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Sonoco Europe Investment to Aid Production, Energy Efficiency

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Sonoco Products Co. (SON - Free Report) announced that Sonoco Europe has expanded its production sites for injection-molded rigid plastic packaging in Zwenkau, Germany by investing around 8 million euros and adding 25 new employees. This development aims to increase production capacity and improve the location’s energy efficiency.

Expansion Details

Sonoco’s two sites, Zwenkau I and II, were already among the most modern and efficient plants in the packaging industry. The latest expansion will significantly boost its production capacities for injection-molded rigid plastic packaging at the Zwenkau sites. Further, the workforce has been strengthened from 75 to 100 staff, alongside an investment of roughly 8 million euros for the facility expansion.

IML technology

In Zwenkau, Sonoco produces injection-molded rigid plastic packaging using advanced in-mold labelling (IML) technology. This technology permits the creation of highly decorated, visually appealing plastic containers, particularly suitable for uniquely showcasing spreads, sausage products, fish and dairy produce. Additionally, Sonoco produces IML lids for rigid paper containers in Zwenkau.

A number of food manufacturers use Sonoco’s decorated IML injection-molded rigid plastic packaging for moist and sensitive food products. Most importantly, IML opens up a wide range of design possibilities, and outstanding tactile and visual effects.

In addition, Sonoco’s patented PermaSafe technology offers these advantages for sterilized and pasteurized food. These types of products were usually packaged in glass or tin cans. The technology is impermeable to oxygen and water vapor, and offers greater decoration possibilities and convenience for consumers.

Apart from complete plastic packaging solutions, Sonoco also produces IML lids for rigid paper containers in Zwenkau. The lids can be individually designed with IML technology and significantly expand the packaging’s decoration area.

Sonoco Europe

Sonoco Europe manufactures paperboard tubes and cores, fiber-based construction tubes and recycled paperboard and linerboard. Over the past few years, persistently high unemployment and a slowdown in China and other developing countries, and geopolitical conflicts in Eastern Europe and the Middle East have negatively affected European demand in both the continental and export markets.

Despite the ensuing pressure on the operations of this unit, the company’s financial performance has been relatively steady. In addition to its ongoing efforts to optimize the plant footprint and cost structure within Europe, management believes Sonoco should be able to grow at or above the Eurozone’s projected GDP growth rates, and continue to mitigate the impact of these factors.

Sonoco plans to develop a new rigid paper product technology engineered by its European rigid packaging operations for commercial development at its West Chicago, IL, can plant. Further, the acquisition of Weidenhammer Packaging Group has strengthened its packaging business in Europe and further expanded its expertise in stable, highly decorated convenience packaging. It will also expand the company's consumer-related packaging and services business to around $2.8 billion in annual sales or around 53% of its combined revenue.

Zacks Rank

Sonoco currently has a Zacks Rank #3 (Hold).

Better-ranked stocks in the sector include Berry Plastics Group, Inc. (BERY - Free Report) , Packaging Corporation of America (PKG - Free Report) and Greif, Inc. (GEF - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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