06
  • European tube and core increase
  • U.K., central and western
  • 12-16, 3/1/06
  • Nordic region
  • 5-8, 3/1/06

6
2005 A Strong Operating Performance
  • Double-digit increase in sales
  • Record base (non-GAAP) operating earnings
  • Continued strong cash flow generation
  • Ongoing productivity improvement
  • Improved margins
  • Increased volume
  • Positive price/cost relationship
  • U.S. pension plan fully funded at year-end
  • Debt-to-capital ratio reduced to 35.7
  • Best safety performance in 107-year history

7
Areas for Improvement in 2006
  • Need increased flexible packaging capacity for
    growing opportunities with major CPGs
  • Reduce working capital
  • Reduce number of underperforming plants
  • Stay focused on putting the right people in the
    right jobs to execute growth strategy

8
Growth Strategy
Average Annual Double-digit Total Returns for
Shareholders
Top Line Growth
Total Packaging Solutions for Consumer
Product Companies
Strategic Acquisitions and Joint Ventures
Geographic Expansion
One Sonoco Face to the Customer
New Product and Service Development
Managing the Guts
Continuous Productivity Improvement
Appropriate Cost Structure
Balance of Sales and Earnings from Consumer and
Industrial Markets
Base for Growth
Substantial Cash Flow
Consecutive Quarterly Dividends Since 1925
Strong Balance Sheet
9
Growth Base
  • Dividends
  • Substantial cash flow
  • Dividends
  • Capital expenditures
  • Pension and postretirement
  • Acquisitions
  • Debt reduction
  • Stock buy backs
  • In process of repurchasing 2.5 million shares
  • Current authorization 5,285,762 shares
  • Strong balance sheet

10
Growth Strategy
Average Annual Double-digit Total Returns for
Shareholders
Top Line Growth
Total Packaging Solutions for Consumer
Product Companies
Strategic Acquisitions and Joint Ventures
Geographic Expansion
One Sonoco Face to the Customer
New Product and Service Development
Managing the Guts
Continuous Productivity Improvement
Appropriate Cost Structure
Balance of Sales and Earnings from Consumer and
Industrial Markets
Base for Growth
Substantial Cash Flow
Consecutive Quarterly Dividends Since 1925
Strong Balance Sheet
11
Managing the Guts
  • Margin Improvement
  • Objective Return EBIT margins to historical
    levels
  • Structural cost reductions
  • Working capital management
  • Price micro-management
  • Operating execution
  • Six Sigma
  • Lean Manufacturing
  • Scrap reduction

12
Sales Growth Sales Excluding Divestitures ( in
Millions)
6.8 CAGR
4.6 CAGR
13
Growth Strategy
Average Annual Double-digit Total Returns for
Shareholders
Top Line Growth
Geographic Expansion
Total Packaging Solutions for Consumer Product
Companies
Strategic Acquisitions and Joint Ventures
One Sonoco Face to the Customer
New Product and Service Development
Managing the Guts
Continuous Productivity Improvement
Appropriate Cost Structure
Balance of Sales and Earnings from Consumer and
Industrial Markets
Base for Growth
Consecutive Quarterly Dividends Since 1925
Substantial Cash Flow
Strong Balance Sheet
14
Top Line Growth Acquisitions
  • Acquisition criteria
  • Not dilutive in first year
  • Meet cost of capital in three to four years
  • Complementary to existing businesses
  • Example CorrFlex Graphics, LLC
  • One of North Americas largest point-of-purchase
    (P-O-P) display companies acquired 5/28/04
  • Accretive in first year exceeding pro forma
    expectations

15
Top Line Growth Joint Ventures
  • Sonoco-Alcore, joint venture with Ahlstrom of
    Finland
  • Combined Ahlstroms and Sonocos respective
    European paper-based tube/core and coreboard
    operations 11/02/04
  • Sonoco owns 64.5. Can acquire remainder through
    put/call provisions
  • Similar agreement with Demolli of Italy
  • Sonoco owns 25 with option to acquire 100 after
    12/06

16
Top Line Growth Geographic Expansion
  • Poland
  • New service center for PG/Gillette
  • Sonoco moved with Gillette from U.K. to Poland
  • Turkey
  • Completed second tube and core plant in 2005
  • Principally serving textile industry
  • India
  • Reviewing entry opportunities
  • Brazil
  • Sonoco is largest tube and core manufacturer
  • Newest venture steel easyopen closures
  • China
  • Sonoco is largest tube and core manufacturer
  • Five converting plants/one paper mill
  • A sixth tube and core plant to open in 2006
  • Germany
  • New service center for PG European baby care
    division
  • Also manages Mitsubishi tube and core requirements

