Sealed Air Corporation (SEE - Free Report) announced a 2.5-5% price hike on majority of its Food Care division’s products in Europe, Middle East and Africa (EMEA), effective Jan 1, 2018, in order to remain profitable regardless of higher raw material and other input costs.
Notably, the company raised prices in EMEA as polyethylene (PE) market prices remain highly uncertain in the region due to a slump in upstream market activity. However, Sealed Air refrained from price hikes in Switzerland and the U.K. at this moment, as it had raised prices in the regions earlier this year.
According to Sealed Air, persistent spike in costs of key raw materials, including a 19% in PE, 16% in nylon and 35% in polystyrene, led to the hike. The prices for these raw materials are cyclical, and depend on fluctuations in prices of petrochemical-based raw materials and energy.
The recent price hike also stemmed from rise in non-material costs, including power, labor and transportation, in the range of 1-4%. The hike will be applied to all shrink bags, rollstock products, food films and vertical pouch packaging.
The escalating raw material costs have partly shadowed Sealed Air’s price performance compared to the industry it belongs to. The company has underperformed its industry in a year’s time, recording a mere gain of 3%, which is in huge contrast with 14.5% growth recorded by the industry.
Nevertheless, Sealed Air is anticipated to grow on the back of enhanced demand for its core product portfolio, recently-introduced innovations, and accelerated growth in the global protein market, as well as the e-commerce sector.
Zacks Rank & Key Picks
Sealed Air currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are Caterpillar Inc. (CAT - Free Report) , Deere & Company (DE - Free Report) and Terex Corporation (TEX - Free Report) . All three stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has a long-term earnings growth rate of 10.3%. Its shares have been up 51.1%, year to date.
Deere has a long-term earnings growth rate of 8.2%. So far this year, shares of the company have gained 46.2%.
Terex has a long-term earnings growth rate of 11.3%. The company’s shares have rallied 45.9% during the same time frame.
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