
©Carsten Reisinger | stock.adobe.com
After experiencing “historic volume adversity” throughout 2023, Delaware, Ohio-based packaging company Greif Inc. reports continued low volumes, particularly in North America, in its recently completed first quarter, and its financial results reflect those challenges.
Overall, the company posted nearly $1.21 billion in total net sales in the three months ended Jan. 31, down slightly from the $1.27 billion in net sales in the first quarter of 2023.
“Volumes remained under pressure in most parts of the world through the quarter,” CEO Ole Rosgaard said during Greif’s first-quarter earnings call this week. “North America, still our largest and most diverse region with both rigids and paper packaging, remained our weakest market globally in the first quarter.”
Greif’s gross profit, operating profit and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also declined in the first quarter of 2024 compared with the same period last year.
Gross profit totaled $222 million compared with $252 million in last year’s first quarter, while operating profit was $69 million compared with $156 million and adjusted EBITDA was $128 million compared with $165 million.
“While our team's execution remains solid, the combined effect of extended slow demand and the significant negative price/cost dynamic in our paper business led to a decrease in year-over-year performance,” Chief Financial Officer Larry Hilsheimer said.
Global Industrial Packaging
The company’s Global Industrial Packaging (GIPS) segment fared slightly better in the first quarter than its other business segments.
GIPS net sales were down from $706 million in the first quarter of 2023 to $687 million in the most recent quarter, while both gross profit and operating profit were up. GIPS gross profit totaled $135 million compared with $125 million and operating profit was $51 million compared with $46 million in the first quarter of last year.
Adjusted EBITDA in the segment came in at $71 million compared with $72 million,
“Our GIP business has continued to trend consistent with the previous few quarters with sustained low level of demand offset by strong execution on pricing costs,” Hilsheimer said. “Volumes remain under pressure in most regions throughout the world and order patterns remain tight as customers face limited visibility to demand improvement.”
Greif notes “continued discipline” on value over volume as a key first-quarter takeaway, saying it remains agile and managing costs to real-time demand.
Paper Packaging and Services
Despite reporting improving volume trends in containerboard in the first quarter, Greif’s Paper Packaging and Services (PPS) segment saw marked declines in several areas.
“Our PPS business saw a mix of volume trends, with containerboard clearly improving and our boxboard business still trending down slightly,” Rosgaard said. “Overall, it is clear we remain in a difficult point in the cycle an dour teams are doing an excellent job controlling what we can control and focusing on serving our customers.”
Net sales in the PPS segment were down from $560 million in the first quarter of 2023 to $515 million in the recently completed quarter with both gross profit and operating profit seeing significant declines.
PPS gross profit in the first quarter of 2024 totaled $84.4 million compared with $124 million in last year’s first quarter, and operating profit totaled $17 million compared with $109 million in the same period last year.
Adjusted EBITDA also was down in the segment, totaling $56 million in the first quarter of 2024 compared with $91 million in last year’s first quarter.
“Corrugated converting volumes were up 3 percent and containerboard mill volumes were above that level year over year as converting customers began to reorder paper and rebuild low inventory positions as they saw the demand outlook improving in late ’23 and early ’24,” Hilsheimer said. “We expect that rising mill volumes in containerboard and elsewhere, if they continue, will lift volumes in our [uncoated recycled paperboard] and tube and core business as well.”
However, Rosgaard noted that despite some improvements in volumes, it’s not enough to signal an inflection.
“When we speak to customers, they seem much more positive than they have been for a long time, although we haven’t seen that materialize into volume yet,” he said.
“In summary, we see a long run rate for growth in many of our businesses and intent to continue along with path of transforming our portfolio to meet the market needs and better serve our customers.”
Greif’s full first quarter 2024 financial presentation can be viewed here.
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