MWV price increases help ‘solid’ growth

However, the Richmond, Virginia-based packaging and paper firm said profits were dented by soaring energy, raw materials and freight costs, which rose by $64m in the second quarter, compared with the same period in 2007.

Pre-tax profit increased 74% to $73m on sales of $1.7bn, up 8%.

MWV chief executive John Luke said the company would continue to address cost issues by “going after price increases, while pressing ahead with our profitable growth strategy”.

In the company’s packaging resources business, profit from continuing operations dropped 33% to $54m, while sales increased 5% to $764m.

Year-on-year, bleached board shipments rose 2% driven by liquid packaging and export markets. Bleached board pricing increased 5% in the second quarter, while coated unbleached kraft prices rose 3%.

The company said this segment would take “pricing actions” to combat cost inflation and it was implementing a new freight policy to counteract rising fuel costs on outbound shipments.

Profits also fell in the consumer solutions business by 8% to $22m, while sales rose by 10% to $656m.

Growth was particularly strong in the beverage, tobacco, personal care and healthcare markets outside North America.

MWV said this segment also generated improved results in media packaging owing to sales of higher-margin video games packaging and productivity improvements.

In the second quarter MWV purchased assets of Oracle Packaging in North Carolina, adding new beverage packaging business from Coors, Pepsi and Diageo.

The company also boosted its pharmaceutical packaging business with the acquisition of International Labs with India-based Bilcare.

Third quarter profits are expected to be similar across both segments.

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