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By the numbers: Q2 2025
Net sales: $2.2B
Down 1.5% year over year
Net income: $104M
Down from $190M in Q2 2024
- “Highly unusual time”: Graphic Packaging International’s volumes were hurt in the first half of 2025 by weaknesses among customers and consumers, CEO Mike Doss explained on Tuesday’s second-quarter earnings call. Consumers are cutting back their spending on packaged goods and at quick-service restaurants, reducing demand at GPI’s customers. “We’re in a highly unusual time” in which economic strain and uncertainty is translating into an extended period of volumes weakness, Doss said, noting that “this has gone on longer than I’ve historically seen.”
- Sector breakdown: Food packaging, which is GPI’s largest market, is particularly hit by these difficulties. “Many, if not most, of our CPG and QSR customers continue to express caution about their own near-term volume outlooks,” said CFO Stephen Scherger. This should get resolved in the “medium term,” Doss said, including through customers’ increased promotional activity. Generally, Q2 sales were flat for most of GPI’s end markets, although beverage demand was solid, executives said. July results have shown strength in areas like energy drinks, flavored seltzer and wellness drinks, Doss said.
- Waco cost hikes: Higher-than-expected costs related to the in-progress construction of a new recycled paperboard mill in Waco, Texas, have prompted executives to bump up capital expenditure projections for the year from $700 million to $850 million. Costs increased for final engineering and design, related to permitting and insurance, Doss said. Labor costs also climbed, especially for the 600 electricians working to finish the project, he said, noting this is an issue across industries as the data center boom drives up construction labor costs. GPI still expects to bring the mill online in the fourth quarter.
- Tariffs: Doss said this week’s trade agreement between the United States and European Union is a “moderate net positive for Graphic Packaging.” The company does not sell its paperboard in Europe, but it exports its own material to its converting operations in Europe, he explained. The new agreement does not limit GPI’s ability to service its operations, which is “a very good outcome for us,” he said, although it’s monitoring customers affected by the 15% tariffs. “The other thing that it does is ... [reduce] what I’ll call non-tariff trade barriers between the U.S. and Europe,” Doss said, specifically referencing changes to the EU Deforestation Regulation, “which was looking to be very costly.”
- Club store box revamp: GPI is seizing opportunities to work with customers on innovation, Doss said, describing an innovation GPI designed specifically for the club store sector that is now on shelves. The bulk coffee pod box nests the products in orderly stacks, compared with the conventional method to “dump the pods in and glue the box shut,” Doss said. It reduces dead space so the same number of pods can fit into a carton that is 21% smaller and uses 30% less material per package. Additionally, the switch from B to D flute corrugated reduces thickness by 25%. GPI reworked the container to be narrower and taller to improve shelf appeal and take up less space in a consumer’s pantry, while also allowing for 30% more units per retail pallet. The opening orientation also boosts the box strength.
- Outlook: Return on investment from the Waco startup is expected to begin in 2026. GPI expects adjusted earnings before interest, taxes, depreciation and amortization to be modestly better in the second half of 2025 than the first, in part thanks to inventory reduction efforts, Scherger said. GPI tightened its projection for full-year EBITDA to between $1.45 billion and $1.55 billion, within the previous expectation of $1.4 billion to $1.6 billion. Free cash flow for 2025 is unchanged, even with the Waco cost alterations, but for 2026 it is now projected to be $700 million to $800 million instead of the previous estimate of $800 million to $1 billion.
