CCL sells division to concentrate on cosmetics packaging

Related tags North america

CCL Industries, a global packaging and labelling provider, has
completed the sale of its North American CCL Custom Manufacturing
Division to KCP Income Fund for approximately Cdn $273 million. The
move marks the company's move away from household packaging to
concentrate more on specialty packaging for the cosmetics and
personal area, reports Simon Pitman.

CCL​ says that The proceeds from the sale, which was for cash, will fund the continued expansion of CCL's higher growth Label and Container businesses through further acquisitions and technology improvements. The company says it may also repay debt, and repurchase stock.

The North American Custom Manufacturing Division generated sales of CAD604.6 million ($481.1m) in 2004 and accounted for CAD26.6 million of CCL's consolidated operating income. With the sale completed, CCL estimates that its annualized revenues will still be in excess of CAD1.0 billion including revenues generated by Steinbeis Packaging, the label acquisition the company completed in January 2005.

With headquarters in Toronto, Canada, CCL employs 4,000 in production sites in North America, Asia and Europe. Currently the company is focused on the cosmetics and personal care business areas, but is also active in pharmaceutical, household and specialty food and beverage products.

Mr. Donald Lang, CEO and vice chairman stated, "This completes the dramatic transformation of CCL that we started five years ago, with CCL now emerging as a pure specialty packaging company focusing on our high growth label and container businesses."

Lang added that the company had reported significant income growth in the first quarter of 2005 compared to the first quarter of 2004 of 18 per cent and 55 per cent in the label and container divisions, respectively.

The company is now hoping that this performance, coupled with the contributions of its ColepCCL and Steinbeis divisions, ongoing operational improvements and the continued strength of the personal care market, will bode well for success in the rest of the 2005 financial year.

Based on current factors, the company says that it is now anticipating earnings before unusual items for 2005 to exceed the company's 2004 performance. This should lead to an after tax gain of CAD 100 million.

Further to improving the company's presence in the cosmetics and personal care field, the sale is also expected to diversify the company's exposure to the US currency, a move that aims to insulate it from future downturns in the US economy.

Further to the sale the company has also confirmed the appointment of Geoffrey Martin to the position of president and COO. His appointment will see the position's responsibilities expanded to include all operations of the new CCL. Donald Lang is appointed to the new role of Vvice chairman of the Bboard and retains his responsibilities as CEO. Both appointments were announced in April in conjunction with the announcement of the sale of the North American Custom Manufacturing Division.

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