Sonoco announces further cost reduction measures

Sonoco says it expects base earnings for the fourth quarter and full year of 2008 to be $0.48 to $0.52 per diluted share and $2.23 to $2.27 per diluted share, respectively.

The company had previously projected base earnings for the fourth quarter and full year of 2008 to be $0.60 to $0.64 per diluted share and $2.36 to $2.40 per diluted share, respectively.

In 2007, full-year base earnings per diluted share was $2.38.

Says Charles J. Hupfer, senior vice president and chief financial officer, "While sales volume and profitability have held up in our consumer packaging segment so far in the fourth quarter of 2008, our businesses that serve industrial markets are seeing a much larger than expected decline in volume and reduced profitability as a result of significantly slowing global economic conditions.”

In order to align its manufacturing capacity and fixed cost structure to match market conditions, chairman, president and CEO Harris E. DeLoach, Jr says Sonoco is implementing further cost reduction measures which are expected to achieve approximately $28 million in annualized pre-tax savings when fully phased in through 2009.

"This realignment calls for the closing of approximately 15 plants globally and the reduction of approximately 700 positions. The majority of these plant closings are small in size and our focus is on reducing our global industrial products manufacturing footprint."

DeLoach said the cost of the realignment is estimated to be approximately $29 million, of which approximately $20 million in pre-tax restructuring charges are expected to be taken against earnings in the fourth quarter of 2008.