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Sonoco (SON) Issues Update on Progress of Project Horizon
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Sonoco Products Company (SON - Free Report) recently provided an update related to its Project Horizon. The company’s $115 million project is geared to transform its Hartsville-based corrugated medium machine to a state-of-the-art uncoated recycled paperboard (URB) operation with annual production capacity of roughly 180,000 tons. This conversion is likely to be completed by the end of the second-quarter 2022.
The new machine will be the lowest cost URB machine in the world with capacity to produce a wide range of high-value URB paper grades for Sonoco’s industrial and consumer products businesses and external trade customers. This project is expected to drive annual cost savings of $30 million by 2023. Sonoco is one of the world’s top URB producers with annual production capacity of 2 million tons.
The company’s several other construction projects are in progress that will help in upgrading the entire Hartsville Mill Complex infrastructure, while allowing for efficient and safe handling of raw materials and finished goods.
A crucial component of the Project Horizon is construction of a new stock prep system that will enable increased consumption of lower-cost mixed paper, along with Old Corrugated Containers (OCC). This new system is likely to be operational in October. The company is also constructing a new offline winding operation and 102,000-square foot finished goods warehouse on the Hartsville complex in a bid to lower cost and complexity involved in paper finishing and warehousing.
Sonoco plans to exit corrugated medium market by early 2022. Meanwhile, it expects URB production capacity through its United States and Canada mill network to remain neutral at around 1.2 million tons. As the Project Horizon is progressing well, the company now expects to permanently close its Hartsville #1 and #9 URB cylinder machines. This will reduce annual paper production capacity by roughly 70,000 tons. Last year, the company permanently shut down Hartsville paper machine with annual production capacity of 30,000 tons and Trent Valley, Ontario-based paper mill with yearly production capacity of 95,000 tons.
The company will provide an additional update on this project during the second-quarter 2021 earnings call on Jul 22. Sonoco projects second-quarter adjusted earnings per share between 82 cents and 88 cents compared with earnings of 79 cents in the prior-year quarter. The upbeat guidance reflects healthy demand trends across most of its consumer and industrial businesses. Sonoco is focused on driving growth and margin expansion, and generating solid free cash flow. Apart from this, its focus on optimizing businesses through productivity improvement, standardization and cost control will aid performance in the days ahead.
Price Performance
Sonoco’s shares have gained 14.6% so far this year, outperforming the industry's growth of 8.8%.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Year to date, the company’s shares have rallied 29.1%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.
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Sonoco (SON) Issues Update on Progress of Project Horizon
Sonoco Products Company (SON - Free Report) recently provided an update related to its Project Horizon. The company’s $115 million project is geared to transform its Hartsville-based corrugated medium machine to a state-of-the-art uncoated recycled paperboard (URB) operation with annual production capacity of roughly 180,000 tons. This conversion is likely to be completed by the end of the second-quarter 2022.
The new machine will be the lowest cost URB machine in the world with capacity to produce a wide range of high-value URB paper grades for Sonoco’s industrial and consumer products businesses and external trade customers. This project is expected to drive annual cost savings of $30 million by 2023. Sonoco is one of the world’s top URB producers with annual production capacity of 2 million tons.
The company’s several other construction projects are in progress that will help in upgrading the entire Hartsville Mill Complex infrastructure, while allowing for efficient and safe handling of raw materials and finished goods.
A crucial component of the Project Horizon is construction of a new stock prep system that will enable increased consumption of lower-cost mixed paper, along with Old Corrugated Containers (OCC). This new system is likely to be operational in October. The company is also constructing a new offline winding operation and 102,000-square foot finished goods warehouse on the Hartsville complex in a bid to lower cost and complexity involved in paper finishing and warehousing.
Sonoco plans to exit corrugated medium market by early 2022. Meanwhile, it expects URB production capacity through its United States and Canada mill network to remain neutral at around 1.2 million tons. As the Project Horizon is progressing well, the company now expects to permanently close its Hartsville #1 and #9 URB cylinder machines. This will reduce annual paper production capacity by roughly 70,000 tons. Last year, the company permanently shut down Hartsville paper machine with annual production capacity of 30,000 tons and Trent Valley, Ontario-based paper mill with yearly production capacity of 95,000 tons.
The company will provide an additional update on this project during the second-quarter 2021 earnings call on Jul 22. Sonoco projects second-quarter adjusted earnings per share between 82 cents and 88 cents compared with earnings of 79 cents in the prior-year quarter. The upbeat guidance reflects healthy demand trends across most of its consumer and industrial businesses. Sonoco is focused on driving growth and margin expansion, and generating solid free cash flow. Apart from this, its focus on optimizing businesses through productivity improvement, standardization and cost control will aid performance in the days ahead.
Price Performance
Sonoco’s shares have gained 14.6% so far this year, outperforming the industry's growth of 8.8%.
Zacks Rank & Stocks to Consider
Sonoco currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Greif, Inc. (GEF - Free Report) , Lindsay Corporation (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Year to date, the company’s shares have rallied 29.1%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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