Sweetheart Holdings reports second-quarter loss of $7 million

Sales rise more than 1%

Fonda merger completed

May 03, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

Sweetheart Holdings Inc. said yesterday that it lost $7 million in its second quarter, in part because of changes to its manufacturing structure and in part because of worsening business conditions.

The Owings Mills-based maker of disposable products such as plates and cups announced in November that it was closing several out-of-state manufacturing facilities, laying off nearly 200 workers and hiring an equal number at its Baltimore County location.

The move is expected to save the company about $13 million a year, but for now it is costing the company in costs associated with the move and manufacturing inefficiencies during the transition period. The changeover is about 80 percent complete.

For the 13 weeks that ended March 31, Sweetheart lost $7.1 million, compared with a loss of $1.2 million in the year-earlier quarter.

Sales increased a little more than 1 percent to $296 million. Sweetheart is privately held but files earnings reports with the Securities and Exchange Commission because it has public bonds.

The company also said that on March 25 it completed its merger with Fonda Group Inc., with Sweetheart as the surviving entity. Fonda, which makes disposable paper plates, trays, tray covers and napkins, was once the controlling shareholder of Sweetheart.

Sweetheart's expansion in Owings Mills was aided by a five-year state loan of $2 million. Maryland also agreed to provide up to $81,400 in grants for work-force training and development. Baltimore County said it would provide $25,000 to train hourly workers.

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