“We are clearly disappointed with our results this quarter, which were impacted by lower-than-expected unit volumes and operational issues in the U.S. Packaging segment,” says William F. Austen, Bemis president/CEO. “We are commencing a series of decisive actions and will execute a comprehensive plan to improve financial and operational performance in this segment. We are evaluating all aspects of our U.S. business – including our manufacturing footprint, SG&A, and direct and indirect spending – to better position the Company in the current environment and for the long-term. We are committed to providing additional details and updates as we make progress on these critical initiatives.
"Our Global Packaging segment met our expectations this quarter, driven by continued operational improvements in our Latin American and healthcare packaging businesses. We are pleased with the traction our new leadership is making in each of these businesses as they drive new ways of thinking, enact change, and deliver on our commitments.”
Initiatives to Improve US Packaging Operations and Profitability
As part of the Company’s efforts to improve the profitability of its US Packaging business, Bemis is developing a comprehensive plan that enhances focus and improves performance in its U.S. business while maintaining the high quality products, best-in-class service, and culture of innovation consistent with Bemis’ standards. Actions include:
- Strengthening the US Packaging leadership team. Bemis appointed Fred Stephan as President of the Company’s U.S. Packaging business in February. Fred brings significant experience and skills to his new role. He most recently served as Senior Vice President & General Manager of the Insulation Systems business at Johns Manville, a Berkshire Hathaway company. Fred successfully served in a number of general management and functional roles over the past 12 years at Johns Manville and during the previous 20 years at General Electric.
Austen stated, “Fred is an outstanding addition to Bemis Company. He has a great track record of leadership and success, and I have already been impressed with his fresh insights, his drive for action and results, and his practical and simple approach to our U.S. business. I look forward to Fred’s impact on changing the way we do business in the U.S. and to the financial performance improvement that Fred will help drive in the long-term. I am personally committed to working with Fred to get our U.S. business back on track.”
Bemis is also evaluating additional ways to enhance its U.S. organizational structure to promote accountability and efficiency.
- Optimizing manufacturing capacity. The Company is evaluating its manufacturing footprint and utilization in the U.S. to align with customer and end market demand and to ensure optimal operational efficiency. A plan will be announced during the second quarter and implemented during 2017, with benefits expected in 2018. In late March and early April 2017, Bemis eliminated approximately 200 manufacturing positions in its US Packaging business. The impact of this is included in the Company’s updated 2017 outlook.
- Further reducing cost structure. Bemis is taking actions to reduce SG&A expenses in the U.S. The Company is evaluating all administrative activities and costs and is accelerating its Global Business Services (shared services) initiative in the US.