Chesapeake reports loss in 'challenging' 2007

Net sales fell 1%, excluding the effect of changes in foreign currency rates, but increased by 6% from 2006 to $1.06bn (£550m) when these were taken into account.

Excluding special items, Chesapeake made a $1.9m loss from continuing operations, compared with a $7m profit in 2006. Its loss including special items narrowed from $32.4m in 2006 to $13.8m.

In 2007, the company took $15.8m in restructuring charges, asset impairment and other exit costs, due primarily to planned redundancies under its $25m global cost saving programme.

Chesapeake, which has 45 sites in Europe, North America, Asia and Africa, also sold its tobacco packaging business in Bremen, Germany.

In December 2007, Chesapeake agreed with its lenders to amend certain covenants of its senior revolving credit facility.

Chesapeake president and chief executive Andrew Kohut said 2007 was a "challenging year, but it was also a year when much was accomplished".

Sales in Chesapeake's Paperboard Packaging division fell 3% following the loss of substantial business with British American Tobacco (BAT), although this was partially offset by increased sales of German confectionery packaging.

Meanwhile, competitive market conditions hit pharmaceutical and healthcare packaging sales.

However, sales in the Plastic Packaging division grew by 12% on 2006 to $180m after Chesapeake increased volumes and passed through some raw material cost increases.

The division's operating income also rose 7% thanks to increased sales of speciality chemicals packaging. In January, Kohut opened a new plastics operation in Hungary that manufactures containers for the agrochemical industry.

Kohut predicted that 2008 would be a better year than 2007, with improvements mainly in the second half of the year.

He also said Chesapeake had secured "significant new business" into 2008.