Graphic Packaging reports net sales slump of 6% in Q2 of FY2024

USA – Graphic Packaging, a consumer packaging company, reported a net income of US$190 million, or US$0.62 per share, based on 306.9 million weighted average diluted shares for Q2 of FY2024.

This compares to a net income of US$150 million, or US$0.49 per share, based on 309.1 million weighted average diluted shares for Q2 2023.

The net gain from special items was US$22 million in Q2 2024, while a net charge of US$37 million was recorded in Q2 2023.

Adjusting for special items and amortization of purchased intangibles, the adjusted net income for Q2 2024 was US$183 million, or US$0.60 per diluted share, compared to US$203 million, or US$0.66 per diluted share, for Q2 2023.

Michael Doss, the Company’s President and CEO, commented, “Q2 played out largely as expected, with continued strength in Foodservice and Beverage results, and strong execution driving solid Adjusted EBITDA.

“Consumers are responding to higher prices by shifting their purchasing patterns, and our portfolio, designed to move with the consumer, is doing just that.

“Graphic Packaging’s innovation leadership was on full display in the quarter with a big win for Paperseal Shape at one of the UK’s largest food retailers. We deliver the sustainable packaging solutions consumers prefer and are on track to reach US$200 million in Innovation Sales Growth during 2024.”

Net sales decreased by 6% to US$2.23 billion in Q2 2024, compared to US$2.39 billion in the prior year.

The decline was driven by the divestiture of the Augusta, GA bleached paperboard manufacturing facility and reduced open market sales participation, totaling US$83 million. There was also a net decline in sales from packaging operations of US$73 million, primarily due to price and mix.

Other acquisitions and divestitures (excluding Augusta) had a US$16 million favorable impact on sales, while foreign exchange had a US$15 million unfavorable impact.

EBITDA for Q2 2024 was US$458 million, US$24 million higher than Q2 2023. After adjusting for business combinations and other special items, Adjusted EBITDA was US$402 million in Q2 2024 versus US$453 million in Q2 2023.

The US$51 million decline in Adjusted EBITDA was primarily due to the divestiture of the Augusta facility, related bleached paperboard price and volume declines, and incremental planned maintenance expenses totaling US$47 million.

Excluding these items, the negative impact of lower sales and modest cost inflation were offset by Net Performance. Other acquisitions and divestitures (excluding Augusta) had a US$4 million favorable impact on EBITDA, while foreign exchange had a US$8 million unfavorable impact.

The adjusted EBITDA margin, including the negative impact of maintenance and divestiture and reduced open market paperboard participation, was 18.0% versus 18.9% in the prior-year quarter.

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