During 2017, the Company launched an improvement plan called “Agility” to fix, strengthen, and grow its business.
As part of this three-pronged approach, the fix aspect involves the restructuring and cost savings plan announced in June and increased in September to target pre-tax annual savings of $65 million. As anticipated, $4.1 million of this benefit was realized in 2017; the Company anticipates approximately $35 million of benefit in 2018, with the remainder of the plan benefit in 2019. Estimated total pre-tax costs to implement the plan are $110 to $125 million. Of that total, pre-tax cash expense is estimated between $75 and $85 million. The announced plan includes optimizing manufacturing capacity, consolidating office space, and reducing SG&A cost structure and other costs.
The strengthen and grow aspects of Agility create the foundation for the Company’s long-term success by simplifying its product portfolio and organizational structure, rebalancing R&D efforts to focus on manufacturing improvements, and deliberately pursuing targeted areas of growth in its North American business. The Company’s actions during 2018 related to these work streams will lay the foundation for future growth.
BUSINESS SEGMENT RESULTS
New Reportable Segment Structure
Effective with reporting for the fourth quarter of 2017, the Company realigned its segment reporting to transition from two reportable segments to three reportable segments as follows: U.S. Packaging, Latin America Packaging, and Rest of World Packaging. The U.S. Packaging business segment is unchanged. The Company will now report Latin America Packaging and Rest of World Packaging business segments, which had previously been aggregated and named Global Packaging.
The Latin America Packaging segment includes all food and non-food packaging-related manufacturing operations located in Latin America. The Rest of World Packaging business segment includes all food and non-food packaging-related manufacturing operations located in Europe and Asia-Pacific, as well as medical device and pharmaceutical packaging manufacturing operations in the U.S., Europe, and Asia.
Historical detail of the new reportable segments is provided in the supplemental schedules on the Company’s investor website and in the attached schedules in this press release.
U.S. Packaging
U.S. Packaging net sales of $643.3 million for the fourth quarter of 2017 represented an increase of 1.8 percent compared to the same period of 2016. Unit volumes were relatively flat compared to the prior fourth quarter. The increase in net sales was driven primarily by sales price increases partially offset by mix of products sold.
U.S. Packaging net sales of $2,626.0 million for the full year 2017 represented an increase of 0.2 percent compared to the same period of 2016. Compared to the prior year, unit volumes were up nearly 1 percent.
U.S. Packaging operating profit decreased to $89.3 million in the fourth quarter of 2017, or 13.9 percent of net sales, compared to $94.0 million, or 14.9 percent of net sales, in 2016.
U.S. Packaging operating profit decreased to $352.5 million for the full year 2017, or 13.4 percent of net sales, compared to $400.0 million, or 15.3 percent of net sales, in 2016. Compared to the prior year, lower profits were driven by mix of products sold, previously-negotiated contractual selling price reductions on select products, and inefficiencies related to an ERP system implementation at one of the Company’s manufacturing facilities during the second quarter.
Latin America Packaging
Latin America Packaging net sales of $178.7 million for the fourth quarter of 2017 represented a decrease of 0.6 percent compared to the same period of 2016. Currency translation decreased net sales by 0.5 percent. Organic sales were approximately flat reflecting flat unit volumes and increased selling prices that were offset by unfavorable sales mix driven by the economic environment in Brazil.
Latin America Packaging net sales of $711.4 million for the full year of 2017 represented an increase of 1.2 percent compared to the full year of 2016. Currency translation increased net sales by 4.0 percent. Organic sales decline of 2.8 percent reflects decreased unit volumes of approximately 4 percent and unfavorable sales mix driven by the challenging economic environment in Brazil, partially offset by increased selling prices.
Latin America Packaging operating profit for the fourth quarter was $6.2 million, compared to $15.2 million for the same period in 2016. Latin America Packaging operating profit for the full year was $30.0 million, compared to $50.0 million for the same period in 2016. Compared to the prior year, lower profits in Latin America Packaging were driven primarily by the impacts of the challenging economic environment in Brazil, including lower unit volumes and unfavorable mix of products sold.
Rest of World Packaging
Rest of World Packaging net sales of $181.6 million for the fourth quarter of 2017 represented an increase of 3.1 percent compared to the same period of 2016. Currency translation increased net sales by 4.1 percent. The acquisition of Evadix increased net sales by 0.5 percent. Organic sales decline of 1.5 percent reflects unfavorable mix of products sold, partially offset by increased unit volumes of approximately 8 percent and increased selling prices.
Rest of World Packaging net sales of $708.8 million for the full year 2017 represented an increase of 4.2 percent compared to the full year of 2016. Currency translation decreased net sales by 1.7 percent. The acquisitions of Steripack and Evadix increased net sales by 3.7 percent. Organic sales growth of 2.2 percent reflects increased unit volumes of approximately 6 percent and increased selling prices, partially offset by unfavorable mix of products sold.
Rest of World Packaging operating profit for the fourth quarter was $15.4 million, compared to $18.2 million for the same period in 2016. Rest of World Packaging operating profit for the full year 2017 was $61.1 million, compared to $64.0 million for the same period in 2016. Compared to the prior year, lower profits in Rest of World Packaging were driven primarily by rising raw material input prices in Europe and mix of products sold.
more detail at: http://investors.bemis.com/press-release/bemis-company-reports-2017-results-and-2018-outlook