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Greif, a packaging producer based in Delaware, Ohio, has reported that its sales increased in the second quarter of 2021 compared with the same time period in 2020.
According to the company’s latest earnings report, Greif achieved overall net income of $149.8 million, or $2.51 per diluted Class A share, in the second quarter of 2021 compared with $11.4 million, or 19 cents per diluted Class A share, in the second quarter of 2020. Overall net income, excluding the impact of adjustments, was at $67.3 million, or $1.13 per diluted Class A share, in the second quarter of 2021, an increase from $56.5 million, or 95 cents per diluted Class A share, in Q2 2020.
The company says its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by $4.7 million to $176.6 million in the second quarter of this year. Additionally, Greif’s total debt decreased by $368.9 million to $2,313.4 million.
“Greif delivered a strong second quarter, with solid results across the company and meaningful progress against our strategy,” says Pete Watson, Greif president and chief executive officer. “In addition to strong underlying business performance that drove improved earnings and free cash flow, we enhanced colleague engagement and customer service levels, advanced our commitment to sustainability and achieved a notable reduction in our leverage. With improved visibility into customer demand patterns, we are reintroducing annual guidance for fiscal 2021 and are well-positioned to benefit from a growing global economy.”
Paper division sales
Greif reports that net sales for its Paper Packaging & Services division increased by $55.4 million to $537 million in the quarter. Net sales for the division, excluding foreign currency translation, increased by $54.6 million primarily because of higher published containerboard and boxboard prices and higher volumes. Net sales for the second quarter of 2020 included $35.4 million of net sales attributable to the divested Consumer Packaging Group business, which was sold April 1, 2020.
For the second quarter of 2021, gross profit in the Paper Packaging & Services division decreased by $1 million to $93.9 million. According to Greif, the decrease in gross profit was primarily from higher old corrugated container (OCC) and other raw material input costs and higher transportation expenses. The company says those costs were mostly offset by higher net sales. During an earnings call June 10, Larry Hilsheimer, chief financial officer at Greif, said the company expects OCC prices to average $101 per ton for this fiscal year and $122 per ton during the second half of the fiscal year.
Operating profit in the division increased by $32.8 million to $27.3 million in light of the prior-year quarter loss of $38.6 million on divestment of the Consumer Packaging Business, which was primarily related to the allocation of goodwill to the transaction. Adjusted EBITDA decreased by $10.8 million to $68.3 million primarily because of $24 million in recovered fiber and transportation costs.
During the company’s earnings call, Watson said Greif had announced a new set of price increases for its recycled boxboard grades in response to strong demand and cost inflation. Watson said Greif will benefit from these price increases in its fiscal third quarter.
Watson added that the demand in Greif’s converting operations also remains robust. Second-quarter volumes in CorrChoice, the company’s corrugated sheet feeder system, were up 37 percent per day compared with the second quarter of 2020. The company says it suspects the increased volumes are because of e-commerce growth as well as strong automotive markets and food and beverage markets.
“[The division’s] fiscal third quarter is off to a strong start,” Watson says. “In May, our volumes in CorrChoice and our tubes and core businesses were up both double digits on a per-day basis versus the prior year and reflect flat to single-digit growth sequentially versus April.”