Greif says Q2 results impacted by ‘significant’ negative price, cost in paper business

Delaware, Ohio-based packaging company Greif Inc. has reported its second quarter 2024 earnings, and while the CEO says demand exceeded expectations, results were impacted by “significant” negative price or cost in its paper business.

The company’s net income saw a notable decrease, going from $111.2 million in the second quarter of 2023 to $44.4 million in the most recently completed quarter. Its adjusted earnings before interest, taxes, appreciation and amortization also was down, coming in at $170 million this quarter compared with $229 million in the second quarter of 2023.

However, Greif’s net income painted a different picture. The company reports $1.37 billion in net income this quarter, up from $1.31 billion in the second quarter of 2023, and CEO Ole Rosgaard says “solid progress” was made in the company’s “Build to Last” strategy, including the acquisition of France-based packaging company Ipackchem.

“We are excited to present another solid progress on our Build to Last strategy, including completing our Ipackchem acquisition and achieving multiple other milestones on our Build to Last missions,” Rosgaard says. “These missions, enables by operating excellence, are structurally improving our operating efficiency, creating significant operating leverage as we saw continued signs of demand improvement in many of our key regions and end markets during the quarter.”

In its Global Industrial Packaging (GIP) segment, both net sales and gross profit saw slight increases. GIP net sales were $805 million in the second quarter of this year compared with $748.2 million a year ago, while gross profit came in at $182 million compared with $178 million in the second quarter of 2023.

However, the segment’s adjusted EBITDA was down to $118.3 million compared with $121.2 million a year ago.

The company expects modest recovery in its GIP business in most regions over the remainder of its fiscal year as industrial activity increases and demand trends improve.

In Greif’s Paper Packaging and Services (PPS) segment, results were mixed.

Net sales in the PPS business were up slightly from $555 million in the second quarter of 2023 to $561 million in the second quarter of 2024, but that is where the upward momentum stops.

Gross profit was down to $86 million in the most recently completed period compared with $131.4 million in the same period last year and adjusted EBITDA went from $105 million in the second quarter of 2023 to $49 million in the second quarter of 2024.

The company reports improved containerboard and uncoated recycled board operating rates throughout the quarter and says corrugated volumes improved slightly year over year.

“On the demand side, our second quarter results exceeded our expectations, however, results were impacted by significant negative price or cost in our paper business from the continued delayed recognition of announced price increases,” Rosgaard says. “For the time being, we continue to monitor and manage the improving demand alongside our customers while strictly managing costs to ensure value creation.”