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Sealed Air Management Discusses Q2 2012 Results - Earnings Call Transcript

Despite making this strong progress in our priorities, volume weakness and unfavorable foreign exchange impacted our profitability in the quarter, resulting in a more cautious outlook for 2012 and a revision to our full year guidance, which we will cover in more detail later in the call.

Focusing on sales performance on Slide 3. On a pro forma basis, reported sales declined 4% to $2 billion. Excluding the negative impact of currency, our organic sales increased 1% in the quarter. This was driven by 2% higher price and 1% lower volume, which was largely due to weakness in Europe.

Looking at price. Overall, all of our segments held or increased price benefits in the quarter versus last year due to the benefits of our prior pricing actions that went into effect either in the first or early second quarter. These benefits combined with modestly easing raw material costs late in the quarter did allow us to achieve a positive price cost spread of approximately $35 million in the second quarter.

Looking at Slide #4, you can see that all regions reported positive organic sales growth in the quarter except EMEA. The EMEA region was impacted by the weak European economy resulting in 3% lower volumes in that region on a pro forma basis. This decline reflected greater weakness in Europe across all of our business segments and was predominantly in Southern Europe, which was a disappointment as early quarter trending had suggested sequential stabilization.

Looking at the remaining regions, North America generated 1% organic growth on a pro forma basis, including 1% lower volumes. The volume decline was largely attributed to our Food Packaging and Diversey businesses. Weaknesses in our customers' protein production levels impacted our Food Packaging segment's demand. In the Diversey segment, volumes were negatively impacted by the effect of customer destocking and a bankruptcy related to the pink slime incident that we reported in the first quarter. I am pleased to report that July trends for Diversey North America did show a marked improvement, reaffirming the expectations for more normalized customer order patterns.

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