He said they are working on product lines that are not getting the return on capital invested and it is negotiating contracts better than before with a key being the need to accept there are some product lines which have aged and that they are no longer interested in.
“When we have negotiations, our people are, by definition, seeing resistance. I've never seen a purchaser tell me that our products are too cheap. But they understand because it's not only about price. It is about quality,” Peribere, CEO, president and director, told investors during a conference call.
“It is about the value we create to them, et cetera. So… there's a cultural shift. It is going to take time, but we are seeing some good attention and movements.”
Equipment sales and product mix factors
Sealed Air cited products for fresh red meat, such as Darfresh, Grip & Tear, Simple Steps and Oven Ease as examples that are driving stronger equipment sales and favourable product mix.
Food packaging organic sales increased 4% and hygiene organic sales increased 3.4%.
The firm continued to experience above-market growth in Asia, Mid East, Africa and Turkey (AMAT) and in Latin America, from rising beef production prices, equipment sales and product and sanitation solutions in Food & Beverage.
Beef production in North America increased 1% and Europe declined by 1%, sales in North America increased by just over 2% and Europe was relatively flat.
Constant currency sales increased 12% in Germany and 5% in the UK but were offset by continued economic weakness in France, Italy and Spain.
Food and beverage division positive
In the Food & Beverage (F&B) Division,net sales of $946.5m increased 3.9% on a constant dollar basis and 2.6% on a reported basis.
Reported operating profit was $103.7m for second quarter 2013, compared with $69.8m in 2012.
F&B achieved 2.5% higher volumes, led by strength in AMAT and Latin America and a slight increase in North America.
The favorable $17m for selling, general and administrative expenses (SG&A) includes $9m related to the net impact of plant consolidations and relocation projects in the division that negatively impacted results in the second quarter 2012.
Volume declined slightly in Europe and JANZ. Price/mix was higher by 1.4%, primarily due to a 5.1% increase in Latin America and positive trends in North America, Europe and AMAT.
F&B Adjusted EBITDA increased 24.2% to $138.9m, or 14.7% of net sales, compared with $111.8m, or 12.1% of net sales, in 2012.
This increase was primarily due to higher volumes, more favorable price/mix, manufacturing efficiency improvements and cost synergies from the Integration and Optimization Program.