Sonoco, a global packaging company, has reported a 5% decline in net sales for the second quarter (Q2) of financial year 2024 (FY24), amounting to $1.62bn compared to $1.70bn in the same period of FY23.
The downturn was largely attributed to the divestiture of the company's Protective Solutions division, the shutdown of a thermoformed food packaging plant, the reclassification of recycling operations, and reduced selling prices.
The Consumer Packaging segment experienced a 4% decrease in net sales to $928m while the Industrial Packaging segment saw a 3% increase to $601m over the quarter.
Sonoco's generally accepted accounting principles (GAAP) net income attributable to the company fell by 21% to $91m, from $115m a year earlier.
This led to a GAAP diluted earnings per share (EPS) of $0.92, a decline from $1.16 in Q2 FY23.
The GAAP operating profit was $140m in the second quarter of FY24, a 25% drop from $188m, primarily due to higher acquisition-related costs, restructuring, and asset impairment charges.
Driven by the unfavourable price in the Industrial Paper Packaging segment, the company’s adjusted operating profit and adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) also saw reductions to $193m and $262m, respectively, in Q2 FY24.
Sonoco president and CEO Howard Coker said: "Sonoco delivered solid second-quarter results with sequential growth in adjusted EBITDA and EPS. While the pace of Consumer volume recovery remains muted, we were pleased to see low single-digit organic volume improvements in Industrials.
“Importantly, productivity was $51m in the second quarter bringing our first half 2024 total to $102m, well ahead of our full-year outlook.
“Our assertive actions to improve productivity from value-creating capital and portfolio simplification has continued to yield results. In addition, we continued executing on our disciplined and dynamic capital deployment strategy by investing in capital and innovation projects while returning capital to shareholders."
Looking ahead to the full year 2024, Sonoco anticipates adjusted EPS to be in the range of $5.00 to $5.30.
For the third quarter, the company expects adjusted EPS to be between $1.40 and $1.60.
In June this year, Sonoco announced its definitive agreement to acquire Eviosys, a leading European manufacturer of food cans, ends, and closures, from KPS Capital Partners.