17
Top Line Growth Total Solutions Strategy
A full range of packaging supply chain products
and services for consumer product companies
Graphics reproduction Laser cylinder engraving
Consumer Products
Delivery of packaged products
to customers destination
  • Service Centers
  • - Custom
  • packing
  • - Fulfillment
  • - Purchasing
  • - Inventory
  • control

Brand artwork management
  • Creation
  • Package development
  • Filling
  • Market testing

Consumer Packaging Development Center
Sonoco Trident PG The Body Shop
Keating JV MasterFoods Phillip Morris Internal
Rigid paper and plastic containers Kraft PG Flex
ible Packaging MasterFoods Kraft Metal and
plastic closures Ball Planters Point-of-purchase P
G Gillette
Sonoco CorrFlex PG Gillette Packaging
Services PG Gillette razors Gillette
blades Hewlett-Packard inkjet cartridges PG
Germany baby care products
Packaging Services Sonoco CorrFlex PG Gillette

18
Top Line Growth Total Solutions Strategy
  • One Sonoco Face to the customer
  • Our large consumer product goods (CPG) customers
    want fewer suppliers, capable of handling an
    increasingly wider range of their packaging
    supply chain needs
  • These large CPG customers are interested in
    building stronger alliances with strategic
    vendors
  • They want a single point of account leadership
    One Sonoco Face to simplify their
    relationship across multiple Sonoco businesses
  • Sonoco is uniquely able to take advantage of this
    opportunity because we have the broadest
    offerings of packaging products and services in
    the industry
  • We have assigned seasoned executives to handle
    these relationships

19
Top Line Growth New Product and Market Development
  • Increased expenditures and new patent
    applications annually since 2001
  • Sales from new products alone reached 74.7
    million in 2005
  • New products those commercialized two years or
    less
  • Objective is to average in the 100 to 125
    million range of annual sales from new products

20
Top Line Growth New Products and Technology
Extensions Flexible Packaging
Krafts Snack n Seal technology
21
Top Line Growth New Products and Technology
Extensions Flexible Packaging
Retort pouches stand out in stores and provide
consumer convenience
Gum package with laser-scored opening
Flexible stick packs for powdered beverages
22
Top Line Growth New Products and Technology
Extensions Packaging Services
PointofPurchase display
23
Top Line Growth New Products and Technology
Extensions Rigid Paper
SonoWrap single-wrap pack
24
Top Line Growth New Products and Technology
Extensions Rigid Plastic
Thermoformed containers are portable,
non-breakable and can be microwaveable
25
Top Line Growth New Products and Technology
Extensions Rigid Plastic
Molded plastic squeeze tubes for adhesives and
sealants
26
Top Line Growth New Products and Technology
Extensions Rigid Plastic
Multi-wall, high-barrier self-heating container
27
Top Line Growth New Products and Technology
Extensions Closures
Easy-open closures serving many markets including
coffee pet foods infant formulas soups and
meats prepared pastas fruits and vegetables
28
Top Line Growth Technology Enhancements Sonotube
Forms with Rainguard Technology
29
Financial Review
30
Earnings per Share
31
Earnings per Share and Base EPS
32
Reconciliation of EPS to Base EPS
2002
2003
2004
2005
Diluted EPS, as reported
1.39


1.43


1.53


1.61


Adjusted for
Restructuring
.09


.38


.14


.13


Recognition of Tax Benefits
-


-


(.09)


-


Tax on Repatriation
-


-


-


.10


Legal Settlement
-


-


.03


-


Exec Life Insurance
-


-


.04


-


Environmental Reserve
-


-


-


.08


Gain on Sale of Disc. Ops.
-


(.51)


-


-


Base EPS
1.48


1.30


1.65


1.92


33
Base PL Summary 4th Qtr 2005 vs. 2004 (
Millions, except Base EPS)
2005
2004
Better/(Worse)
Net sales
954.9


885.0


7.9
Base EBIT
91.0


68.1


33.5
Base earnings
58.4


42.8


36.3
Base EPS, diluted
.58


.43


34.9
34
Base PL Summary 2005 vs. 2004 ( Millions,
except Base EPS)
2005
2004
Better/(Worse)
Net sales
3,528.6


3,155.4


11.8
Base EBIT
308.5


268.5


14.9
Base earnings
192.6


162.9


18.3
Base EPS, diluted
1.92


1.65


16.5
35
Sales Bridge 4th Qtr 2005 vs. 2004 (Millions)
Comments
2004 Net Sales
885.0


