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Sonoco Recycling LLC, a unit of Sonoco Products Co. (SON - Analyst Report), has spent $2 million to improve the material recovery facility (MRF) located in Onslow County, North Carolina. It led to capacity improvement, enabling the facility to process more recyclables.

Sonoco Recycling is a world leader in recycling which collects 3.5 million tons of paper, plastic, metal and other material annually. Currently, the company operates six material recovery facilities and serves more than 125 communities, in which curbside-collected residential and commercial materials are processed.

Sonoco Recycling decided to invest in Onslow County as it found the region has prioritized in the fields of sustainability and recycling. Onslow County gives high importance to clean environment provision for its citizens.

Sonoco Recycling will provide long term recycling opportunities to the citizens of Onslow County area. Moreover, the facility has an education room to inform students about the benefits of recycling.

Sonoco has been struggling with operating difficulties in its North American uncoated recycled paperboard mills. This has resulted in unscheduled downtime and higher costs.

Moreover, lower-than-expected volumes in the consumer and industrial packaging business remain a major concern for Sonoco. Accordingly, the company has cut down its estimates for third-quarter 2012 to the range of 51 cents to 53 cents from the previous guidance of 62 cents to 66 cents.

Sonoco has braved the challenges from soaring input costs with a price surcharge implementation. The company has increased the prices of nailed woods reels, plywood reels and ThermoSafe brands to incorporate the higher raw material costs.

Sonoco reported adjusted earnings of 58 cents per share in second-quarter 2012 compared with 60 cents in the year-ago quarter. The results were in line with the Zacks Consensus Estimate.

Net sales increased 6.6% year over year to $1.20 billion, missing the Zacks Consensus Estimate of $1.22 billion. The improvement stemmed from the acquisition of Tegrant Corp., partially offset by lower volume and currency translation effect.

Sonoco retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.

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