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For second quarter 2012, Sealed Air Corporation (NYSE:SEE) reported sales of $2.0 billion, a 65% increase over 2011, including a 67% increase from the Diversey acquisition, a 2% increase in organic sales, and a 4% unfavorable foreign currency translation. Sales volume performance improved slightly and reflected unit volume growth in all regions except EMEA, due to a 3% volume decline in Europe. On a pro forma basis, sales decreased 4%. Excluding the unfavorable impact of foreign exchange, pro forma sales increased 1% from 2% higher price and 1% lower unit volumes.
For the second quarter 2012, Sealed Air reported a loss of $0.07 per share after a $0.27 per share unfavorable effect from special items. This compares with reported net earnings per common share (EPS) of $0.37 in 2011. On an adjusted basis, second quarter 2012 EPS was $0.20 compared with second quarter 2011 adjusted EPS of $0.40.
Adjusted EBITDA was $243 million in the quarter, or 12.1% of net sales, which includes unfavorable foreign currency of $10 million. On a pro forma basis, 2011 adjusted EBITDA would have been $305 million or 14.6% of net sales. Benefits from cost synergies and a favorable price/cost spread from prior pricing actions were not enough to offset the unfavorable effects of lower unit volumes, foreign exchange translation, a negotiated labor agreement and costs associated with manufacturing consolidation and productivity improvement activities. Second quarter 2011 pro forma adjusted EBITDA also benefited from a reduction in variable compensation recorded by Diversey.
Commenting on our operating performance, William V. Hickey, President and Chief Executive Officer, stated:
“The fundamentals of our business model remain strong. Despite uneven demand patterns, organic sales in developing regions increased by over 10% on a pro forma basis, we increased our market penetration, and we delivered cost synergy benefits to plan.
Nonetheless, we are disappointed by our adjusted EBITDA results, which were lower than we expected. Persistent weakness in our customers’ end markets and cautious order patterns became more challenging in the latter part of the quarter as European economic conditions further declined and our food businesses navigated through challenging protein production trends.