Sonoco reports improving productivity, sales growth across consumer businesses

Sonoco Products Co.’s first-quarter results met the high end of previously provided quarterly guidance, according to the Hartsville, South Carolina-based packaging producer, which has raised its full-year guidance based on the strength of its operating model.

In its most recent earnings report released May 1, Sonoco reports $1.73 billion in net sales, down 2 percent from $1.77 billion a year ago, and the company says strong pricing was offset by lower overall volume. Sonoco’s GAAP (generally accepted accounting principles) operating profit increased 36 percent to $230 million as gains on asset sales and lower acquisition-related costs offset lower price cost and volume and mix.

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“Sonoco delivered a strong first quarter, highlighted by commercial pricing benefits in industrials, improving productivity and sales growth across most consumer businesses,” President and CEO Howard Coker says.

Consumer Packaging

In Sonoco’s Consumer Packaging segment, net sales are up 5 percent year over year, and the company attributes that primarily to continued strong strategic pricing performance and acquisitions, though volume and mix in the segment was lower compared with last year because of softer demand in aerosol and rigid plastic food packaging markets.

The “unfavorable” but anticipated metal price overlap in metal packaging and volume declines in both metal aerosols and rigid plastics food packaging led to a 47 percent decrease in the segment’s operating profit ($92 million) and a 39 percent decrease in its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which came in at $122 million.

Industrial Paper Packaging

Sonoco’s industrial segment net sales saw a 12 percent decrease from $699 million last year to $616 million this year, and the company reports specific declines from its exit of the corrugated medium market, which created a $54 million impact to its 2022 full-year results, the exit of operations in Russia and weakness in converted paper.

All other

Net sales from Sonoco’s other business units essentially were flat at $205 million, and the company says strategic pricing actions were offset by volume and mix declines.

Operating profit in its “other” category improved 88 percent from $15 million last year to $27 million, and adjusted EBITDA was up 61 percent from $21 million to $33 million.

“Our portfolio continues to be resilient in the current volatile economic environment due to the dedicated efforts and execution of the Sonoco team in support of our strategic initiatives,” Coker says.

Sonoco’s full first-quarter earnings report can be found here and its accompanying presentation can be found here.