Sealed Air Corp. is going by a new corporate brand name, but the packaging company is facing an old nemesis: pressure on profitability.
The Charlotte, N.C.-based company, which now goes by SEE and includes brand names such as Cryovac, Bubble Wrap and Liquibox, posted lower net sales and profit for the second quarter.
While the results were expected by the company, CEO Ted Doheny said Sealed Air is embarking on a new cost-cutting program aiming to take out $140 million to $160 million in annual costs by the end of 2025.
Dubbed "cost take-out to grow," the initiative comes at a time when See expects continued demand weakness to continue into the second half of 2023.
Sealed Air, which is still the company's legal name, had reorganized in the couple years prior to COVID-19, making changes that both saved money and improved earnings.
But coming out of the pandemic, the company finds itself once again facing challenges. This includes changes in consumer habits facing higher prices for products packaged in the company's films, bags and trays for food, including meats and poultry.
"The rapid increase in inflation over the last several quarters has impacted discretionary spending, resulting in decelerating market demand. Consumers are trading down from premium to lower priced proteins. This dynamic impacted all regions," Doheny said on an Aug. 8 conference call to discuss second quarter earnings.
Retail demand is expected to remain soft into 2024, the company said.
Sealed Air is pushing back by redirecting resources "from crisis problem solving to focus on driving major growth opportunities," the CEO said. The company looks to accelerate automation across all lines of business and launch new products using sustainable materials and digital printing.
SEE earned $94 million — 65 cents per diluted share — on sales of $1.38 billion during the second quarter ended June 30. This compares with earnings of $114.4 million, or 77 cents per diluted share, on sales of $1.42 billion during the same period in 2022.
The company now expects sales to range from $5.4 billion to $5.6 billion for the year, down from a previous estimate of $5.85 billion to $6.1 billion.