Pactiv posts 29 percent 4th-qtr profit gain despite sales decline; cost controls helped

Pactiv 4th-qtr profit rises despite lower sales

LAKE FOREST, Ill. — Trash bag and plasticware maker Pactiv Corp. on Tuesday posted a 29 percent jump in fourth-quarter profit despite lower sales, as the company reined in expenses.

For the last three months of 2009, net income rose to $71 million, or 53 cents per share, compared with $55 million, or 41 cents per share, in the 2008 fourth quarter.

Sales dipped 3 percent to $854 million from $883 million.

Analysts polled by Thomson Reuters, on average, expected profit of 50 cents per share on sales of $848.8 million.

The company, which makes Hefty trash bags as well as foodservice products and food packaging, said the sales decline reflected higher volume but lower prices due to declining raw material costs.

Expenses declined about 6 percent in the quarter.

Pactiv said sales of Hefty products declined 5 percent to $334 million, as a 7 percent increase in volume was offset by a 12 percent decline in prices.

Pactiv’s food service and packaging segment posted a 2 percent sales decline to $520 million, also showing 7 percent volume growth, but prices fell 10 percent.

For the year, the company earned $323 million, or $2.42 per share, up from $216 million, or $1.63 per share, in 2008. Sales declined 6 percent to $3.36 billion from $3.57 billion in 2008.

The company noted it made $550 million in pretax pension contributions during the year to address its pension underfunding.

Pactiv said it expects to post profit between 38 cents and 42 cents per share for the first quarter. Analysts, on average, forecasts first-quarter profit of 51 cents per share.

For 2010, the company said it expects profit between $2.20 and $2.40 per share, with sales up between 7 percent and 9 percent. That implies projected sales between $3.6 billion and $3.66 billion.

Wall Street projects full-year profit of $2.35 per share with sales of $3.49 billion.

Pactiv shares closed down 12 cents at $23.33.