By the numbers
Q1 net income attributable to Sonoco: $148M
Up 29% year over year
The proportion of Sonoco’s global rigid plastic packaging capable of “making the relevant on-package recyclable claim” (beats the company’s 75% by 2025 goal)
- Economic outlook: Sonoco reported that its Q1 sales results reflected “strong pricing” that was offset by lower overall volume. The readout follows a March 21 announcement from the company that it was raising first-quarter earnings guidance. It said the better-than-anticipated results stemmed from improving productivity, lower-than-expected input costs and higher-than-expected demand in certain products and end markets. “We are cautiously optimistic about the remainder of the year,” CFO Rob Dillard said on a Tuesday earnings call.
- Consumer packaging: Consumer packaging net sales of $909 million were up 5% over the prior year period. Rigid paper containers and flexibles showed stability, but demand weakened in rigid plastic food packaging and aerosols. The aerosol category is improving following destocking, the company reported, and food can volumes are expected to increase metal packaging volumes.
- Industrial paper packaging: Net sales in industrial paper packaging fell 12% year over year to $616 million. Lower volumes were expected given a lack of demand recovery, the company reported, but prices helped offset volume declines. While sales grew sequentially, demand is remaining soft, execs said.
- ESG: The company released its 2022 corporate responsibility report last week. Sonoco said it has ended the use of virgin pulp in mill operations and all now use 100% recycled fiber. Its own plants and MRFs are also focused on collecting other waste materials for recycling and reuse, the report said. The company’s total Scope 1 and 2 emissions increased 3.6% in 2022 from 2021, but its total weight of waste disposed declined 8.6%. Recycled materials, skewed heavily in fiber, accounted for 81% of all materials purchased, versus 19% virgin.
- Looking ahead: For Q2, executives offered earnings guidance of adjusted earnings per share between $1.45 and $1.55. For the full year, the company projects heightened free cash flow between $620 million and $720 million. It maintained guidance for adjusted earnings before interest, taxes, depreciation and amortization between $1.1 billion and $1.15 billion. When analysts asked about the wide range, executives noted international markets, such as Asia and Europe, and the industrial segment as some of the areas of uncertainty. The company is continuing to invest in expanded capacity to support sustainable packaging in 2024 and thereafter, said Chief Operating Officer Rodger Fuller.
