Sonoco’s Q2 packaging profit rises as industrial segment’s 95% recycling mill utilisation offsets 1% sales dip

GLOBAL – Sonoco has reported second-quarter adjusted earnings of US$1.51 per share, up 10% year-over-year, while net sales dipped 1% to US$1.9 billion, as productivity gains and industrial segment strength offset softer consumer demand and inflationary pressures.

The US packaging company, which supplies paper, metal and plastic packaging to food, beverage, pet care and industrial customers, said GAAP operating profit rose 9.8% to US$193 million. Adjusted EBITDA declined 1% to US$324 million, while adjusted EBITDA margin held steady at 17.2%. 

The consumer segment reported a 1% sales increase to US$1.24 billion, though operating profit fell 5% due to weaker demand for metal aerosol cans and adhesives and sealant tubes in the US.

Industrial Segment Leads with 95% Mill Utilisation and 29% Sequential Profit Growth

Sonoco’s industrial segment delivered the quarter’s standout performance, with operating profit up 4% year-over-year and 29% sequentially. 

Segment sales rose 4% to US$643 million, supported by a 6.4% increase in North American uncoated recycled paperboard trade tons that lifted mill utilisation to 95%, described as the highest level in years. 

Productivity gains of US$16 million in the industrial division more than offset price-cost headwinds from higher freight, chemicals, old corrugated containers and lumber. 

The recycling of recovered fibre at Sonoco’s mills supports the circular economy by diverting waste from landfills while providing cost-effective raw materials for packaging production.

Paper Can Volumes Surge 9% as Inflationary Pressures Persist

Paper can volumes rose 9% across EMEA and APAC, including a 29% increase in Asia, while metal cans saw double-digit unit growth in pet food in EMEA. However, global inflationary pressures tied to higher energy expenses, partly driven by the Middle East conflict, reduced operating profit by approximately US$10 million in the quarter. 

Sonoco generated record Q2 operating cash flow of US$301 million, up 56% year-over-year, and free cash flow of US$237 million, up 139%. 

Sonoco reaffirmed its full-year 2026 guidance of US$7.25-7.75 billion in net sales, US$1.25-1.35 billion in adjusted EBITDA, and US$5.80-6.20 in adjusted EPS. 

The company has implemented a US$60-per-ton price increase for uncoated recycled paperboard and a 7% increase for converted paperboard products to recover rising costs.

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