Greif surpasses cost savings targets amid fiscal 2025 challenges

USA – Greif Inc., a leading provider of industrial packaging solutions, has exceeded its cost optimization goals for fiscal 2025 despite navigating economic headwinds and subdued demand. 

The company, which shifted its fiscal year-end to September 30, reported two months of results for the fourth quarter and 11 months for the full year, complicating direct comparisons.

Executives highlighted internal restructuring efforts during an earnings call, including the elimination of about 8% of professional roles in the quarter to streamline operations.

In a statement, CEO Ole Rosgaard noted that the sales of the containerboard business to Packaging Corporation of America for US$1.8 billion and timberlands to Molpus Woodlands Group for US$462 million generated US$2.3 billion in gross proceeds. 

These funds went toward debt reduction, bringing the leverage ratio below 1x. “We closed fiscal ’25 as a more focused, more agile company than at any time in our history,” Rosgaard said. He added that the transformation is picking up pace, with early financial gains emerging.

The optimization program, aimed at cutting US$100 million in costs over three years, delivered US$50 million in run-rate savings for fiscal 2025, more than double the initial target of US$15 million to US$25 million. 

This progress prompted Greif to raise its fiscal 2026 savings projection to US$80 million to US$90 million, from the earlier US$50 million to US$60 million range. 

By fiscal 2027, the company anticipates total savings of US$100 million to US$120 million.

Rosgaard explained that the initiative has shifted from top-down directives to employee-led actions, with staff identifying fresh cost-cutting ideas at the local level.

CFO Larry Hilsheimer detailed further adjustments, including a review of IT contractors and a revised pay structure for AI-related work. 

These steps seek to flatten organizational layers and quicken decisions. The company has also embedded efficiency practices into daily operations to support growth in sustainable packaging segments.

Financially, Greif posted fourth-quarter net sales above US$701 million and full-year sales of US$3.93 billion. 

The Customized Polymer Solutions segment saw flat volumes due to weak industrial demand, though small containers showed upward trends from recent investments in organic expansion and mergers. 

Sustainable Fiber Solutions experienced a 7.7% volume drop, linked to mill downtime in September and soft fiber demand, yet gross profit and margins rose year over year. 

Durable Metals volumes fell amid market softness, but cash flow stayed strong with ongoing cost controls.

Integrated Solutions, meanwhile, recorded volume gains, fueled by over 30% growth in closures. 

Hilsheimer indicated that the focus remains on agility to capitalize on demand recovery. As Greif enters fiscal 2026, these moves position it for improved performance, even as broader economic pressures linger.

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