PCA reports profitable Q1

Packaging Corp. of America (PCA) has reported first quarter 2025 net income of $203.8 million, or $2.26 per share, a 38.7  percent increase from the $146.9 million the Lake Forest, Illinois-based paper and board producer earned one year earlier.

The company, whose network of North American mills consumes about 1 million tons annually of old corrugated containers (OCC) and other recovered paper grades, also reports first-quarter net sales of $2.1 billion, up from $2.0 billion in the first quarter of 2024.

PCA says its increase in first quarter 2025 earnings was driven primarily by higher prices, mix and volume in its Packaging segment, along with a slight increase in prices and mix in its Paper segment. Results were 10 cents above first quarter guidance of $2.21 per share primarily due to higher prices and mix in the Packaging segment.

The company’s first quarter 2025 containerboard production of 1.25 million tons increased by 75,000 tons compared with the first quarter of 2024. In the Paper segment, PCA’s sales volume was down 7 percent from the first quarter of 2024 but rose by 2 percent compared with the prior quarter.

“A new first quarter revenue record was achieved to begin the new year,” PCA Chair and CEO Mark W. Kowlzan says. “In the Packaging segment we had excellent implementation of our previously announced price increases and, although we began to see some pullback in the middle of the quarter related to the uncertainty created by global trade tensions, box demand was solid and exceeded a very strong comparative period in last year’s first quarter.

“Our Paper segment continued to achieve impressive margins with both volume and prices slightly above original estimates. Across the company, continued emphasis on operational efficiency, cost reduction initiatives and capital project execution helped minimize the persistent inflation we see throughout most of our cost structure.”

Kowlzan again mentions trade issues when commenting on PCA’s prospects for the financial quarter currently underway.

“We anticipate continued ambiguity relative to domestic and foreign tariff actions and their effect on global trade and our demand trends,” he says. “Therefore, we have made certain assumptions in our guidance to recognize potential negative impacts to volume and costs from this uncertainty.”

PCA expects domestic prices to improve in its Packaging segment with continued implementation of its price increases, along with fairly flat export prices.

"Although we see box shipments improving, operating costs will be negatively impacted due to lower containerboard volume as we run our operations to match demand assumptions," Kowlzan says.

“In the Paper segment, implementation of the higher published index prices from the first quarter will continue, although volume will be lower with the planned maintenance outage at our International Falls, Minnesota, mill. Rail contract rate increases at six of our mills during the first and second quarters will result in higher freight and logistics expenses, and depreciation expense is assumed to be higher as well. Considering these items, we expect second quarter earnings of $2.41 per share.”

PCA is the third largest producer of containerboard products and a leading producer of uncoated freesheet paper in North America. The company operates eight mills and 85 corrugated products plants and related facilities.