Consumer segment and Packaging Services, Wire and
Cable Reels and Protective Packaging
Volume / Mix
43.2


Higher average prices in most consumer packaging
businesses, Wire/Cable Reels and Molded Plastics
Price
11.9


Acquisitions/Divestitures
11.0


Primarily related to Sonoco Alcore JV
Exchange / Other
3.8


Impact of dollar weakening against foreign
currencies
2005 Net Sales
954.9


36
Sales Bridge 2005 vs. 2004 ( Millions)
Comments
2004 Net Sales
3,155.4


Consumer segment and Packaging Services, Wire and
Cable Reels and Protective Packaging
Volume / Mix
100.0


Primarily Consumer segment, but higher average
prices in most all business units
Price
60.4


Acquisitions/Divestitures
166.6


Approximately half related to Sonoco Alcore JV
and half related to acquisition of CorrFlex
Exchange / Other
46.1


Impact of dollar weakening against foreign
currencies
2005 Net Sales
3,528.6


37
Base EBIT Bridge 4th Qtr 2005 vs.
2004 (Millions)
Comments
2004 Base EBIT
68.1


Volume / Mix
6.7


Consumer segment and Packaging Services, Wire and
Cable Reels and Protective Packaging
Lower OCC costs in North American paper
operations Material purchasing savings in
Consumer segment
Price / Cost
8.0


Engineered Carriers/Paper N. A., Rigid Paper and
Plastics N. A., Flexible Packaging, and Packaging
Services were main drivers
Productivity
14.1


Other
(6.1)


Increases in energy, freight, and wages/salaries,
and Asian impairment partially offset by Gains on
sale of two operations
2005 Base EBIT
91.0


38
Base EBIT Bridge 2005 vs. 2004 ( Millions)
Comments
2004 Base EBIT
268.5


Volume decreases and unfav. mix in Engineered
Carriers/Paper segment offset fav. vol/mix in
Consumer and Packaging Services segments
Volume / Mix
(.5)


4th quarter drop in OCC costs, material
purchasing savings in Sonoco CorrFlex, higher
prices in Molded Plastics business and Wire/Cable
Reels
Price / Cost
15.7


Engineered Carriers/Paper N. A., Rigid Paper and
Plastics N. A., Flexible Packaging, Packaging
Services and Wire/Cable Reels were main drivers
Productivity
46.1


Other
(21.3)


Increases in Energy, Freight, and Wages/salaries,
Asia impairment partially offset by Acquisitions,
Gains on sale of two operations
2005 Base EBIT
308.5


39
Cash Flow YTD through 4th Quarter ( Millions)
12/31/2005
12/31/2004
Change
Net Income
161.9


151.2


10.6


Asset Impairment
9.5


6.2


3.4


Depreciation and Amortization
163.1


163.9


(.9)


NWC Change
(38.5)


(48.9)


10.4


Pension / FAS 106 Funding
(77.0)


(33.4)


(43.7)


Other
8.4


13.2


(4.7)


Operating Cash
227.4


252.2


(24.8)


Use of Cash
Capital Expenditures
(129.1)


(119.8)


(9.3)


Dividends
(90.1)


(85.1)


(5.1)


40
Balance Sheet (Millions)
Note Debt / Total Capital ratio is adjusted to
increase capital by deferred taxes.
41
2006 EPS Guidance
1st Quarter .41 - .44
Full Year 1.94
42
Conclusions and Outlook Why Invest in Sonoco?
  • Effective management of price/cost
  • Through 2006, expect average annual cash flow
    from operations of approximately 300 million,
    excluding any discretionary pension plan
    contributions, with capital expenditures from
    125 million to 150 million annually
  • Volumes and margins improving in Consumer
    Packaging
  • Aggressive new product development, geographic
    expansion and integration of new acquisitions and
    joint ventures

43
Conclusions and Outlook contd Why Invest in
Sonoco?
  • Dividends yielding more than 50 higher than the
    SP average and paid consistently since 1925
  • First quarter 2006 EPS estimated in range of .41
    to .44 per diluted share, including
    approximately .02 related to expensing of stock
    options and excluding restructuring charges
    and/or significant general economic changes
  • First quarter usually weakest
  • Fullyear 2006 EPS estimated in range of 1.90 to
    1.94, including (.03) for expensing of stock
    options and excluding onetime items and/or
    significant general economic changes
  • Company expects to be at the high end of that
    range
  • With greater clarity into year, will determine if
    guidance should be readdressed

44
(No Transcript)
About PowerShow.com