ManagementParadise.com : Worlds Leading Management Portal. MBA | Classroom, Boardroom and Beyond


Go Back   ManagementParadise.com Forums - Your MBA Online Degree Program and Management Students Forum for MBA,BMS, MMS, BMM, BBA, students & aspirants. > Projects HUB for Management Students ( MBA Projects and dissertations / BMS Projects / BBA Projects > PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT > Financial Management

Financial Analysis of Meadwestvaco

Financial Analysis of Meadwestvaco

Discuss Financial Analysis of Meadwestvaco within the Financial Management forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; MeadWestvaco (NYSE: MWV), which started calling itself MWV in March 2008[1], makes customized and printed packaging and office paper.[2] Its ...

Reply

 

LinkBack Thread Tools Display Modes
Advertisements
Financial Analysis of Meadwestvaco
Old
 (1 (permalink))
Netra Shetty
netrashetty is on a distinguished road
 
netrashetty
Student of PGDM at Mats Institute of Management and Entrepreneurship
Bangalore, Karnataka
Management Paradise Guru
 
Status: Offline
Posts: 4,857
Join Date: Dec 2010
Location: Bangalore, Karnataka
Financial Analysis of Meadwestvaco - February 19th, 2011

MeadWestvaco (NYSE: MWV), which started calling itself MWV in March 2008[1], makes customized and printed packaging and office paper.[2] Its customers include companies in the food and beverage, media and entertainment, personal care and health care industries.[2] It operates in more than 30 countries and sells its products in over 100[2], although 69% of 2007 sales came from the United States.[3] In addition to its paper product lines, MWV's Community Development and Land Management Group manages the 952,000 acres of forestland that the firm owns in the U.S. and Brazil.[4] In 2007, the firm sold approximately 393,000 acres of forestland, generating an after-tax gain of $169 million.[4][5]

In 2007, MWV's revenue was $6.9 billion (5.8% gain over 2006) and its 2007 net income was $285 million (206.5% gain over 2006).[6] The large growth in net income in 2007 reflects an after-tax gain of $169 million from the sale of 393,000 acres of U.S. forestland.[4][5]

The other main issue facing MWV is the proliferation of digital technology and its negative impact on the use of paper and packaging products. For example, email is replacing pen and paper memos, and downloaded music is becoming more popular than purchases of CDs in their special injection-molded cases, a specialty of MWV. Because of this trend, 2007 sales growth in MWV's Consumer and Office Solutions segment was stagnant[7], and 2007 net income in its Consumer Solutions division (responsible for injection-molded cases) fell by 8%.[7]

Contents
1 Business Overview
1.1 Financial Metrics
1.2 Business Segments
1.2.1 Packaging Resources (42% of pre-tax profit)
1.2.2 Consumer Solutions (11% of pre-tax profit)
1.2.3 Consumer & Office Products (18% of pre-tax profit)
1.2.4 Specialty Chemicals (5% of pre-tax profit)
1.2.5 Corporate and Other (-24% of pre-tax profit)
2 Key Trends and Forces
2.1 Environmental concerns take a toll on MWV's bottom line.
2.2 Changing delivery methods for music and video entertainment reduce demand for some of MWV's specialty packaging.
2.3 Digital communications reduce paper consumption, hurting MWV's Consumer & Office Products segment.
3 Competition
4 References
Business Overview

MeadWestvaco, which rebranded itself as MWV in March 2008[8], produces and sells paperboard (a raw material used in packaging), customized and printed packaging, home and office paper products and specialty chemicals that are byproducts of the paper and packaging businesses.[2] Additionally, the firm owns 952,000 acres of forestland in the U.S. and Brazil, strategically managing, buying and selling them to produce revenue.

Financial Metrics


MWV's Revenue, Net Income and Profit Margin: 2005-2007[6]
The following table[6] shows MWV's revenue and net income, as well as the percentage changes in each, for 2005-2007.

(millions USD) 2005 2006 2007
Revenue $6,170 $6,530 $6,906
% change 1.8% 5.8% 5.8%
Net income $28 $93 $285
% change 108% 232.1% 206.5%
Business Segments


MWV's breakdown of pre-tax profit by business segment[9]
MeadWestvaco is broken down into five reported business segments: Packaging Resources, Consumer Solutions, Consumer & Office Products, Specialty Chemicals and Corporate and Other.

