THE US packaging giant Chesapeake Corporation, which has four Irish production plants, has posted worse than expected second quarter results.
Net loss in the quarter was $261 million (€167.7 million) compared to a net loss in the second quarter of 2007 of $11.5 million. Net sales of $251.4 million in the second quarter of 2008 were 6 per cent down on 2007.
Chesapeake’s operations in Ireland, which include one plant in Belfast, specialise in paperboard packaging.
The latest accounts show the American group recorded a “goodwill impairment” charge of $215.5 million in its paperboard packaging division in the second quarter of this year.
The operating income from the division before exceptional items was $3.3 million, down $6.5 million year-on-year. Excluding the effect of changes in foreign currency exchange rates, operating income in Chesapeake’s paperboard packaging division actually fell by $7.4 million compared to the second quarter of 2007.
Speaking yesterday Andy Kohut, president and chief executive officer of Chesapeake Corporation, said the group had expected results for the first half of the year to fall below 2007 figures. But he said the results were “worse than expected”.
Mr Kohut said sales were down across most paperboard markets and the group had incurred more than $3 million of re-organisational expenses. He said its main priority was to secure refinancing of its revolving credit facility. Chesapeake confirmed it had negotiated what it described as a “comprehensive refinancing plan”.
Mr Kohut believes that the group has a “robust business pipeline” that will deliver “benefits during the second half of the year”.
But he warned it remains a group priority to “sell or close non-core assets or assets which are under-performing”.
