Sonoco highlights ‘continued strong productivity’ in Q3 earnings

Sonoco Products Co. released its third-quarter 2024 earnings last week, and President and CEO Howard Coker says results were within expectations.

The Hartsville, South Carolina-based packaging company reports $1.68 billion in net sales for the three months ending Sept. 29 compared with $1.71 billion in the same period last year—a 2 percent dip—while operating profit saw a bigger decline, coming in at $128 million in the third quarter of 2024 versus $163 million last year. Sonoco attributes the loss to higher acquisition-related costs and a net loss on divestitures.

“Our third-quarter results were within expectations from seasonally higher consumer packaging demand and continued strong productivity,” Coker says. “Consumer and industrial volumes were higher year-over-year and price/cost headwinds were persistent across both segments.”

Sonoco’s adjusted operating profit did not take as big a hit, coming in at $211 million in this year’s third quarter compared with $213 million last year. Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were essentially flat year over year. In this year’s third quarter, the company reports $281 million adjusted EBITDA compared with $280 million last year.

Highlighted in the company’s third-quarter earnings report are “productivity improvements” the company says have brought in $23 million during the third quarter and $141 million in the first nine months of 2024. Sonoco also reports generating $438 million in operating cash flow and $171 million of free cash flow during the first nine months of the year.

“Overall, we achieved strong profit margin and operating cash flow in the quarter from the solid execution of our global team,” Coker says.

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

In its consumer packaging segment, net sales essentially were flat, coming in at $984 million in this year’s third quarter compared with $985 million last year, while its operating profit margin is up 5 percent and its adjusted EBITDA is up 6 percent. Sonoco attributes the gains to higher productivity from procurement savings, production efficiencies, fixed-cost reduction initiatives and higher volumes.

Industrial paper packaging segment net sales were up 5 percent the quarter, totaling $585 million compared with $580 million last year. However, the segment’s operating profit is down 6 percent and adjusted EBITDA down 3 percent.

Sonoco’s “all other” category shows losses across the board. The segment’s net sales are down 26 percent, which the company says reflects the sale of its Protexic business, its operating profit down 16 percent and adjusted EBITDA down 18 percent.

The company also provided an update on its pending acquisition of European food can, ends and closures manufacturer Eviosys. The nearly $4 billion deal first was announced in late June and Sonoco officials expect the transaction to close by the end of this year.

Sonoco’s full third quarter earnings report and presentation can be found on its website.