Greif sales increase in FY2019

Greif Inc., a packaging products and services company based in Delaware, Ohio, has announced in its fourth-quarter and fiscal 2019 results that the company completed its acquisition of Caraustar Industries Inc. and increased anticipated run-rate synergies to at least $70 million from the original $45 million estimate. In addition, Greif’s net sales increased by $721.2 million to about $4.6 billion, and gross profit increased by $171 million to about $960 million. The company also reduced its net debt by $178.1 million since April 30. 

For the fourth quarter of 2019, the company’s net sales increased by $244.4 million to about $1.23 billion and gross profit increased by $54.2 million to $259 million. 

“The global Greif team executed well despite a challenging industrial business environment in both the fourth quarter and fiscal 2019,” says Pete Watson, Greif president and chief executive officer. “We achieved a step change in financial performance with the acquisition of Caraustar and advanced our focus on customer service excellence and disciplined operational execution around our global portfolio. As we look ahead to fiscal 2020, we are committed to managing those areas within our control to successfully navigate a continued uncertain global macroeconomic environment.”

Greif reports that its Paper Packaging & Services division's net sales increased by $290.3 million to $535.1 million in the fourth quarter of 2019. The company says the increase in sales was primarily because of the $322.6 million contribution from the acquired Caraustar operations, partially offset by the impact of about 12,000 tons of containerboard economic downtime; about 6,500 tons of scheduled containerboard maintenance downtime at the company’s Mason, Ohio, mill; and lower published containerboard prices.

In the Paper Packaging & Services division, gross profit increased by $58.7 million to $128.5 million in the fourth quarter of 2019. The increase in gross profit was primarily from the $73.7 million contribution from the acquired Caraustar operations, partially offset by the same factors that affected net sales. Also, operating profit in this division increased in the fourth quarter by $2.4 million to $55.7 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $46.6 million to $108.7 million primarily from the $63.6 million contribution from the acquired Caraustar operations, partially offset by the same factors that impacted net sales.

According to the company’s fourth-quarter 2019 financial results conference call Dec. 5, in fiscal 2020, the Paper Packaging & Services division will benefit from the additional 3.5 months of Caraustar and from various new capital growth projects coming online, including a new corrugated sheet feeder in Palmyra, Pennsylvania. On the call, Watson said he expects that the company will face a headwind from lower published containerboard prices that occurred in the middle of 2019, which he said will be offset partially by lower input cost. He added that the company’s assumption for old corrugated container (OCC) cost will remain lower for longer with an average of $46 on a blended rate in fiscal 2020, down slightly from the fiscal 2019 average of $50 per ton.