Bemis Co. Inc.'s turnaround plan is expected to deliver some $35 million in cost savings for the company this year.
An update on the company's restructuring efforts, which it calls Agility, came during a Feb. 1 earnings conference call where the Neenah, Wis.-based company also said it would close an additional plant, this time in Tennessee.
"Through Agility, we are creating a cost-effective and more disciplined structure that is positioned to capture growth," CEO William Austen said. "We will deliver the financial improvement plan we have laid out. But also, equally as important, we are also setting the stage for a profitable, growing company in the years to come."
The restructuring plan already netted some $4.1 million of pre-tax annual savings in 2017, with an additional $35 million coming this year. The balance of the expected $65 million in annual savings will happen in 2019, the company said.
Savings this year will come from efforts including optimizing manufacturing capacity, consolidating office space and reducing 262 administrative positions.
"We are committed and determined to improve and to regain credibility," Austen said.
The company's approach toward improvement involves many facets, including a concerted effort to go after smaller business opportunities the firm once passed over.
These short- and medium-run opportunities register billions of dollars in sales each year, but also require a different approach than the company's traditional focus on large-run business. That means the company is streamlining specifications, working to quicken quotes and providing dedicated assets to this segment.
"As we become simpler, quicker and easier to work with, we are able to more deeply penetrate pockets of growth such as short-run business and non-food applications that historically our business model has not focused on," Austen said.
Part of the company's reorganization has been the previous announcement of the closure of four locations.
Market conditions, and not the restructuring program, has brought about the need to close another location, the company said.
This summer, Bemis will close its Shelbyville, Tenn., packaging location after one of the company's customers decided to shutter some of its own infant care product plants.
"Our customer, whose end market is an ultra-competitive space, is embarking on several plant closures within their network and has decided to transition this business away from our facility," Chief Financial Officer Mike Clauer said.
"Our analysis showed that our assets at this facility could not be redeployed and deliver a meaningful return," he said. "We are, therefore, closing our facility."
The base profit related to the facility is about $6 million annually, the CFO said.
Bemis earned a profit of $94 million, or $1.02 per diluted share, on sales of $4.05 billion in 2017. That compares to a profit of $236.2 million, or $2.48 per share, on sales of $4 billion in 2016.
The company lost $40.7 million, or 44 cents per diluted share, on sales of $1 billion, in the fourth quarter. That compares with a profit of $60.5 million, or 64 cents per diluted share, on sales of $988 million during the fourth quarter of 2016.