Sonoco Products Co.

Overview Key strengths Key risks Leading market position in paperboard tubes, cores, and packaging. Acquisitions that could increase leverage. Vertically integrated operations and products in multiple substrates. Exposure to fluctuations in cardboard and other raw material costs. Strong end-market diversity with a global footprint. Changing consumer preferences regarding the use of plastic packaging. Revenues were down about 6.5% as volume and mix continued to be affected by inflationary pressures on consumer, inventory destocking among its customers, and lower pricing reflected index movement across the company?s substrates. Although price/cost turned negative for the bulk of 2023, Sonoco was able to offset with productivity initiatives contributing about $109 million, resulting in EBITDA margins at about 15.5% and remaining steady at about $1.05

...Sonoco Products Co.'s 2023 revenue was lower than expected; however, EBITDA came in about in line with our expectations. Revenues were down about 6.5% as volume and mix continued to be affected by inflationary pressures on consumer, inventory destocking among its customers, and lower pricing reflected index movement across the company's substrates. Although price/cost turned negative for the bulk of 2023, Sonoco was able to offset with productivity initiatives contributing about $109 million, resulting in EBITDA margins at about 15.5% and remaining steady at about $1.05 billion versus $1.07 billion in 2022. For 2024, it seems that the company's consumer metal packaging and thermoform/flexibles businesses have hit a trough, and volumes should improve as the year progresses. Rigid paper containers will continue to lag as consumer demand continues to lag, particularly in Europe. S&P Global Ratings expects the industrial segment volumes to improve this year in the low single-digits; however,...

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