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Sonoco (SON) Signs Deal to Expand Sustainable Packaging

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·4 min read
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Sonoco Products Company SON, in collaboration with Tellus Products, LLC, declared the receipt of a prequalified label, Check Locally for recyclability from How2Recycle for the Natrellis line of food packaging.

Based in the United States, Tellus is an innovative packaging company that produces upcycled sugarcane fiber and other U.S.-grown plant fibers, including hardwood for sustainable tableware and foodservice products.

Natrellis features a highly-engineered surface that delivers exceptional performance through the product’s full lifecycle, delivering customers a great product experience. This advanced packaging helps maintain the package strength during all stages of use by avoiding loss of food moisture and eradicating wicking through the package to outside surfaces. Sonoco also provides custom rigid lidding and flexible lidding for these market solutions.

Natrellis technology fulfills consumers’ increasing preference for more sustainable options for high-quality refrigerated and chilled foods. This alliance supports the companies’ focus to provide sustainable packaging solutions to customers.

Sonoco’s peer companies like Amcor Plc AMCR, Packaging Corporation of America PKG and Sealed Air SEE are also offering sustainable packaging to consumers.

Recently, Amcor unveiled an advanced technology for small bottles to recycle. The company is committed to making all of its packaging recyclable by 2025.

Sealed Air is plans to design 100% recyclable or reusable packaging solutions by 2025. So far, 50% of its solutions are already being designed for recyclability.

Packaging Corporation’s 89% of all corrugated products were recovered and directed into the recycling stream in 2020. The company’s Sustainable Forestry Initiative certified mills are focused on introducing new harvested fiber to maintain sustainable fiber supply. Consumers’ growing awareness and consequent increase in demand for sustainable packaged products is a major growth scope for these companies.

Sonoco’s ThermoSafe unit and Singapore Airlines entered into a global partnership agreement to lease the new Pegasus ULD temperature-controlled bulk shipping container. The deal allows pharmaceutical freight forwarders access to Pegasus ULD containers directly from Singapore Airlines, a reliable partner in transporting high-value, time and temperature-sensitive pharmaceutical cargo across the globe. ThermoSafe’s Pegasus ULD is the world’s first FAA and EASA-approved passive bulk temperature-controlled ULD container for medical usages. Sonoco’s temperature-assured business is gaining from rising sales of critical products packaging for pharmaceutical transport, including flu and COVID-19 vaccines.

Sonoco anticipates demand in most consumer and industrial businesses to remain solid in the near term. It projects fourth-quarter 2021 adjusted earnings per share (EPS) between 84 cents and 90 cents. The mid-point of the guidance suggests growth of 6% from earnings of 82 cents reported in fourth-quarter 2020. For 2021, the company’s adjusted EPS guidance is expected at $3.49-$3.55. The mid-point of the range indicates an improvement of 3% from the adjusted EPS of $3.41 in 2020.

Sonoco’s consumer packaging businesses witnessed pandemic-driven demand for certain consumer products like food and household products. The segment will continue to gain traction from elevated at-home eating trends. It believes that the confectionery, food service and construction products’ markets, which had been mostly impacted by the pandemic, will continue to recover. Demand for Industrial Paper Packaging products returned to pre-pandemic levels in most of the global markets. The company sees opportunities for new product growth such as its fiber protective post business, which is expanding in Poland, Turkey and Mexico.

Sonoco’s industrial-end markets will gain from the historically-high backlogs for uncoated recycled paperboard in the United States and Canada coupled with robust demand for global tubes, cores and cones returning to the pre-pandemic levels. The company is focused on growing sustainable packaging solutions.

Sonoco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

The company’s shares have moved up 5.2% so far this year compared with the industry’s rise of 12%.

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