Atlanta-based Graphic Packaging Holding Co., which operates Graphic Packaging International (GPI), has reported net income of $73 million for the third quarter of this year, rising from a figure of $64 million in the same quarter last year.
The third quarter of 2021 was negatively affected by a net $32 million special charge, the company says, preventing a potential third-quarter 2021 net income of $105 million. GPI also cites “$88 million of commodity input cost inflation” as a factor limiting its earnings.
“Demand for sustainable and circular packaging solutions is accelerating globally and we are proud to be the fiber-based consumer packaging provider driving ongoing innovation and meeting the call for more sustainable packaging alternatives,” states Michael Doss, the company’s president and CEO.
“The food service business continued to recover, with sales improving 11 percent year over year, while food, beverage and consumer grew 3 percent,” Doss says. “Commodity input cost inflation accelerated during the quarter and, as such, we have been executing multiple price actions to offset the inflation we have encountered this year.”
The company consumes more than 1 million tons annually of old corrugated containers (OCC) and other scrap paper grades, seeking a secondary commodity that has risen in value throughout the year.
Looking forward, Doss comments, “We have received all of the necessary regulatory approvals for our previously announced AR Packaging acquisition, which we expect will close on Nov. 1. At the same time, our transformational coated recycled board (CRB) optimization project is on track, with coated recycled paperboard production to begin on our new K2 machine in Kalamazoo, Michigan, in the fourth quarter.”
He continues, “Completion of these two large, transformational investments extends our industry leadership through increased global reach and market expansion, advanced innovation capabilities and a strengthened competitive position across all three paperboard substrates. Growth and returns from the successful execution of these investments coupled with continued strong demand for fiber-based packaging provide us confidence in next year’s projected adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of at least $1.4 billion and the resulting cash flow growth which will allow us to quickly deleverage following the successful close of the AR Packaging transaction.”
GPI is in the process of acquiring Sweden-based AR Packaging Group AB, which it describes as Europe’s second-largest producer of fiber-based consumer packaging.