Pactiv changing accounting methods, lowers its full-year profit forecast

Pactiv changing its accounting methods

LAKE FOREST, Ill. — Pactiv Corp. said Monday that it is changing its accounting methods, which will lower its full-year earnings guidance.

The maker of Hefty garbage bags and packaging materials said it is switching from a combination of the last in, first out (LIFO) method and first in, first out (FIFO) method to a strictly FIFO method. The company’s switch to FIFO begins with its 2009 results.

Pactiv now anticipates 2009 profit of $2.26 to $2.30 per share. Its prior outlook was for earnings in a range of $2.44 to $2.48 per share.

Analysts surveyed by Thomson Reuters, whose estimates generally exclude one-time items, predict full-year earnings of $2.46 per share.

Pactiv said the accounting change should have a minimal impact on fourth-quarter profit, but can’t predict if it will impact 2010 earnings.

The company previously forecast fourth-quarter profit in a range of 48 cents to 52 cents per share. Analysts expect earnings of 50 cents per share.

Pactiv said the accounting change will lower cash tax payments by about $8 million next year and is a better reflection of its current inventory value.

The company’s stock gained 25 cents to $23.87 in midday trading.