Sealed Air Hikes Prices to Combat Growing Raw Material Costs

Zacks

In order to combat continued escalation of raw material and other input costs, Sealed Air Corporation (SEE) has announced a 5% price hike on certain products of its Product Care unit in North America effective Oct 1, 2014.

Most important raw materials utilized by Sealed Air are polyolefin and other petrochemical (PE)-based resins and films. These raw materials represented around 40% of consolidated cost of sales in 2013.

Since Jan 2013, PE suppliers have reportedly increased prices between 13%—22% on a cumulative basis, which includes a 4%—8% in early 2014. Other major PE suppliers have also announced their intent to raise prices effective Sep 1, spurred by tightness in supplies of ethylene feedstock.

This price hike follows Sealed Air’s previous price increases announced in February. The company’s efforts of minimizing the impact of cost increases will help customers in the long term and at the same time will assist the company in delivering an innovative product portfolio.

The 5% price hike will be applied to Bubble Wrap brand cushioning, Cell-Aire foam and laminates, Jiffy mailers, Instapak film, Fill-Air void fill, NewAir I.B. and FillTeck inflatable cushioning materials, RapidFill automated bags and Cryovac, Opti and CorTuffshrink films.

The consumer packaging company reported a 20% year-over-year increase in second-quarter adjusted earnings per share to 42 cents. The company also raised its fiscal 2014 guidance based on strong performance in the first half as well as improved outlook for the second half.

Sealed Air will benefit from the relocation its global headquarters which will create a stronger, one-company culture that will enable greater collaboration, accelerate innovation and drive operating efficiencies. Moreover, the company will benefit from cost savings from its ongoing Integration & Optimization Program as well as its recent additional restructuring plan.

Elmwood Park, NJ-based Sealed Air is a major specialty packaging service provider to a diverse set of end markets. The company operates in the United States and in 50 other countries with packaging and performance-based materials and equipment systems serving food, medical, and an array of industrial and consumer applications.

Sealed Air currently sports a Zacks Rank #1 (Strong Buy). Other favorably ranked stocks in the same sector include Berry Plastics Group, Inc. (BERY), Graphic Packaging Holding Company (GPK) and ACCO Brands Corporation (ACCO). All these carry a Zacks Rank #2 (Buy).

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