Sonoco reports strong first quarter FY23 results, surpasses estimates

USA – Sustainable packaging provider Sonoco has reported an operating profit of US$230 million in the first quarter (Q1) of fiscal year 2023 (FY23), up 36% from US$169 million Q1 FY22.

The company’s adjusted operating profit for the quarter ending 2 April 2023 declined 18% to US$213 million.

Sonoco registered net sales of US$1.73 billion over the quarter, down 2% from US$1.77 billion in Q1 FY22.

Its Consumer Packaging segment posted a 5% growth in net sales from last year, while the Industrial Packaging segment reported a 12% sales decline in Q1 FY23.

Net income attributable to Sonoco was US$148 million in Q1 FY23, up 29% from US$115 million in Q1 FY22 while adjusted net income attributable to the company dropped 25% to US$138 million.

The company’s earnings per diluted shares (EPS) grew 28% to US$1.50 during the quarter while adjusted EPS decreased 24% against the prior year period.

Sonoco’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter decreased 13% to US$276 million.

Sonoco president and CEO Howard Coker said: “Sonoco delivered a strong first quarter, highlighted by commercial pricing benefits in industrials, improving productivity, and sales growth across most consumer businesses.

“Our portfolio continues to be resilient in the current volatile economic environment due to the dedicated efforts and execution of the Sonoco team in support of our strategic initiatives.”

Earlier this year, Sonoco divested its Sonoco Sustainability Solutions division to US-based waste and recycling company Northstar Recycling Company.

Coker added: “We are raising the high end of our full-year guidance after a good start to the year. We are executing well operationally and expect to maintain solid performance with limited demand recovery in Industrials.”

Sonoco expects adjusted EPS in the range of US$1.45 to US$1.55 in the second quarter of FY23 and US$5.70 to US$6.00 for FY23.

DS Smith reports strong profitability in FY22

Elsewhere, British fiber-based packaging supplier DS Smith has reported ‘strong growth’ in profitability, with expected adjusted EBITA for FY23 in the range of £850m-£860m (US$930.99m – US$941.94m).

In a pre-close trading update the corrugated giant said good customer relationships and a sustainability focus have ‘driven resilient packaging prices’ during the period.

“Combined with good cost management, this has more than offset the weaker than expected volumes to deliver growth in profitability and delivery in line with our medium-term financial targets,” read the statement.

Miles Roberts, group chief executive, said: “I am pleased with the excellent performance we have delivered this year, despite the volatile macroeconomic conditions.

“Our relentless focus on more resilient international FMCG customers to meet their rapidly evolving needs has enabled us to increase our share of their business and, together with ongoing cost management, has driven very strong profit growth.

“We remain committed to investing in our business, leveraging our scale, flexible supply chain, supporting our deep customer relationships with innovative fiber-based solutions to lead the transition to a more circular economy, positioning us well as we enter the next financial year.”

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