AEP Industries profit falls as costs rise

Plastic packaging company AEP Industries Inc. said Monday its second-quarter profit fell 10 percent due to difficult economic and competitive conditions and higher manufacturing costs.

Earnings for the three months ended April 30 fell to $5.5 million, or 81 cents per share, from $6.2 million, or 77 cents per share. The company said the gain in per-share earnings reflected its share repurchase program and the sale of a foreign unit, but would not provide a more specific explanation.

Excluding one-time amounts related to the sale of its AEP Netherlands unit, AEP booked a loss from continuing operations of $3.3 million, compared with a profit of $5.1 million in the prior year.

Quarterly sales rose 14 percent to $181.2 million, from $158.3 million in the second quarter of fiscal 2007. AEP attributed the growth to a 15 percent increase in average selling prices, driven by higher resin costs, which was partially offset by a 2 percent dip in sales volume.

The company said revenue also boosted by foreign sales, due to the strengthened Canadian currency.

Operating expenses rose 11 percent to $23.1 million, reflecting payments related to a commercial dispute, increased delivery expenses from higher fuel costs, increased bad debt expense due to a customer's bankruptcy, and advisory costs related to the sale of AEP Netherlands. Those expenses were partially mitigated by a decrease in compensation costs.

"Second quarter results reflect the unfortunate but anticipated effects of the economic slowdown currently under way in North America," said Chairman and Chief Executive Brendan Barba. "Despite the continuation of difficult conditions, we are navigating the current economic environment and are positioned for improved operating results in the final two quarters of 2008."

AEP shares fell $2.68, or 12.1 percent, to $19.50 in morning trading, their lowest point since October 2005.