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Greif shares rise after 4Q result tops estimates

BOSTON (AP) -- Shares of Greif Inc. rose on Wednesday after the industrial packaging company posted fourth-quarter earnings that topped Wall Street's forecast.

THE SPARK: After markets closed on Tuesday, Greif reported net income of $26.5 million, or 45 cents per share, for its fiscal fourth quarter ended Oct. 31. That was up from earnings of $20.8 million, or 36 cents per share, in the year-ago period. Excluding special items, Greif reported adjusted earnings of 63 cents per share in the latest quarter. That beat the consensus forecast of analysts surveyed by FactSet, who expected 58 cents per share, on average.

Revenue fell 5 percent to $1.08 billion, primarily due to unfavorable effects of currency exchange and lower selling prices for the company's products. However, President and CEO David Fischer said the company posted record free cash flow of $304 million in the latest fiscal year, and a record operating profit of $84 million at Greif's paper packing segment.

Greif, based in Delaware, Ohio, reported results following a review of previously disclosed past accounting errors involving its Latin American operations in the company's rigid industrial and packaging segment.

THE BIG PICTURE: Fischer said relatively stable economic conditions in North America last quarter helped to partly offset weak performance, especially in Europe, for its flexible products and rigid industrial packaging segments.

THE ANALYSIS: KeyBanc Capital Markets analyst Adam Josephson said in a note to clients that Greif's record free cash flow in the latest fiscal year was roughly double what the company generated in the four previous years combined.

Josephson, who maintains a "Hold" rating on the stock, said the company's paper segment "remained the star of the company" after generating 7 percent growth in sales volume and a higher profit margin.

But he also noted market pressures in Greif's rigid and flexible packaging segments, where he remains "concerned about continued weak volume and pricing pressure."

SHARE ACTION: Shares of Greif rose $3, or 7.4 percent, to $46.63 in morning trading. Greif shares have ranged between $38.78 and $56.88 over the past 12 months.