Sealed Air swings to 3Q loss on Diversey charge
ELMWOOD, N.J. (AP) — Sealed Air Corp. posted losses in excess of $1 billion for the third quarter Friday after the food packaging company took a hit on a company it had acquired that grew slower than was expected.
While net income was in line with expectations when that one-time charge is removed, Sealed Air fell short on revenue and shares dipped almost 3 percent in premarket trading.
The company recorded a $1.22 billion, pre-tax charge for the impairment of goodwill and certain intangible assets related to Diversey Holdings, a cleaning and sanitation services company.
Sealed Air said "challenging macroeconomic conditions" in both Europe and North America led to growth rates and operating margins that came in lower than it expected from Diversey, a privately held company it acquired for $4.3 billion.
The company is selling a subsidiary of Diversey that focused on the Japanese market to The Carlyle Group for about $377 million. It said the sale was part of a plan to focus resources on the parts of the company with the greatest potential
Overall, Sealed Air lost $1.17 billion, or $6.03 per share, in the three months that ended Sept. 30. That compares to earnings of $73.7 million, or 41 cents per share, in last year's quarter. Not counting the charge, the company reported adjusted earnings of 31 cents per share in the quarter, about what analyst polled by FactSet were expecting.
Revenue climbed 52 percent to $1.9 billion, shy of the $1.98 billion that Wall Street was looking for.
Aside from the Diversey charge, Sealed Air also said marketing, administrative and development expenses more than doubled to $429.2 million in the third quarter.
Sealed Air, based in Elmwood, N.J., now expects 2012 adjusted earnings of 90 cents to $1, not counting the Diversey business it sold. That's down from its previous forecast for $1 to $1.10 per share.
Analysts expect, on average, had expected earnings of 99 cents per share.
Shares fell 46 cents to $16.22.