Financial Reports & Markets
Sonoco shares financial results for the second quarter of 2023
August 3, 2023 By P&PC Staff/Sonoco
Sonoco reported financial results for its second quarter ended July 2, 2023.
Highlights from the quarter include the following:
- Net sales decreased to $1.7 billion driven by lower volumes.
- GAAP operating profit decreased to $188 million as lower overall volume and mix was partially offset by lower acquisition-related and restructuring costs, gains on asset sales, higher price/cost and productivity.
- Achieved net income margin of 6.7 percent and Adjusted EBITDA margin of 16.1 percent.
- Effective tax rates on GAAP and Adjusted Earnings were 26.8 percent and 25.6 percent, respectively, compared with 25.8 percent and 25 percent, respectively, from the second quarter of the prior year.
- GAAP net income decreased to $115 million for diluted GAAP EPS of $1.16.
- Adjusted net income attributable to Sonoco decreased to $136 million for diluted Adjusted EPS of $1.38.
- Adjusted operating profit and Adjusted EBITDA declined to $211 million and $275 million, respectively, due to lower overall volume and mix, partially offset by higher price cost and productivity.
- Achieved Adjusted EBITDA margin of 16.1 percent.
Sonoco president and CEO, Howard Coker stated, “Sonoco continues to operate well with most of our businesses achieving commercial, operational, and productivity objectives. In the second quarter, volume softness beyond our expectations negatively impacted Consumer metal packaging and Industrials. In metal, accelerated inventory reduction programs within our top food and aerosol customers resulted in lower than expected demand and negatively impacted operating leverage. In Industrials, volume for paper and converted products remained low across all geographies and end markets including paper, film, textile, and appliances. Industrial customers cited lower end market demand and customer destocking as factors for the declines. Despite these challenges, our teams generated $349 million of operating cash flow for the first six months of 2023. Throughout the quarter, our teams continued to execute well in a volatile demand environment and I express my sincere appreciation for their continued support of Sonoco and our customers.”
“Based on the softer than expected second-quarter results and in recognition of our customers’ cautious forecasts through the remainder of the year, we are reducing our full-year guidance. We intend to continue to manage variable and fixed expenses and execute our continuous improvement programs to improve results in the near and long term. While this near-term volume outlook is disappointing, we are optimistic regarding the number of long-term value-creating opportunities available within our diverse portfolio from ongoing operational improvements, accretive acquisitions, and non-core business divestitures which will be timed to maximize value. Our innovative design engagements focused on sustainable packaging and collaboration with customers remain strong, and we remain confident in our strategy, our teams, and our ability to generate strong cash flow and returns for shareholders,” said Coker.
- Consumer net sales were $924 million as volumes were generally impacted by destocking trends among our customers and inflationary pricing pressures within retail.
- Consumer results included continued strong performance in the flexible packaging and rigid paper container businesses offset by weakness in the metal packaging and rigid plastic businesses.
Industrial paper packaging
- Industrial volumes remained low across all regions with limited signs of near-term improvement.
- Net sales decreased 20 percent to $585 million due to volume and mix weakness in global demand for paper and converted paper products.
- Strong execution in commercial and operational excellence resulted in Adjusted EBITDA margin of 20 percent.
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