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Sonoco's (SON) Arm Acquires American Recovered Paper Recycler

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Sonoco Products Company’s (SON - Free Report) business unit Sonoco Recycling acquired a privately-held, recovered paper recycler business — American Recycling of Western North Carolina.

This business annually processes approximately 30,000 tons of recovered fiber at its Asheville material recovery plant and expects to generate sales of around $9 million in the current year. The facility is situated approximately 65 miles from Sonoco’s Newport, TN, uncoated recycled paperboard mill. American Recycling of Western North Carolina business will supply stable, low-cost recovered fiber to Sonoco’s mill facilities.

Sonoco Recycling is a top 10 recycler in the United States, which annually recycles 2.8 million tons of old corrugated containers, metals, mixed paper, and plastics through its five material recovery facilities and 20 recycling hubs. Sonoco Recycling currently operates 40 recycling facilities around the globe.

Sonoco is focused on expanding its sustainable packaging portfolio. In sync with this, the company entered into an agreement to acquire Ball Metalpack, which produces sustainable metal packaging for food and household products. Last month, the company, in collaboration with Tellus, declared the receipt of a prequalified label — Check Locally — for recyclability from How2Recycle for the Natrellis line of food packaging. Natrellis technology fulfills consumers’ increasing preference for more sustainable options for high-quality refrigerated and chilled foods.

Sonoco intends to achieve sustainability goals with a significant reduction of carbon emissions and provide sustainable products to customers. Earlier this year, the company established Scope 1, 2 and 3 emission reduction goals authorized by the Science-Based Targets initiative (SBTi). By 2030, the company intends to lower Scope 1 and 2 greenhouse gas emissions by 25% and Scope 3 carbon emission by 13.5%.

Sonoco’s peer companies like Amcor Plc (AMCR - Free Report) , Packaging Corporation of America (PKG - Free Report) and Sealed Air (SEE - Free Report) 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 plans to design 100% recyclable 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 sustainably-packaged products is a major growth scope for these companies.

Sonoco’s consumer packaging businesses are gaining from elevated at-home eating trends. It believes that the confectionery, food service and construction products’ markets, which had been impacted by the pandemic, will continue to recover. The company’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. Sonoco expects adjusted earnings per share for the current year to be at the top end of its guidance of $3.49-$3.55.

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

Sonoco’s shares have declined 0.5% in the past year compared with the industry’s rise of 11.9%.

Zacks Investment ResearchImage Source: Zacks Investment Research