Commenting on the flexible packaging segment results, Theisen said, “Performance in this segment reflects the positive impact of a manageable raw material cost environment and diligent cost management during the first quarter. While we benefit from our exposure to a diverse range of packaging applications, some of which continue to demonstrate volume growth, overall unit sales volume has declined. These volume levels are consistent with the experience of our customers and reflect the negative impact of weak economic conditions and inflation on consumer demand. Raw material costs increased during the first quarter, which will put some pressure on second quarter results. We have been modifying customer pricing agreement terms to accelerate our ability to adjust selling prices on a more timely basis in 2012 and reduce the impact of raw material cost changes. We expect volume to continue to be weak through the first half of this year and to strengthen during the second half of 2012.”
PRESSURE SENSITIVE MATERIALS BUSINESS SEGMENT
Pressure sensitive materials net sales for the first quarter of 2012 were $145.3 million compared to $145.0 million in the first quarter of 2011. The increase in net sales reflects the impact of increased sales of higher value products, partially offset by a negative impact from currency translation of 2.1 percent. For the first quarter of 2012, operating profit was $9.7 million, or 6.7 percent of net sales, compared to operating profit for the first quarter of 2011 of $9.9 million, or 6.8 percent of net sales. The impact of currency translation was insignificant to quarterly operating profit.
OTHER OPERATING (INCOME) EXPENSE, NETFor the first quarter of 2012, other operating income and expense included $5.2 million of fiscal incentive income, compared to $5.5 million for the first quarter of 2011. Fiscal incentives are associated with net sales and manufacturing activities in certain South American operations and are included in flexible packaging segment operating profit.