Show I 1 r ra BUSINESS and end the STOCK MARKET by BABSON'S BASON'S REPORTS Copyright 1972 1911 STRONGER ECONOMY AIDING CONTAINER MAKERS Betterment is showing up this year in the earnings of companies manufacturing manufacturing manufacturing turing containers and packaging materials materials mate mate- rials after the relatively depressed conditions con con- conditions seen during 1971 The most impressive impressive impressive im im- im- im gains are being chalked up in inthe inthe inthe the paper based packaging area which is more closely tied to variations in the national economy than are other forms of packaging Although makers of glass containers and metal cans are not enjoying enjoying enjoying en en- the healthy earnings increases of certain producers of paper containers contain contain- ers they are registering better results than those of last year and the outlook for further advances is optimistic Considering the reasonable price earn ings ratios of many issues in this group the Research Department of Babson's Babson's Bab Bab- sons son's Reports Inc feels that most container container con con- tamer stocks are well worth holding For purchase at this time we recommend recommend recommend mend Diamond International and National National National Na Na- Can both traded on the New York Stock Exchange Things Still Looking Up According to Department of Commerce figures shipments of containers and packaging materials for 1971 were valued valued val val- u d at billion 5 percent above the 1970 level and 60 percent over the billion attained during 1963 A continuing continuing continuing con con- expansion of the overall container container con con- tamer and packaging industry is looked for with the annual rate perhaps 5 percent Appraising the years ahead it itis itis itis is probable that output will reach a total value of 26 billion in 1975 33 billion by 1980 Plastics and Paper Plastic packaging with dollar volume increasing 15 10 percent yearly should continue to be the most dynamic part of the packaging industry Plastic containers containers con con- containers are already widely used for li liquid liquid li- li quid detergents bleaches cosmetics and dairy products Plastic bottles are arenow arenow arenow now being developed for the huge beer and soft drink markets Paper and paperboard packaging accounts accounts ac ae ac- ac counts for about 50 percent of the Industry's industry's industry's in In- total sales Because of its low cost and versatility paperboard is widely widely widely wide- wide ly used as carton material However flexible paper packaging specialty bags liners and converted wraps has been losing ground to competing materials materials materials mate mate- rials and this trend is likely to continue con con- Fiber boxes especially water water- resistant types have been finding wider use in food and beverage markets While the paper container industry was previously previously previously pre pre- plagued with overcapacity a gradual phasing out of inefficient mills and stronger economy have resulted in inan inan inan an improved supply demand relationship relationship relation relation- ship with consequent price firming Glass Containers Better Detter general business is also helpIng help help- ing the producers of glass containers but overcapacity problems and rising labor and materials costs are affecting profit margins For the longer term a slowdown in the growth rate of bottles and the competition from metal and plastic containers may prove to be sharper negative factors than tile the current ecological controversy But nut glass container producers are fighting I to protect their share of the market Prospects for Metal Container Containers l of metal cans have been hard hit by higher costs and a poor price structure stemming from overcapacity over capacity The trend toward manufacture ture tune of cans by users themselves has also presented problems The can companies companies com com- however have been working hard to improve performance through new methods and development such as onsite on on- site production lines open easy cans and cost cutting cost cutting measures Although can makers' makers efforts to improve improve improve im im- im- im prove profit margins were blunted earlier earlier earlier earl earl- ier this year when the Price Commission res rescinded ln d a a. a previously approved ed 43 43 p per per- r cent hike in to favor of ot an interim 20 percent lift the latter was upped to a permanent 29 increase effective August August August Au Au- gust first This price relief combined with an anticipated step up step in shipments of metal cans should help lift profit margins |