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Sonoco (SON) Unit to Hike Recycled Paperboard Prices in EMEA
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Sonoco Products Company’s (SON - Free Report) wholly-owned subsidiary, Sonoco Alcore S.a.r.l, intends to implement a price hike of €100 ($109) per ton for all recycled paperboard grades sold in the company’s EMEA (Europe, Middle East & Africa) regions. The price rise will be effective for all shipments starting Mar 14.
Sonoco is executing price-rise actions in response to the escalating costs. The company is witnessing significant volatility in energy prices and other cost surges across its operations and supply chain. The company’s productivity and cost-control initiatives are not enough to mitigate these costs and it is forced to pass on these costs to customers.
Sonoco’s fourth-quarter 2021 earnings and sales beat the respective Zacks Consensus Estimates and increased year over year. The company anticipates demand in most consumer and industrial businesses to remain solid in the near term. It projects first-quarter 2022 adjusted earnings per share (EPS) between $1.25 and $1.35. For 2022, the company expects an adjusted EPS of $4.60-$4.80, with a mid-point target of $4.70 per share. It had reported earnings of $3.55 per share in 2021. The upbeat guidance is driven by strong performance in its legacy businesses and expected earnings benefit from the acquisition of Ball Metalpack. Robust demand, positive price/cost, productivity initiatives and improvement in volume/mix are likely to favorably impact bottom-line results in 2022.
Sonoco’s peers in the Containers – Paper and Packaging space like Sealed Air Corporation (SEE - Free Report) , Packaging Corporation of America (PKG - Free Report) and Greif, Inc. (GEF - Free Report) are focused on hiking prices to offset inflationary pressure.
Limited availability of certain raw materials, global transportation disruptions and inflationary pressure have impacted Sealed Air’s supply chain. The company encountered higher freight costs associated with the sourcing and movement of raw materials due to tight market conditions. Even though Sealed Air is implementing price increases, the associated timing lag on these increases and formula-based pricing have dented margins.
Packaging Corporation cautions that first-quarter 2022 is likely to witness the largest inflation-driven sequential cost increase in the company’s history. The company continues to face unprecedented inflation in most of its operating cost categories and freight costs. Also, seasonally colder weather could lead to higher energy and wood costs.
Greif will continue to encounter labor shortages and supply chain disruption. Surging costs for raw material used in the paper-making process, energy, chemical and transportation are headwinds.
Sonoco’s consumer packaging businesses witnessed pandemic-driven demand for certain consumer products like food and household products last year. The company is now witnessing a normalization of demand from the heightened at-home eating trends. It believes that the confectionery, food service and construction products’ markets, which had been most impacted by the pandemic, will continue to recover. The demand for Industrial Paper Packaging products returned to pre-pandemic levels in most of the global markets.
Sonoco’s industrial-end markets will gain from continued strong demand for global tubes, cores and cones. Its core consumer and industrial businesses are well-positioned to achieve year-over-year bottom-line growth of 20% in 2022. Its ThermoSafe cold chain packaging business will continue to benefit from strong demand for temperature-assured shippers for transporting COVID vaccines.
Image: Bigstock
Sonoco (SON) Unit to Hike Recycled Paperboard Prices in EMEA
Sonoco Products Company’s (SON - Free Report) wholly-owned subsidiary, Sonoco Alcore S.a.r.l, intends to implement a price hike of €100 ($109) per ton for all recycled paperboard grades sold in the company’s EMEA (Europe, Middle East & Africa) regions. The price rise will be effective for all shipments starting Mar 14.
Sonoco is executing price-rise actions in response to the escalating costs. The company is witnessing significant volatility in energy prices and other cost surges across its operations and supply chain. The company’s productivity and cost-control initiatives are not enough to mitigate these costs and it is forced to pass on these costs to customers.
Sonoco’s fourth-quarter 2021 earnings and sales beat the respective Zacks Consensus Estimates and increased year over year. The company anticipates demand in most consumer and industrial businesses to remain solid in the near term. It projects first-quarter 2022 adjusted earnings per share (EPS) between $1.25 and $1.35. For 2022, the company expects an adjusted EPS of $4.60-$4.80, with a mid-point target of $4.70 per share. It had reported earnings of $3.55 per share in 2021. The upbeat guidance is driven by strong performance in its legacy businesses and expected earnings benefit from the acquisition of Ball Metalpack. Robust demand, positive price/cost, productivity initiatives and improvement in volume/mix are likely to favorably impact bottom-line results in 2022.
Sonoco’s peers in the Containers – Paper and Packaging space like Sealed Air Corporation (SEE - Free Report) , Packaging Corporation of America (PKG - Free Report) and Greif, Inc. (GEF - Free Report) are focused on hiking prices to offset inflationary pressure.
Limited availability of certain raw materials, global transportation disruptions and inflationary pressure have impacted Sealed Air’s supply chain. The company encountered higher freight costs associated with the sourcing and movement of raw materials due to tight market conditions. Even though Sealed Air is implementing price increases, the associated timing lag on these increases and formula-based pricing have dented margins.
Packaging Corporation cautions that first-quarter 2022 is likely to witness the largest inflation-driven sequential cost increase in the company’s history. The company continues to face unprecedented inflation in most of its operating cost categories and freight costs. Also, seasonally colder weather could lead to higher energy and wood costs.
Greif will continue to encounter labor shortages and supply chain disruption. Surging costs for raw material used in the paper-making process, energy, chemical and transportation are headwinds.
Sonoco’s consumer packaging businesses witnessed pandemic-driven demand for certain consumer products like food and household products last year. The company is now witnessing a normalization of demand from the heightened at-home eating trends. It believes that the confectionery, food service and construction products’ markets, which had been most impacted by the pandemic, will continue to recover. The demand for Industrial Paper Packaging products returned to pre-pandemic levels in most of the global markets.
Sonoco’s industrial-end markets will gain from continued strong demand for global tubes, cores and cones. Its core consumer and industrial businesses are well-positioned to achieve year-over-year bottom-line growth of 20% in 2022. Its ThermoSafe cold chain packaging business will continue to benefit from strong demand for temperature-assured shippers for transporting COVID vaccines.
Sonoco currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
Sonoco’s shares have declined 8.9% in the past year against the industry’s rise of 5.7%.
Image Source: Zacks Investment Research