Sonoco to eliminate 40 positions in Hartsville

Sonoco is eliminating about 40 positions in its Hartsville operations as part of a broader global realignment aimed at achieving about $28 million in annualized pre-tax savings, the company said.

On Friday, Sonoco Chairman, President and Chief Executive Officer Harris E. DeLoach Jr. announced in New York cost reduction measures that will include the closing of about 15 of the company’s plants globally and the elimination of about 700 positions worldwide.

“The majority of these plant closings are small in size and our focus is on reducing our global industrial products manufacturing footprint,” DeLoach said in remarks to New York’s investment community.

Sonoco, a $4.0 billion global manufacturer of industrial and consumer products and provider of packaging services, employs about 18,500 people at its more than 300 operations in 35 countries and serves customers in 85 nations.

The 40 positions in Hartsville are mainly nonmanufacturing jobs that include support positions within some of the company’s divisions and corporate offices, said Roger Schrum, vice president of investor relations and corporate affairs.

Some of the Hartsville jobs will be eliminated by the end of this year, while others will be eliminated possibly in January, Schrum said.

Company officials sent employees a letter announcing the realignment and indicating that employees who would be affected by the reductions would be told this week. That process has already begun, Schrum said.

About half of the 40 jobs will be eliminated due to early retirement of employees, Schrum said. Some other eliminations will result from open positions that will be left unfilled, he said.

DeLoach said the cost of the global realignment is expected to be about $29 million, of which about $20 million in pre-tax restructuring charges are expected to be taken against earnings in the fourth quarter of 2008. The majority of the costs involve severance and other cash costs that will be incurred through 2009.

Sonoco expects base earnings for the fourth quarter and the full year of 2008 to be about 48 cents to 52 cents a share and $2.23 to $2.27 a share, respectively. The company had previously projected base earnings for the fourth quarter and full year of 2008 at 60 to 64 cents a share and $2.36 to $2.40 a share ,respectively. In 2007, full-year base earnings were $2.38 a share.

“While sales volume and profitability have held up in our Consumer Packaging segment so far in the fourth quarter of 2008, our businesses that serve industrial markets are seeing a much larger than expected decline in volume and reduced profitability as a result of significantly slowing global economic conditions,” said Charles J. Hupfer, senior vice president and chief financial officer for Sonoco.

“Our strategy to drive long-term shareholder value has not changes and, I believe, is more relevant than ever,” DeLoach said. “Our consumer growth strategy is clearly working and we are taking the necessary steps to better position our industrial p products businesses for a rebound when the economy turns. While we are focused on long-term value creation for shareholders, we have paid cash dividends to shareholders for 334 consecutive quarters and today the current dividend provides about a 4.5 percent yield. Overall, we are optimistic that Sonoco is better positioned than at any time in our nearly 110-year history.”