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Packaging Corp. of America (PCA) has reported third-quarter 2022 net income of $262 million, or $2.80 per share, and net income of $266 million on net sales of $2.1 billion in 2022, marking an increase in sales from $2 billion in sales in the third quarter of last year.
The Lake Forest, Illinois-based company’s earnings per share (EPS) figure also increased 6.4 percent year on year from $2.63 in the third quarter of 2021 to $2.80 this year. Reported earnings in the third quarter of 2022 were lower in part because of special items pertaining to expenses at the Jackson, Alabama, mill for its paper-to-containerboard conversion costs.
PCA says in its packaging segment, total corrugated products shipments and shipments per day were down (6 percent) compared with last year’s third quarter. Containerboard production of more than 1,116 million tons led to containerboard inventory that finished higher by 11,000 tons compared with the third quarter of 2021, and up 22,000 tons compared with the prior quarter.
In the paper segment, sales volume was down 13,000 tons compared with the third quarter of 2021 and up 6,000 tons compared with the second quarter of last year.
“We were able to exceed our guidance for the quarter even though we continued to experience significant cost inflation across the company and demand in our packaging segment was well below our expectations,” says Mark W. Kowlzan, chairman and CEO of PCA.
“Implementation of our previously announced price increases in the packaging and paper segments continued to generate excellent results, and our mills and plants remained focused on lowering operating costs through process efficiency optimization efforts and material usage initiatives," he adds. "We also ran our containerboard system in a very cost-effective manner to match our supply with demand, and the scheduled outages in our mills were executed very well.”
Regarding the remainder of the year, Kowlzan says, “Looking ahead as we move from the third and into the fourth quarter, we see most of the issues that impacted third quarter packaging segment demand continuing, and we will run our containerboard system based on this current outlook. At our Jackson, Alabama, mill we will be completing the scheduled annual maintenance outage as well as the first phase of the containerboard conversion work on the No. 3 machine.”
Referring to additional challenges, Kowlzan says, “Our box plants will have four less shipping days in the fourth quarter, and we also expect a seasonally less rich mix in corrugated products as well as lower average export containerboard prices.
"In our paper segment, we will continue to implement our price increase that took effect in September; however, volume will be lower compared to the seasonally stronger third quarter.”
He concludes, “Scheduled outage expenses will be higher, and we expect slightly higher operating costs, primarily labor and benefit expenses, along with anticipated colder weather resulting in higher energy costs. Considering these items, we expect fourth-quarter earnings of $2.22 per share.”
That figure would mark a 20.7 percent decrease from third-quarter EPS.
PCA describes itself as the third-largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. The company operates eight mills and 90 corrugated products plants and related facilities.
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