Sweetheart Cup posts loss of $584,000

Energy, freight costs, higher rents blamed

April 24, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

Owings Mills-based Sweetheart Cup Co. Inc. said yesterday that it lost $584,000 in the second quarter, compared with net income of $991,000 in the year-ago period.

The privately held company, which has public bonds and files financial reports with the Securities and Exchange Commission, had net sales of $219.6 million in the 13 weeks that ended March 25, up 1 percent from $217.4 million in the comparable period last year.

The loss resulted primarily from increased rents and higher energy and freight charges, said Hans H. Heinsen, Sweetheart's chief financial officer.

"Considering the fact that last year was a record year for us, and given increasing energy costs, we're pretty happy with the quarter," Heinsen said.

The company's food-service sales, which includes paper plates and cups, grew 3.8 percent. Its food-packaging sales, which includes larger containers, primarily for the dairy and food-processing industries, declined 2.8 percent.

"The decline in sales in food packaging reflects a continued consolidation in our customer base in the food-packaging business and somewhat softer markets," Mike Hastings, the company's new president and chief operating officer, said during a conference call with analysts yesterday.

Hastings, formerly in charge of Sweetheart's sales and marketing, took over his position March 1.

His predecessor, Tom Uleau, has been promoted to vice chairman and executive vice president of S.F. Holdings, the parent of Sweetheart, which has more than 2,000 employees in Maryland.

Neither Hastings nor Uleau could be reached for comment.

"I wasn't real shocked by the quarter," said Paul Greenberg, head of global high-yield research at Bear Stearns. "Their order books look good. I'm optimistic on these guys."

Greenberg said the second quarter is traditionally Sweetheart's weakest and most volatile.

Hastings also said yesterday that Sweetheart has purchased an 80 percent share in Global Cup of Mexico City, the largest manufacturer of cold-drink cups in Mexico.

Sweetheart paid $12 million for Global and expects it to add $2.8 million in the company's cash flow over the next 12 months, with net sales of $20 million.

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