Acquisitions, facility upgrades highlight Sonoco’s third quarter

Sonoco credits improving supply conditions and a number of activities it says are critical to its future for strong third-quarter financial results for the period ended Oct. 2.

The Hartsville, South Carolina-based packaging producer reports results that “exceeded the high end of guidance” thanks to stable demand in consumer packaging and a focus on continued progress on strategic priorities which it expects will continue to benefit financial results into next year and beyond.

“We delivered another strong quarter of results from stable consumer demand and improving supply chain conditions, while executing a number of activities critical to our future,” Sonoco President and CEO Howard Coker says. “Overall, I am pleased with our team’s performance through the quarter while successfully meeting the demand requirements of our customers.”

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The company’s net sales increased 34 percent year over year to $1.9 billion, while GAAP operating profit and base operating profit increased year over year to $182 million and $225 million, respectively.

Sonoco reports its financial results in two segments—consumer packaging and industrial paper packaging, with all remaining business reported as “all other.”

The consumer packaging segment new sales increased 72 percent year over year to $1.03 billion, and Sonoco says a positive volume/mix growth was driven by global rigid paper containers and flexibles. The segment’s operating profit increased 93 percent to $128 million.

In the industrial paper packaging segment, net sales increased 4 percent to $661 million through what Sonoco says is strong strategic pricing performance that was partially offset by the impact of foreign currency exchange and lower volume/mix in both paper and converted products. It’s operating profit, however, increased more substantially to $82 million, up 48 percent compared with the previous year’s quarter.

The all other business segment saw a 10 percent increase in net sales to $198 million.

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Key acquisitions have been at the forefront of Sonoco’s positive financial performance. The company says it continues to see strong results from the Ball Metalpack acquisition that was completed in January, and anticipates more growth with the $88 million acquisition of Skjern Paper in Denmark.

The move is intended to grow Sonoco’s existing and new customers in Europe. Skjern Paper has one mill that consumes 100-percent-recycled paper and what Sonoco says is a “strong ESG profile” with less reliance on natural gas. The agreement was announced Sept. 28 and the companies expect the deal to close in the fourth quarter.