Sonoco Products Company SON reported adjusted earnings per share of $1.02 in the fourth quarter of 2023, missing the Zacks Consensus Estimate of $1.07. The figure came within the company’s guidance of $1.01-$1.16. The bottom line fell 20% from the prior-year quarter’s level.

Including one-time items, the company reported earnings of 82 cents, which compared unfavorably with the year-ago quarter’s 98 cents.

Sonoco’s net sales were $1.64 billion, beating the Zacks Consensus Estimate of $1.59 billion. The top line, however, fell 2.4% year over year on lower volumes and pricing.

Operational Update

The cost of sales was around $1.3 billion, 4.8% lower than the year-earlier quarter. Gross profit in the reported quarter totaled $340 million compared with the prior-year quarter’s $314 million. The gross margin came in at 20.8% compared with the year-ago quarter’s 18.7%.

Selling, general and administrative expenses amounted to $200 million, up 15.6% year over year. Adjusted operating income was $167 million compared with the prior-year quarter’s $184 million.

Sonoco Products Company Price, Consensus and EPS Surprise

Sonoco Products Company price-consensus-eps-surprise-chart | Sonoco Products Company Quote

Segmental Performance

The Consumer Packaging segment’s net sales declined 2.6% year over year to $856 million, as volumes were impacted by lower consumer purchases. We predicted the segment’s sales to be $913 million in the quarter. Operating profit amounted to $83 million, down 2.4% from the prior-year quarter. The reported figure topped our estimate of $76 million.

Net sales in the Industrial Paper Packaging segment were $593 million, reflecting a year-over-year dip of 0.2% due to a low volume and mix. Our estimate for the segment’s quarterly sales was $522 million. Operating profit totaled $62 million, reflecting a 21.5% year-over-year fall. We expected an operating profit of $67 million for the quarter.

Sales for the All Other segment, which comprises protective, healthcare, retail and industrial plastics units, were $187 million, down 6.5% year over year. The reported figure missed our projected sales of $199 million. Operating profit for the segment totaled $22 million compared with the year-ago quarter’s $20 million. We predicted an operating income of $20 million for the quarter.

Financial Performance

Sonoco reported cash and cash equivalents of $152 million at the end of Dec 31, 2023, compared with $227 million at the end of Dec 31, 2022. The company generated cash flow from operating activities of $883 million for 2023 compared with $509 million in 2022.

As of Dec 31, 2023, total debt was $3.1 billion compared with $3.2 billion as of Dec 31, 2022.