Chesapeake dampens plastics sale speculation

The Virginia-based packaging group laid out its plans in its annual report for 2007, published yesterday (31 March).

According to the report, Chesapeake's plastic packaging sales increased by 16% to $180m (£91m) in 2007, thanks to increased sales volume, favourable exchange rates and partial pass through of higher raw material costs.

In January, Lansdowne Partners packaging specialist Tim Rothwell suggested that Chesapeake could sell its plastics division after the firm said it would explore "alternatives for non-core or redundant assets".

Chesapeake also said it planned to expand its network of 21 pharmaceutical and healthcare plants in both developed and emerging markets.

The company has nine European pharmaceutical and healthcare plants, three in the US and one operation in Asia.

Chesapeake chief executive and president Andrew Kohut said the company had already secured "significant business" this year with GlaxoSmithKline, AstraZeneca, Schering-Plough, Bristol-Myers Squibb and Syngenta, in addition to Nestlé, Cadbury Schweppes and United Biscuits.

"These customer names are powerful evidence that we are making good on our commitment 'to protect and promote the world's greatest brands'," he said.

The company cited the increasing popularity of lifestyle drugs, such as Viagra and Botox, and the ageing population for the growth of the pharmaceutical and healthcare packaging market.

Chesapeake's UK net sales increased marginally from 2006 to 2007 to $497.3m, but were well down on 2005's $557.6m.

Last month, the company reported a $1.9m loss in 2007 from continuing operations, compared with a $7m profit in 2006. Its loss including special items narrowed from $32.4m in 2006 to $13.8m.

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