Operating profit at our Industrial/Environmental Filtration segment grew $1.6 million, or 10%, from the second quarter of 2011. Our 13.2% operating margin in this reporting segment in the second quarter increased 1.1 percentage points from last year’s second quarter primarily due to a reduction in selling and administrative costs as a percentage of net sales.
Net sales at our Packaging segment declined $4.2 million, or 18%, from the second quarter of 2011. Similar to the first quarter, this reduction was primarily driven by lower smokeless tobacco packaging sales, lower confection packaging sales and lower sales in other markets due to inventory and production scheduling adjustments. Lower smokeless tobacco packaging sales were primarily due to one of our major customers qualifying a second source supplier according to their corporate policy. The $1.3 million reduction in operating profit and the 3.8 percentage point reduction in operating margin compared with the second quarter of 2011 were primarily the result of lower sales.
Our operating performance in our Packaging segment significantly improved from the first quarter as evidenced by our 8.9% operating margin in the second quarter. We will continue to aggressively pursue several significant sales opportunities in our pipeline over the remainder of the year. Accordingly, we expect our Packaging segment operating performance to continue to improve sequentially over the third and fourth quarters of 2012.2012 Guidance Chris Conway commented on 2012 guidance: “Although our second quarter earnings were the second highest in Company history, we experienced softer demand in several of our geographic and product markets. We believe most of this softer demand was influenced by generally uncertain economic activity. However, our operational execution remained strong, as evidenced by our continued improvement in operating margin despite relatively flat sales. However, based upon our year-to-date financial results and due to continuing economic uncertainty, we are reducing our guidance for 2012 diluted earnings per share to $2.50 to $2.65 from our previous guidance of $2.55 to $2.70.
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