Graphic Packaging perseveres through ‘year of transition,’ highlights innovation

In what Graphic Packaging President and CEO Michael Doss dubbed a “year of transition for consumer packaging,” the Atlanta-based consumer packaging company reports year-over-year increases in net income, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings per diluted share, while net sales were essentially flat from a year ago.

Highlights from Graphic Packaging’s 2023 full-year earnings include $723 million in net income, up from $522 million in 2022, with earnings per diluted share at $2.34 compared with $1.69 the prior year, and an adjusted EBITDA of $1.88 billion, up from $1.6 billion in 2022.

The company’s $9.43 billion in 2023 net sales compare with $9.44 billion in 2022, while fourth-quarter net sales of $2.25 billion are down 6 percent from the $2.39 billion in the fourth quarter of 2022. Graphic Packaging did, however, see an increase in adjusted EBITDA in the fourth quarter, up to $457 million compared with $413 million in the fourth quarter of 2022.

“By any measure, if you’re a consumer goods company last year, food [and] beverage, or just actual goods, it was a very challenging year as consumers really pivoted in terms of their preferences in some cases, and our customers had to adapt to that in a real-time basis,” Doss said during Graphic Packaging’s 2024 Investor Day presentation. “It really resulted in a fair amount of inventory destocking, which is well-chronicled … and against that challenging backdrop, Graphic Packaging held up very, very well.”

Like other major packaging companies, Graphic Packaging emphasized “substantial” volume decreases over the course of 2023, but Doss is confident volume will return to more normal levels after seeing what the very early stages of 2024 have brought for the company.

“What we’re really encouraged about going forward is the fact that, as we’ve rolled into 2024, our volumes actually, to date through [Feb. 21], are flat on a year-over-year basis, which is actually a very good thing because … last year in the first quarter, we were actually up,” he said.

“So, we’ve seen some stabilization. The fourth quarter was really most pronounced in the last three weeks of December. It was almost like many of our customers just threw in the towel, and that really manifested itself in Europe in a big way. We saw volumes that were down the last three weeks pretty substantially, and they bounced back really well to start the year off, so that’s what really gives us confidence in the year.”

In looking toward new projects and innovations on the horizon, Graphic Packaging points repeatedly to recycled-content packaging.

The company consumed 1.4 million tons of recovered paper in 2023, ranking eighth on Recycling Today’s list of the largest recovered paper consumers in North America, and major investments like the $1 billion planned for the company’s upcoming recycled paperboard mill in Waco, Texas, and the $600 million invested in its coated recycled paperboard (CRB) mill in Kalamazoo, Michigan, highlight Graphic Packaging’s long-term strategy.

“Our view is that recycled products, in particular, are going to be at the heart of the most attractive part of the paperboard packaging market,” Doss said.

“When you look at what we’ve done with Kalamazoo and the startup on that, it’s been nothing but a home run. Our cost position is unmatched. The grades that we have coming off that machine are fantastic, and it’s integrated well into our business and we’re leveraging those opportunities with customers as we speak. … If you think about what we’re doing in Kalamazoo and you think about what we’re doing in Waco, if we have the opportunity to really grow with customers and generate excellent [return on invested capital] and consistent returns for our shareholders, we are all in on integration.”

The company leveraged those investments in August when it announced the launch of PaceSetter Rainer—a new CRB it says has brightness and whiteness that exceeds that of traditional CRB and competes directly with solid bleached sulfate and folding box board.

“Customers are asking for recycled content,” said Maggie Bidlingmaier, executive vice president at Graphic Packaging and president of its Americas business unit.

“As a result of our two transformational investments in recycling paperboard, this has enabled us to create a unique sheet that brings many of the advantages that bleached board has today. With this new sheet, it’s going to allow us to access underdeveloped markets here in the Americas.”

Graphic Packaging’s full Investor Day presentation can be viewed here.