MeadWestvaco Corp. at its investor meeting divulged that it is targeting$1 billion of incremental revenue over the next three to five years by pursuing growth strategies like commercial excellence, focusing on emerging markets, and product innovation.
The company is looking at an average annual growth of 5%-10% by continuing to build its strong packaging platform that cater targeted end markets, including food, beverage, tobacco, personal care, home and garden, healthcare, as well as corrugated packaging in Brazil. Core market growth, commercial excellence, and emerging markets are expected to drive sales growth in the range of 1-2% individually, while product innovation is expected to contribute 2-3% of the growth.
MeadWestvaco detailed its approach by way of identifying top priority customers based on profit potential, and then building or enhancing partnerships with these customers. MeadWestvaco has a long and successful history in the emerging markets, and is already expanding its platform in Brazil.
China is regarded as its largest growth engine given higher consumption, particularly for premium and luxury brands and a shift towards Western-size convenience foods and larger-count products. The company has reviewed strategies for growing its substantial business in China. MeadWestvaco plans to drive growth initiatives on luxury/premium products in attractive end markets via key customer partnerships and selectively expanding its offering in China from the high-end segments to the middle markets.
The company is also focused on increasing its footprint in India, given its 13% CAGR for the packaging market. The company plans to invest in local manufacturing footprint, capabilities and partnerships to accelerate growth and build on early leadership positions to rapidly expand and shape the market. The company has targeted more than $500 million in revenue growth in key emerging markets over next three to five years.
MeadWestvaco is developing new products based on market and consumer insights, innovation and expertise in materials science and packaging design. Backed by its robust innovation pipeline, the company believes product novelty would drive both revenue growth, in the range of 2% to 3%, and margins over the 2012-2014 timeframe.
The company has been transforming itself from a maker of commodity goods to a producer of high-value packaging for consumer products companies.The profitable growth plans for the packaging business will help deliver higher operating margins and substantial cash flows. These will in turn be reinvested in the business and increase shareholder returns.
The shares of MeadWestvaco currently maintain a Zacks #3 Rank (Hold rating) over the short term.
Richmond, Virginia-based MeadWestvaco Corporation provides solutions to companies operating in the health care, beauty and personal care, food, beverage, home and garden, tobacco, and commercial print industry. The company’s segments include Packaging Resource, Consumer Solutions, Consumer & Office Products, Specialty Chemicals, Community Development and Land Management. It competes with International Paper Co. (IP - Free Report) , Republic Services, Inc. (RSG - Free Report) and Weyerhaeuser Co. (WY - Free Report) .