Graphic Packaging posts US$127M Q1 FY25 net income amid lower sales and rising debt

USA – Graphic Packaging has revised its fiscal year 2025 guidance following a first-quarter performance that fell short of expectations amid challenging macroeconomic conditions and evolving consumer behavior.

The company reported a 23% year-over-year decline in net income for Q1 FY25, falling to US$127 million from US$165 million in the same period last year.

Earnings per share also declined, dropping to US$0.42 from US$0.53 in Q1 FY24.

Both quarters were affected by one-time charges and the amortization of acquired intangible assets, which amounted to US$27 million in Q1 2025 and US$38 million in Q1 2024.

Net sales for the quarter decreased by 6%, landing at US$2.12 billion compared to US$2.26 billion a year earlier.

The decline was driven primarily by three factors: a US$110 million impact from the divestiture of the Augusta, Georgia bleached paperboard plant, lower open market sales, and a US$27 million foreign exchange headwind. While there was minor pricing pressure, it was largely offset by a modest rise in volume.

Volume trends varied by region, with international packaging volumes rising by 3%, while volumes in the Americas declined by 1%.

Despite the revenue drop, EBITDA for the quarter rose 17% to US$353 million. However, after adjusting for business combinations and other special items, adjusted EBITDA fell to US$365 million, compared to US$443 million in the previous year.

The adjusted EBITDA margin for Q1 2025 was 17.2%, down from 19.6% in Q1 2024.

The company’s total debt increased by US$526 million during the quarter to reach \$5.74 billion. Net debt rose by US$554 million to US$5.61 billion, reflecting continued investment activity and operational expenditures.

Due to increased uncertainty in global economic conditions and consumer spending trends, Graphic Packaging has broadened its full-year 2025 outlook.

It now expects net sales between US$8.2 billion and US$8.5 billion, with adjusted EBITDA projected between US$1.4 billion and US$1.6 billion.

These estimates account for an expected 2% volume decline and approximately US$80 million in input cost inflation at the midpoint.

Capital expenditures for the year are expected to total around US$700 million, largely driven by the nearing completion of the company’s recycled paperboard facility in Waco, Texas.

In a related development, Graphic Packaging confirmed plans to close its coated recycled paperboard plant in Middletown, Ohio by June 1, 2025.

The closure, affecting roughly 130 employees, is part of a broader strategy to consolidate recycled paperboard production at fewer sites.

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