For the second quarter of 2020, Greif, an industrial packaging products and services company based in Delaware, Ohio, achieved slightly lower net income compared with the same time frame in 2019. Net income was at $11.4 million in the second quarter of this year compared with $13.6 million in the second quarter of 2019.
Greif reports that adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $19.3 million to $181.3 million in the second quarter of 2020.
According to a news release from Greif on its earnings report, the company completed the divestiture of its Consumer Packaging Business to Graphic Packaging Holding Co., Atlanta, for $85 million in cash during the second quarter. The company says this transaction is still subject to closing adjustments.
During the second quarter, the company also permanently closed its uncoated recycled board (URB) mill in Mobile, Alabama. Greif says this closure was part of “its commitment to optimize the URB mill network.” The closure of Greif’s No. 1 machine in October 2019 combined with the closure of its No. 2 machine removes about 140,000 tons of URB capacity from its network. The company says it plans to transfer existing customer business to other mills in the system.
Additionally, Greif says it achieved record intermediate bulk container volume in the second quarter of 2020. It also acquired a minority stake in Centurion Container LLC to expand the company’s intermediate bulk container reconditioning network in North America.
“From a financial perspective, the business generated solid second-quarter results,” says Pete Watson, president and CEO of Greif. “Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose by 12 percent to $181.3 million, while adjusted free cash flow increased by more than 71 percent to $79 million. Although pleased with this performance, the current operating environment is dynamic and remains difficult to read. While economies have begun to reopen for business, the pace at which they do so varies, and uncertainty persists.”
Watson adds that the company is appreciative of its 16,000 employees across the globe as well as its frontline production workers who have been helping to keep manufacturing going during COVID-19. He says the company took “proactive steps to prioritize the safety and well-being” of its employees, customers and suppliers during the pandemic. The company has been conducting temperature screenings for personnel entering its operations; routinely cleaning high-touch surfaces; following social distancing protocols; staggering production teams where needed; prohibiting all noncritical business travel; implementing visitor protocols; and encouraging colleagues to work from home where possible.
Paper and packaging segment performance
In the company’s paper and packaging business segment, net sales decreased by $16 million to $481.6 million. Net sales decreased by $15.8 million primarily because of lower published containerboard and boxboard prices as well as the divestment of the company’s Consumer Packaging Business, partially offset by Greif’s 11-day additional ownership period of Caraustar in the second quarter of 2020. Greif took about 24,000 tons of economic downtime across the containerboard operations during the quarter.
Gross profit in this division decreased by $13.4 million to $94.9 million, and operating profit decreased by $35.7 million to a loss of $5.5 million arising from the loss on divestment of the Consumer Packaging Business, which was primarily related to the allocation of goodwill to the transaction, the company says.