Packaging demand sees boost in Q3

Packaging companies in North America recently released third quarter 2024 earnings, with several major players reporting increased packaging and box demand after a fairly bumpy year.

In its first quarter since closing the deal this summer to become the world’s largest packaging company, Smurfit Westrock reported in late October it had brought in $7.7 billion in net sales. While transaction-related expenses resulted in a $150 million loss of net income, CEO Tony Smurfit says its sales were “a strong foundation to build on.”

The company projects its 2024 full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be approximately $4.7 billion, with Tony Smurfit saying the company is “increasingly excited” by its immediate and longer-term prospects.

"While we and many of our customers had expected even stronger volume improvement, the pivot back to positive volume growth is certainly encouraging.” – Michael Doss, CEO, Graphic Packaging

“Our third-quarter performance, combined with our deeper knowledge of the combination and continuing asset optimization, clearly points to the opportunities ahead,” he says.

In early November, Kingsey Falls, Quebec-based paper and packaging company Cascades Inc. reported sequentially stronger results that were driven by its containerboard business.

In its packaging products division, Cascades’ containerboard and specialty products sales are up year over year as well as from the previous quarter.

The containerboard segment saw $610 million in third-quarter sales compared with $585 million in the second quarter and $593 million in the third quarter of 2023, while specialty products saw a slight increase, totaling $169 million compared with $167 million last quarter and $157 million in the third quarter of last year.

Cascades’ containerboard operating income and EBITDA also are up quarter over quarter.

Meanwhile, Packaging Corp. of America (PCA), Lake Forest, Illinois, reported record-breaking quarterly production numbers.

“Very strong demand throughout the quarter led to all-time quarterly records for containerboard production, total box shipments and shipments per day,” CEO Mark W. Kowlzan says. “We were able to meet this demand and our customers’ quality and service needs through the operational benefits of our capital spending program and the continued great focus and execution by our sales, customer service, mill and corrugated products plant employees.”

Kowlzan calls PCA’s paper segment results “excellent” and expects more of the same to close out the year.

“Looking ahead, ... we expect demand in our packaging segment to remain strong, with corrugated shipments per day continuing to strengthen and slightly higher containerboard volume,” he says.

While down from last year, Memphis, Tennessee- based International Paper (IP) reported its third-quarter earnings came in above its outlook, helped in part by improved box demand.

“Higher prices across the portfolio, including benefits from our packaging go-to-market strategy, were supported by a moderately improving box demand environment,” CEO Andy Silvernail says.

As far as IP’s pending merger with DS Smith, the company says the regulatory process remains underway and expects the deal to close early in the first quarter of 2025.

Finally, Hartsville, South Carolina- based Sonoco Products Co. and Atlanta-based Graphic Packaging also report moderately improving demand despite lower sales figures.

Sonoco reports a 2 percent dip in net sales in the third quarter, while Graphic Packaging’s net sales decreased 6 percent.

“We saw overall packaging sales improve after two quarters of weakness,” Graphic Packaging CEO Michael Doss said during the company’s earnings call Oct. 29. “We saw improvement in food, household and health and beauty and continued solid performance in beverage and food service markets. While we and many of our customers had expected even stronger volume improvement, the pivot back to positive volume growth is certainly encouraging.”