Sonoco Products Co (SON) Reports 7% Increase in Net Income for Q3 2023
Sonoco Products Co (NYSE:SON) reported a 7% increase in net income for Q3 2023, reaching $131 million.
The company achieved fully diluted earnings per share of $1.32 and adjusted earnings per share of $1.46.
Net sales decreased by 10% to $1.7 billion due to lower volumes and average selling prices.
Sonoco generated $617 million of operating cash flow in the first nine months of 2023.
On November 1, 2023, Sonoco Products Co (NYSE:SON), 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.
Financial Highlights
For the third quarter of 2023, Sonoco reported a 7% increase in net income attributable to Sonoco, reaching $131 million. This resulted in fully diluted earnings per share of $1.32, a 6% increase from the same period in 2022. Adjusted earnings per share were $1.46. 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 $1.7 billion, driven by lower volumes and average selling prices. GAAP operating profit also decreased to $163 million due to lower overall volume and mix and price/cost, partially offset by higher productivity.
Segment Performance
In the Consumer Packaging segment, net sales were $938 million, 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 $580 million 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 $258 million, compared to $227 million as of December 31, 2022. Total debt was $3,255 million, an increase of $33 million from December 31, 2022. The company generated $617 million of operating cash flow in the first nine months of 2023, compared to $322 million in the same period of 2022.
Outlook
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 $850 - $900 million and free cash flow to be $600 - $690 million.
Explore the complete 8-K earnings release (here) from Sonoco Products Co for further details.
This article first appeared on GuruFocus.
