News

Jiffy bag manufacturer Pregis Corporation will increase its prices next month to continue to offset rising costs and falling sales.

The US protective and speciality packaging firm reported a pre-tax profit of $5.2m in the three months to 30 June, up from a pre-tax loss of $4.5m last year, despite falling demand and a negative dollar exchange rate with the pound and euro.

Chief executive Mike McDonnell said the performance was due to driving aggressive cost reductions as well as continued disciplined pricing for value. "We maintained this despite downward pressure on our key raw material costs," he said.

McDonnell said he expected demand to remain weak for the second half of the year and predicted resin costs would continue to rise. He said the firm anticipated increasing its prices in September to account for these cost increases.

"It is critical that these higher costs result in selling price increases so we can avoid the significant margin compression that we experienced last year associated with the excessive time lag between the sharp cost increases and higher selling prices," he said.

The European protective packaging division has recently invested $500,000 in end-of-line packaging equipment to support its plans to grow the Jiffy envelope market in Europe. For more on this story, click here.

PREGIS Q2 RESULTS

Net sales $196m ($275m in 2008)
Operating income $6.5m ($7.2m)
Pre-tax profit $5.2m ($4.5m loss)
Net profit $3m ($5.6m loss)

Protective packaging
Sales $234m ($348m)
EBITDA $15m ($14m)

Speciality packaging
Sales $147m ($186m)
EBITDA $10m ($12m)