STAMFORD, Conn. (AP) -- Shares of Silgan Holdings Inc. fell Tuesday after the packaging products supplier cut its guidance for the full year.
The Stamford, Conn.-based company said it now expects to post an adjusted 2012 profit of $2.65 to $2.75 per share, down from its previous prediction of $2.80 to $2.85 per share. Analysts, on average, expect earnings of $2.79 per share, according to a FactSet poll.
Silgan also reduced its fourth-quarter profit prediction to a range of 43 cents to 53 cents per share from its previous range of 58 cents to 63 cents per share. Analysts expect a profit of 57 cents per share for the quarter.
Silgan President and CEO Tony Allott said that while sales volumes of metal food containers are expected to grow in the fourth quarter compared with a year ago, they will be lower than previously expected.
In addition, product mix and manufacturing costs have lagged expectations, partly as a result of costs related to Superstorm Sandy that forced the company to shut down two facilities for an extended time, Allott said.
Silgan also said Tuesday that as a result of the guidance cuts, it's extending the expiration date of its modified Dutch auction to buy up to $250 million of its common stock to Feb. 5, five business days after the company is set to announce its fourth-quarter results. The modified Dutch auction tender offer allows shareholders to state the amount of shares they wish to tender and the price they are willing to pay within the company's range. Under the offer launched last month, Silgan will repurchase shares in a range of $40.75 to $45.25. It expects to fund the buyback with cash on hand.
As of Monday, 4.5 million shares of Silgan's common stock had been deposited under the tender offer, the company said.
KeyBanc analyst Adam Josephson backed his "Buy" rating for the stock, saying that the shortfall in metal food container volumes probably stemmed from lower-than-expected soup can volumes. He said that while it's unclear why soup can demand was lower than expected, it's important to note that Silgan didn't cut its guidance for 2013.
"U.S. soup sales have been in decline for several quarters, but we do not have reason to believe that the declines have recently accelerated (judging by recent soup company reports)," Josephson wrote in a note to investors.
Silgan shares fell $1.74, or 4 percent, to $42.82 in heavy morning trading, after dropping as low as $41.75 earlier in the day. Over the past 52 weeks, the company's shares have traded between $37.29 and $45.12.
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