On November 1, 2023, Sonoco Products Co, one of the largest sustainable global packaging companies, released its financial results for the third quarter ended October 1, 2023. Despite facing inflationary pricing pressures, the company reported near record results in its Consumer Packaging and Industrial Paper Packaging segments.
For the third quarter of 2023, Sonoco reported a 7% increase in net income attributable to Sonoco, reaching USD131m. This resulted in fully diluted earnings per share of USD1.32, a 6% increase from the same period in 2022. Adjusted earnings per share were USD1.46. The company also reported sequential growth in sales, net income, and adjusted EBITDA, improving net income margin and adjusted EBITDA margin to 7.6% and 16.4%, respectively. However, net sales decreased by 10% to USD1.7bn, driven by lower volumes and average selling prices. GAAP operating profit also decreased to USD163m due to lower overall volume and mix and price/cost, partially offset by higher productivity.
In the Consumer Packaging segment, net sales were USD938m, primarily impacted by inflationary pricing pressures within retail along with unfavorable pricing. Despite lower volumes and broadly negative price/cost, the segment benefited from strong productivity and performance in the flexible packaging, rigid paper, and metal packaging businesses. The Industrial Paper Packaging segment reported a 12% decrease in net sales to USD580m due to volume and mix weakness in global demand for paper and converted paper products. However, strong execution resulted in operating profit margin of 13% and adjusted EBITDA margin of 18%.
Balance Sheet and Cash Flow
As of October 1, 2023, Sonoco had cash and cash equivalents of USD258m, compared to USD227m as of December 31, 2022. Total debt was USD3,255m, an increase of USD33m from December 31, 2022. The company generated USD617m of operating cash flow in the first nine months of 2023, compared to USD322m in the same period of 2022.
For the fourth quarter, Sonoco expects seasonally lower demand volumes and unfavorable index-based pricing impacts. However, the company is raising its full-year adjusted EPS and adjusted earnings guidance based on year-to-date results and fourth quarter guidance. Full-year operating cash flow is expected to be USD850 – USD900m and free cash flow to be USD600 – USD690m.