Sonoco says ’22 saw record performance, meaningful change

Despite challenging macroeconomic conditions throughout last year, Sonoco Products Co., a global packaging company based in Hartsville, South Carolina, said during an earnings call Feb. 9 that it has achieved record fourth quarter and full-year financial results.

In the fourth quarter, Sonoco saw a 16 percent increase in revenue from the same period in 2021, with net sales in its Consumer Packaging segment increasing 49% to $879 million, up from $589 million in the fourth quarter of 2021, and its full-year net sales increased 30 percent year over year to $7.3 billion.

“[Last year] was a year of record performance and meaningful change at Sonoco,” President and CEO Howard Coker says in a statement. “We are executing our focused portfolio strategy and are investing in our businesses to drive growth and profitability.”

Sonoco says its record full-year performance was driven by strategic pricing performance and strong results from the Sonoco Metal Packaging, but those increases were partially offset by lower volumes in industrial paper products and the impact of foreign currency exchange.

“Our talented teams executed well in dedication to our customers despite a challenging macro environment,” Coker adds. “We made further progress on our portfolio simplification strategy and invested in organic growth and accretive acquisitions in our larger, core businesses. This progress, coupled with effective commercial excellence, enabled a positive step change improvement in profitability for the company.”

Segment review

Sonoco reports its financial results in two segments: Consumer Packaging and Industrial Paper Packaging, with all other remaining businesses reported as “all other.”

Consumer Packaging

Along with a 49-percent increase in segment net sales, the Consumer Packaging operating profit increased 37 percent to $85 million in the fourth quarter compared with the same period in 2021. Sonoco says it saw a sequential sales decline compared with the third quarter, which was expected. The company attributes that decline to seasonality and softness in plastic food packaging impacted by lower harvest volumes from inclement weather.

Segment sales increased 59 percent from 2021 to nearly $3.8 billion, while full-year operating profit increase 91 percent to $526 million largely from the Jan. 26, 2022, acquisition of Ball Metalpack as well as strong strategic pricing performance.

Industrial Paper Packaging

Lower demand in all regions, particularly Europe and Asia, led to a slight 9-percent decrease in in quarterly sales, down to $597 million compared with $655 million in the fourth quarter of 2021. Quarterly segment operating profit, however, increased 34 percent to $79 million.

Full-year segment net sales, on the other hand, saw a slight increase of 9 percent to nearly $2.7 billion in 2022, while full-year operating profit increased 45 percent to $328 million. Sonoco says lower volumes globally in both paper and converted products impacted full-year Industrial Paper Packaging results, and the lower volume includes a reported $54 million impact from the exit of the corrugated medium market and the conversion of its No. 10 paper machine at its Hartsville paper mill complex to produce uncoated recycled paperboard.

All other

Net sales from all other businesses in the fourth quarter increased 3 percent and operating profit increased 25 percent compared with the same period in 2021. Full-year net sales and operating profit from all other businesses both increased 5 percent thanks to strong strategic pricing on flat volumes.

“We carry sustained momentum from our strategy and operating model into 2023, which we believe positions us well to navigate near-term volatility,” Coker says of Sonoco’s outlook. “Our continued focus on portfolio optimization, improving price/cost through strategic pricing and productivity positions us to expand profits and increase free cash flow to increase long-term returns for our shareholders.”

Sonoco's full financial report can be seen here.