Packaging Resources (42% of pre-tax profit)
The Packaging Resources segment produces paperboard and other raw packaging materials. It is the largest division of MWV, with $3.02 billion in 2007 sales.[10] Customers include producers of media, beverages, produce, cosmetics, tobacco, pharmaceuticals and healthcare products.[10]

Consumer Solutions (11% of pre-tax profit)
The Consumer Solutions segment produces customized and printed consumer packaging for products including CDs and DVDs, cosmetics, beverage and tobacco products. It also produces packaging equipment for sale or lease to other firms.[10] In 2007, Consumer Solutions sales increased 12% to $2.43 billion.[10]

Consumer & Office Products (18% of pre-tax profit)
The Consumer & Office Products division produces school and office supplies under brands including AT-A-GLANCE, Cambridge, Five Star, Mead and Trapper Keeper.[7] This segment's sales increased by less than 1% in 2007, to $1.15 billion, due to decreases in volume (see Trends/Forces below). However, its profit still increased 9% to $139 million due to price increases, changes in the product mix and productivity improvements.[7]

Specialty Chemicals (5% of pre-tax profit)
The Specialty Chemicals section of MWV produces chemicals that are derived from sawdust or other byproducts of the paper-making process. These chemicals include activated carbon for use in vehicle emission-control systems, as well as chemicals used in printing inks, asphalt paving, adhesives and lubricants.[7] Sales in this division remained level with 2006 at $493 million: higher prices were offset by declining volumes due to decreased car production and lower demand in the publication inks industry.[7]


Corporate and Other (-24% of pre-tax profit)
This segment includes all forestry operations, as well as income and charges related to corporate, restructuring, legal and pension matters. The $184 million loss in 2007 was an improvement over the $448 million loss in 2006, largely due to the sale of 393,000 acres of forestland, which brought in a before-tax gain of $250 million.[11]

Key Trends and Forces

Environmental concerns take a toll on MWV's bottom line.
The firm was found to be liable for environmental cleanup costs at certain sites it had used in the past; this cost $21 million in 2007, and the company anticipates that this figure, too, may grow in the years following that.[12] Additionally in 2007, MWV spent $19 million on environmental capital in order achieve its sustainability goals, and it expects this expenditure to steadily increase in the coming years.[12] Without these two expenditures totaling $40 million, MWV's 2007 net income would have been 14% higher.[6]

Changing delivery methods for music and video entertainment reduce demand for some of MWV's specialty packaging.
The Consumer Solutions segment, which contributed 35%[13] of total 2007 revenue, produces the special injection-molded cases used to package CDs and DVDs. Profits in the Consumer Solutions division fell 8% in 2007, to $86M.[7] The proliferation of computer ownership and broadband internet access have changed the way people access media. As opposed to buying music and movies in CD or DVD format, many consumers simply download them over the internet. In fact, Apple's iTunes music store became the top music retailer in the U.S. in 2008, surpassing the 5-billion-song milestone on June 19, 2008.[14] Globally, sales of music on CDs and DVDs fell 13% in 2007, while sales of downloaded songs increased 34%.[15]

Digital communications reduce paper consumption, hurting MWV's Consumer & Office Products segment.
In the world's wealthiest countries, per-capita consumption of paper fell 6% between 2000 and 2005.[16] This trend has hurt MWV's Consumer & Office Products segment, which contributed $1.15 billion of revenue in 2007. This was a gain of only 0.88% over 2006; growth was hampered by declining volume.[7] Similarly, the widespread proliferation of internet access has decreased the demand for consumer paper products in many areas.[16] For example, e-mail is eliminating the need for MWV's paper memo pads, letter paper and envelopes, and people can use calendar software rather than MWV's At-A-Glance brand of calendars.

