NewsRx.com—Feb. 2, 2011 According to Fitch Ratings' "2011 Outlook for Packaging," the sector should show continued stability as volume recovery continues in 2011. Growth will largely come from international/emerging markets where companies have targeted past investments in capacity, and merger and acquisition (M&A) activity.
Companies will continue focusing capital allocation with investments on growth opportunities, as most companies will increase their level of capital spending. In addition, companies that have balance sheet flexibility will continue to look at acquisition opportunities, likely through smaller or niche-sized international acquisitions to additionally complement existing assets. Excess cash will also be allocated for share repurchase as Fitch does not expect much emphasis on additional debt reduction.
Credit metrics should trend near 2010 levels. Packaging companies should experience low- to mid-single-digit revenue growth rates and flat to slightly improved profitability. Credit profiles are expected to remain stable and bolstered by good liquidity and financial flexibility supported through cash generation, provided companies do not stress the balance sheet with aggressive acquisition targets.
The full report 'Packaging Outlook: Expected Stability as Volume Recovery Continues' is available on the Fitch Ratings' website at www.fitchratings.com.
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