Sonoco Hikes Prices

Zacks Equity Research

Consumer packaging company Sonoco Products Co. (SON) has announced a price hike in fabricated packaging and corrugate packaging to combat increase in costs of resin and corrugated linerboard as well as rising energy costs.

Sonoco declared that it will raise the price of fabricated packaging assemblies containing expanded polystyrene (EPS) and/or polyethylene (:PE) and corrugated materials by 4.2%. All EPS parts and components will become costlier by 3.7%. In addition, prices of corrugate packaging will rise 15%. The price hike will be effective Jan 1, 2014.

Since Sonoco’s acquisition of Tegrant in 2011, the company made efforts to counter price increases through procurement and productivity initiatives and has been successful in reducing the impact for some time. However, a portion of these input costs could not be avoided. It became part of the company’s current cost structure and will reflect in prices in 2014.

Sonoco had earlier declared price hike on all grades of uncoated recycled paperboard, along with paperboard tubes and cores, to recover increasing costs of paper and other raw materials.

Sonoco Products, which is a global manufacturer of consumer and industrial packaging products along with AptarGroup, Inc. (ATR), Packaging Corporation of America (PKG) and Sealed Air Corporation (SEE), reported third-quarter 2013 adjusted earnings of 63 cents per share, up 14% year over year. Earnings were at the upper end of the company’s guidance.

Sonoco revised its full-year earnings per share guidance to $2.27–$2.31. The company expects fourth-quarter 2013 earnings in the range of 55–59 cents a share.

South Carolina-based Sonoco is a global provider of a variety of consumer packaging, industrial products, protective packaging and packaging supply chain services. It is also the largest producer of paper-based tubes and cores in North America.

Sonoco Products currently carries a Zacks Rank #3 (Hold).

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