Packaging company Bemis (BMS 44.25, -2.14, -4.6%) failed to package up a good second quarter earnings report and outlook. Consequently, its stock is being unwrapped today by disappointed investors.
According to Bemis, the crux of its second quarter shortcomings was the challenging economic environment in Brazil, although its core U.S. Packaging business didn't exactly hit it out of the park either.
For the second quarter, Bemis reported a 0.9% decline in net sales of $1.012 billion and a 28.4% drop in adjusted earnings per share of $0.28. The company came up short of analysts' average expectations on both fronts.
Sales volumes reportedly declined sharply in Brazil versus the company's run rate as consumers, retailers, and the company's customers reacted to the political instability there. That contributed to a 37% decline in the Global Packaging segment's operating profit, which flowed from a 10% unit volume decline in Latin America. Net sales for the segment were approximately flat at $350.6 million.
For the U.S. Packaging segment, net sales decreased 1.4% to $661.5 million. Unit volumes were up approximately 1.0%, yet that increase was offset, the company said, by the decrease in net sales that was driven primarily by the mix of products sold and contractual selling price reductions negotiated with some customers to secure business for the long-term.
Bemis is in the midst of a restructuring effort to cut costs and to make its operations more efficient. During the second quarter, restructuring charges were approximately $24 million or $0.18 per share.
The promise of the restructuring activity, however, has been lost for the time being amid the company's reduced guidance for the full year 2017. Bemis is now projecting adjusted diluted earnings per share to be in the range of $2.35 to $2.50 versus its prior guidance of $2.50 to $2.60. The revision was pinned on the impact of the sharp contraction and tough economic environment in Brazil.
Before its first quarter report in April, Bemis was expecting FY17 adjusted diluted earnings per share to be between $2.85 and $3.00, so the new guidance marks the second cut to full-year estimates this year.
Shares of BMS have responded in kind to the reduced expectations. Including today's loss, they are down 7.5% year-to-date and down 16% over the last 52 weeks.