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Graphic Packaging Holding Co., an Atlanta-based provider of sustainable fiber-based consumer packaging solutions to the food, beverage, foodservice and other consumer products companies, has reported net sales of $1,737 million in the second quarter of the year, which ended June 30. This compares with net sales of $1,611 million in the second quarter of 2020. The company reports that net organic sales increased 5 percent in the quarter, driven by demand for sustainability-supported consumer packaging solutions.
Graphic Packaging says it achieved net income of $38 million for the second quarter of the year, or 13 cents per share, based upon 295.8 million weighted average diluted shares, compared with second-quarter 2020 net income of $52 million, or 19 cents per share, based upon 280.5 million weighted average diluted shares.
According to Graphic Packaging’s second-quarter earnings report, the second quarters of this year and 2020 were negatively affected by a net $38 million and a net $20 million of special charges, respectively. When adjusting for charges, adjusted net income for the second quarter of the year was $76 million, or 26 cents per diluted share, compared with second-quarter 2020 adjusted net income of $72 million, or 26 cents per diluted share.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $248 million in the second quarter of the year compared with $260 million in the prior-year quarter. The company says adjusted EBITDA was positively impacted by $15 million of volume and mix related to net organic sales growth and $36 million in favorable net performance; this was offset by $67 million of commodity input cost inflation.
“Strong demand continued across our markets in the second quarter as consumer preferences are driving conversions to our fiber-based packaging solutions,” says Michael Doss, president and CEO of Graphic Packaging. “Increased consumer mobility and consumption outside of the home resulted in higher sales in our Foodservice markets, up 22 percent year over year, while Food, Beverage and Consumer markets continued to show healthy growth of 4 percent. Our teams worked tirelessly to meet customer demand, and we swiftly implemented pricing actions to offset rising commodity input costs, which impacted our results in the quarter.”
Doss adds that the company expects to generate higher adjusted EBITDA in the second half of 2021. He says, “As we address the near-term inflationary headwinds, we remain unwavering in our commitment to introduce new and innovative packaging solutions across global markets supportive of the move to a more circular economy.”
He says sustainable packaging is increasingly important for consumers when deciding what products to purchase. “We are focused on providing the best packaging solutions for consumers through our innovative ‘design for the environment’ approach and extending our capabilities and geographic reach with strategic acquisitions.”
Within the quarter, Graphic Packaging also announced the acquisition of AR Packaging in Europe for about $1.45 billion in cash. The company says that acquisition is expected to close by the end of the year. In the quarter, the company also exchanged International Paper’s remaining partnership units for shares, and completion of that transaction returns ownership of the partnership interest back to 100 percent. Additionally, the company completed its acquisition of Americraft Carton Inc. July 1.
Doss says, “We recently closed the Americraft Carton acquisition, gaining seven well-capitalized converting facilities in North America, and I am pleased to welcome this outstanding group of talented employees to our company. The regulatory approval processes for our announced acquisition of AR Packaging are underway and we anticipate closing that transaction by year-end.”
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