Sonoco decreased EBIT margin to 5.7% in 2Q2017

Sonoco increased net sales by 2.9% in 2Q2017 to the level of USD 1,240.6 million, amid EBIT 70.7 million, margin accounted for 7.7%.

In January-June 2017, the company’s net sales accounted for USD 2,413 million, maintaining the level of the same period of 2016.

Jack Sanders, Sonoco President and Chief Executive Officer, commented:

“Sonoco’s balanced portfolio of consumer-related, industrial and protective packaging businesses continues to produce consistent results despite generally weak market demand and fluctuating raw material costs. Compared to the prior-year quarter, the Company benefited from a positive price/cost relationship, manufacturing productivity improvements, and lower management incentives. However, these positive factors were offset by lower volume/mix, operating cost inflation and higher taxes on our base operating results.

Operating profit in our Consumer Packaging segment was essentially flat with last year’s quarter as total productivity and a slightly positive price/cost relationship essentially offset lower volume. Segment sales rose 2.0% due to acquisitions, net of divestitures, and higher selling prices implemented to recover rising raw material costs which was partially offset by the negative impact of foreign exchange.

Our Display and Packaging segment’s operating profit declined from last year’s quarter on lower volume/mix and manufacturing productivity declines. Segment sales declined 11.7% due to loss of the Company’s contract packaging business in Mexico and Brazil, as well as lower volumes in our domestic display and retail packaging businesses.

Operating profit in our Paper and Industrial Converted Products segment improved 16.1% to the highest level in nearly three years as operating margin increased 70 basis points to 9.3%. The segment benefited from strong manufacturing productivity improvements and a positive price/cost relationship which were only partially offset by higher labor, maintenance and other expenses. Current-quarter segment sales grew by 8.3% due primarily to higher selling prices implemented to recover escalating recovered paper costs, partially offset by the prior-year divestiture of a paperboard mill in France, lower volume and the negative impact of foreign exchange.

Our Protective Solutions segment’s operating profit declined 23.0% from the prior-year quarter, as a negative price/cost relationship and declining manufacturing productivity resulting from lower volume were only partially offset by fixed-cost productivity improvements. Sales improved 3.2% in the quarter due primarily to acquisitions and higher selling prices, which offset lower volume.”

In 4Q2016 Sonoco decreased sales by 9.9%.

Check other wood business-related companies 2Q2017 schedules for financial and operating results.

Earlier Sonoco declared a quarterly dividend payable on September 8, 2017.

About Sonoco:

The company is a global provider of a variety of consumer packaging, industrial products, protective packaging and packaging supply chain services. With annualized net sales of approximately USD 5.0 billion, it has 20,800 employees working in more than 300 facilities in 35 countries. Sonoco is one of the largest producers of uncoated recycled paperboard in the United States and Canada, producing more than 1 million tons annually from 11 mills.

Source: Woodbizforum