Competition

MWV's competes with other firms that produce paperboard, packaging and paper-based office products. The industry is made up of large companies, with the top four companies shown in the table below. International Paper Company (IP) and Smurfit-Stone Container (SSCC) produce similar product mixes to MWV, while Weyerhaeuser Company (WY) also produces wood products like raw timber.[17][18]

(millions USD) Net Sales Net Income
International Paper Company (IP) $21,890 $1,168[19]
Weyerhaeuser Company (WY) $16,308 $790[20]
Smurfit-Stone Container (SSCC) $7,420 ($103)[21]
MWV $6,906 $285[6]
Advertisements

Last edited by netrashetty; February 19th, 2011 at 03:18 PM..
   
Friends: (0)
Reply With Quote
Related to Financial Analysis of Meadwestvaco
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
Financial Analysis of World Financial Group Netra Shetty Financial Management 0 February 17th, 2011 11:32 AM
Financial Analysis of Principal Financial Group Netra Shetty Financial Management 0 February 14th, 2011 02:33 PM
Financial Analysis of Discover Financial Services Netra Shetty Financial Management 0 February 11th, 2011 11:15 AM
Financial Analysis of Ameriprise Financial Netra Shetty Financial Management 0 February 9th, 2011 01:33 PM
Financial Analysis of American Financial Group Netra Shetty Financial Management 0 February 9th, 2011 01:30 PM
 

Reply

Bookmarks

Tags
accounting analysis, annual statement, balance sheet, business finance, business valuation, debt instruments, finance companies, financial analysis, financial analysis report, financial analysts, financial ratio, financial statement, fundamental analysis, funds management, hedge funds, income statement, mutual funds, net income, p&l account, personal finance, private equity, public finance, return on equity, us company finance

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On


» Login
Forgot Password?  New User?
  

» Ads





» Recent Threads

Who are your five...
Last post by Justin Chouhan
26 Minutes Ago 01:06 PM
4 Replies
Are women dominant ( 1 2 3... Last Page)
Last post by Justin Chouhan
34 Minutes Ago 12:58 PM
92 Replies
Solution manual on... ( 1 2 3... Last Page)
Last post by Bhautik Kawa
3 Hours Ago 10:32 AM
38 Replies
World class manufacturing
Last post by Kartik Raichura
23 Hours Ago 01:56 PM
1 Replies
Indian Rupee Update by...
Last post by Epic Research
1 Day Ago 11:22 AM
5 Replies
Asian Markets Update by...
Last post by Epic Research
1 Day Ago 11:20 AM
5 Replies
Management acounting
Last post by H? Ly Tinh
1 Day Ago 10:24 PM
0 Replies
topics for project on... ( 1 2)
Last post by Hrishita Sahay
1 Day Ago 07:43 PM
10 Replies
Hello Everyon
Last post by Bhautik Kawa
1 Day Ago 06:12 PM
2 Replies
Investment Banking...
Last post by Aaina Khan
1 Day Ago 04:11 PM
3 Replies
Short Term Technical... ( 1 2 3... Last Page)
Last post by Windsor Brokers
1 Day Ago 04:02 PM
66 Replies
Readers are advised to...
Last post by Hrishita Sahay
1 Day Ago 03:39 PM
2 Replies
Start Your Business with...
Last post by Juhani Gallen
2 Days Ago 12:07 PM
0 Replies
Supply Chain Management...
Last post by Tom Murdoch
2 Days Ago 10:03 AM
1 Replies
Test bank on... ( 1 2)
Last post by Yuut Muguh
2 Days Ago 01:26 AM
11 Replies

» Projects Helpline

project on privatisation
Last post by Shatrughna Bhoir
4 Days Ago 08:05 PM
topics related to 100...
Last post by Rachini Pandey
6 Days Ago 10:35 PM
Retail Management Notes
Last post by Rajesh Nimbunkar
1 Week Ago 05:12 PM
Final Year MBA Projects...
by Raasi
Last post by Raj Raj
1 Week Ago 03:23 PM
Project Management...
by onjono
Last post by Raj Raj
1 Week Ago 03:13 PM

» THE BIG FIGHT

ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.


Management Paradise
About Us
Press
Jobs
Contact Us
Kartik Raichura
Legal
Terms & Conditions
Privacy Policy
Disclaimer
Copyrights
Help
Zeitgeist
Support
FAQs
Tour
Feedback
Partners
Follow
Copyright © 2004 - 2013 Management Paradise. Site Developed by Available.co.in