Pactiv Corp. plans to close some inefficient plants to reduce overhead and grow its higher-margin Hefty consumer-products business.
The Lake Forest, Ill.-based company said the move primarily will affect its molded fiber packaging business and will reduce overhead in other areas. The consolidation will affect plants in North America and Europe, reducing annualized pretax costs by about $48 million, said Richard Wambold, chairman and chief executive officer.
``The focus is to improve the productivity of the company [and] to reallocate spending in an extended period of time into the growth side of the business,'' Wambold said during a March 16 conference call with analysts.
The company may close a molded fiber plant in Great Yarmouth, England, and consolidate several undisclosed North American facilities, according to its annual report released March 15. A majority of the actions will take place in the second quarter, the company said.
About $25 million of the expected savings will go for marketing in the Hefty business. That operation includes extruded plastic bags and disposable plates.
Among new products expected to fuel growth are thermoformed trays used with case-ready products in supermarkets, Wambold said.
Pactiv operates 56 plants in North America, with molded fiber facilities accounting for seven of those sites. The company's board also has authorized the repurchase of 10 million shares of stock for general corporate uses.
The company, North America's largest thermoformer according to Plastics News figures, recorded about $3.14 billion in sales for 2003.