MANY PACKAGING COMPANIES STILL SEE RED

PACKAGING MARKETS REPORTING DIFFICULT TIMES IN 1ST QTR '09!

For most equipment manufacturers the start of 2009 has been a continuation of an extremely difficult 4th quarter. The economic downturn has been tough on most and cruel to many. Some manufacturers have simply folded, while others are restructuring or slashing spending to help get through this difficult period. Weak consumer demand for goods is reducing the immediate need to purchase new packaging equipment, and the ones that are looking for new machinery are having more trouble getting financing for these capital expenditures. The result is that for packaging equipment manufacturers 25% to 50% lower 1st quarter yr-over-yr sales results are very common in the packaging industry. As an example, here are a couple of publicly traded packaging companies and the difficulties they are reporting in their most recent financial reports.

KRONES INC.:
Krones Inc., the large Equipment Systems provider, recently announced that sales orders for the first quarter of 09 were down 32% with sales revenues down 19%. In fact Krones also warned that customers are wary about investing in new equipment and those that are investing are having a difficult time getting financing from the financial markets for their projects. They have announced the termination of 800 temporary and contract workers for this year. They do not rule out the potential that 09 results could be negative.
Read Krones interim report for the 1st Qtr. 2009 here

MJ MAILLIS:
MJ Maillis Group, which manufactures strap, tape, shrink, and stretch wrapping equipment and materials, reported an after tax loss of 42.9 Million Euro($59 million USD) last year (ending Dec 31,2008), compared to a loss of 36 million Euro in 2007. They mention in their report that the last 4 months of 2008 were very difficult (sales down 27.6% year over year in 4th qtr) and it would continue in the first quarter this year. They were anticipating a bottom in the negative sales trend in qtr 1 of this year with a reversal happening after that. They noted that layoffs were made across the board including at their Wulftec stretch and strap equipment manufacturing facility in Canada.
Read MJ Maillis 2008 financial performance here

XPEDX:
Difficult times are not restricted to the manufacturers. Distributors are feeling the heat also. International Paper noted in its 1st quarter earnings report that its wholly owned distribution business, XPEDX, reported an operating loss of $7 million, down from the $26 million gain posted in the fourth quarter of 2008. Weakened paper and packaging volumes and lower margins were partly offset by favorable cost reductions.
Read International Paper First-Quarter Earnings Report here

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