Packaging Corporation of America has disclosed its financial results for the third quarter of 2023, revealing a net income of $183m, or $2.03 per share.
The company also reported net income of $185m, or $2.05 per share, excluding special items. In comparison, third-quarter net sales for 2023 stood at $1.9bn, a decrease from $2.1bn in the same period in 2022.
The reported earnings for Q3 2023 encompass special items, mainly related to specific costs at the Jackson, AL mill for paper-to-containerboard conversion activities.
Excluding these special items, the drop of ($0.78) per share in earnings compared to Q3 2022 was primarily driven by lower price and mix in the Packaging segment, higher depreciation expense, lower volume in the Paper segment, a higher tax rate and other expenses.
However, these factors were partially offset by lower operating costs, share repurchases, higher prices in the Paper segment and reduced maintenance and logistics expenses.
Segment performance
Financial information by segment indicates a decline in segment income across Packaging, Paper, Corporate and Other categories compared to Q3 2022.
Excluding special items, the Packaging and Paper segments performed slightly better while Corporate and Other remained consistent.
- Packaging segment: Shipments per day for corrugated products increased by 1.9% over the previous year, but total shipments saw a 1.3% decrease. Containerboard production and inventory showed declines from Q3 2022.
- Paper segment: Sales volume experienced a drop of 10,000t compared to Q3 2022 but increased by 14,000 tons from Q2 2023.
CEO's perspective
Packaging Corporation of America Chairman and CEO Mark W Kowlzan commented on the results, stating:
“We exceeded our guidance for the quarter with better demand in our Packaging and Paper segments. Our efficiency optimisation efforts and well-executed maintenance outages contributed to these results. With the stronger demand in our Packaging segment, we ended the quarter with inventory levels lower than anticipated.”
Kowlzan also outlined plans for the future: “Based on our current outlook for improving demand, we are planning to restart the No 3 machine at our Wallula mill during the fourth quarter to bring our inventories to desired levels.”
Looking ahead
As the company transitions from the third to the fourth quarter, Kowlzan anticipates improvements in demand in both the Packaging and Paper segments.
However, he expects lower average prices and a decrease in volume in the Paper segment. Despite anticipated challenges, the company projects fourth-quarter earnings of $1.76 per share.
Investors and industry observers will closely watch how Packaging Corporation of America navigates these challenges in the upcoming quarter.
