The Company's joint ventures in Russia, the Middle East and Chile contributed equity earnings of $1.1 million compared to $1.4 million for the 2011 fourth quarter, with the current period including start-up costs in Santiago.
Tax expense in the fourth quarter of 2012 was $7.3 million compared to $6.0 million in the prior year period. The effective tax rates for these two periods are 28.1% and 25.8%, respectively. The increase in the effective tax rate, excluding earnings in equity accounted investments, for the 2012 fourth quarter reflects a change in the Canadian tax code with respect to upstream loans from foreign affiliates. As a result, the Company could no longer benefit a foreign exchange gain on an intercompany loan causing an increase in the fourth quarter tax expense by $0.9 million.
Net earnings for the 2012 fourth quarter were $19.9 million, an increase of 8.2% compared to $18.4 million for the fourth quarter of 2011. Excluding foreign currency translation impact net earnings improved 18.9%.
Basic earnings per Class B share were $0.59 in the fourth quarter of 2012 compared to $0.55 per Class B share in the prior year quarter. Restructuring and other items had no impact on earnings in the fourth quarter of 2012; however in the 2011 fourth quarter, there was an expense $0.02 per Class B share cost.
Geoffrey T. Martin, President and Chief Executive Officer stated, "CCL's 2012 fourth quarter results represented the ninth consecutive quarter of year-over-year improvement in earnings, resulting in a record performance from operations in 2012 despite significant currency headwinds and a low growth global economic environment."
Mr. Martin continued, "Sales for CCL Label for the 2012 fourth quarter increased 3.9% in local currencies compared to a particularly strong prior year period where we had posted a 12.7% gain. For the year as a whole, organic growth was 5.9% with high single digit rates in North America, low single digits in Europe, flat in Latin America and strong double digit gains in Asia Pacific. Operating income improved 20% for the quarter, excluding the impact of currency translation, and our return on sales margin for 2012 widened 50 basis points to an all-time high 14.6%. Europe was a major success story in the quarter as Home & Personal Care continued to progress in a tough market and Beverage outperformed on large export orders to new customers. Asia was also a highlight on a very strong performance in China and easier comparisons in Thailand due to the floods in the prior year. North America matched the unusually strong fourth quarter in 2011. Our joint ventures continued to progress with solid results in Russia, outstanding performance in the Middle East and lower start-up costs than expected in Chile. Growth in Santiago has exceeded expectations and a further $4 million has been invested in the venture between CCL and its partners."
Mr. Martin then added, "CCL Container delivered another significant step up in profitability in 2012 with record cash flow on the back of solid demand for aerosols and continuing operational improvement. In the fourth quarter some customers rescheduled deliveries into early 2013 and we temporarily shut down one of our lines in Mexico in December for a complete overhaul. Both factors contributed to a temporary modest revenue drop in the quarter. CCL Tube also reported a decline in sales and profitability against a particularly strong fourth quarter in 2011, but still recorded another stand-out year generating a 16.3% return on sales."
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