In the Packaging segment, total corrugated products shipments and shipments per day were up 0.2% over last year’s fourth quarter. Containerboard production was 1,021,000 tons, and containerboard inventory was up 9,000 tons compared to the fourth quarter of 2017 and down 26,000 tons from the third quarter of 2018. In the Paper segment, compared to the fourth quarter of 2017, sales volume was 23% lower and production volume was 11% lower, primarily due to discontinuing the paper business at the Wallula Mill.
Commenting on reported results, Mark W. Kowlzan, Chairman and CEO, says, "Our containerboard mills established a new fourth-quarter production record while reducing our containerboard inventory by 26,000 tons from the end of the third quarter. We ran our system to demand and managed natural gas supply issues that negatively impacted production at our Wallula Mill. Our containerboard production allowed us to maintain our industry leading integration rate by supplying the necessary containerboard to achieve a new all-time quarterly record for box shipments per day. Additionally, in 2018, we established new annual records for containerboard shipments, total box shipments and box shipments per day. The final phase of the containerboard conversion work at our Wallula Mill was very successful with the machine starting up on schedule. During the quarter, the machine operated at its design capacity, producing a high-quality virgin linerboard. Volume in our Paper segment was seasonally lower as expected, but our market conditions were very good and our prices and mix came in better than anticipated. The benefits of market conditions and good operational execution in both of our segments helped us offset higher inflation in many of our operating and converting costs as well as higher freight and logistics expenses.
“Looking ahead as we move into the first quarter of 2019,” he adds, “we expect continued strong demand in our Packaging segment for both containerboard volume and corrugated products volume, and we expect strong market conditions in our Paper segment to continue. We anticipate higher labor and benefits costs with annual wage increases and other timing-related expenses. Although we expect costs for freight and recycled fiber to be fairly flat, we do anticipate some inflation with most of our chemical and repair and materials costs, while seasonally colder weather will increase energy usage and wood costs. We also expect our tax rate to be slightly higher. Finally, the recent decrease in the published price for domestic medium will have a minimal effect on earnings. Considering these items, we expect first quarter earnings of $1.97 per share."
PCA is the third largest producer of containerboard products and the third largest producer of uncoated freesheet paper in North America. PCA operates eight mills and 95 corrugated products plants and related facilities.