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Introduction & Market Context
Sonoco Products Company (NYSE:SON) reported strong first-quarter 2025 results on April 29, showcasing significant growth in revenue and profitability as the company continues its strategic transformation toward a more consumer-focused packaging business. The stock responded positively in after-hours trading, rising 2.65% to $48.00 following the presentation.
The company’s Q1 performance reflects its successful integration of recent acquisitions and the completion of key divestitures, positioning Sonoco as a more defensive business with approximately two-thirds of revenue now coming from consumer packaging segments.
Quarterly Performance Highlights
Sonoco delivered record financial results in the first quarter, with revenue reaching $1.71 billion, a 31% increase compared to Q1 2024. Adjusted EBITDA grew even more impressively at 38% year-over-year to $338 million, with margins expanding 170 basis points to 16.6%.
As shown in the following chart summarizing Q1 2025 results:
Adjusted earnings per share rose 23% to $1.38, though this growth was somewhat tempered by higher interest expenses, taxes, and foreign exchange impacts. The company’s business drivers for the quarter included 24% total revenue growth, with adjusted EBITDA up 38% primarily driven by the SMP EMEA acquisition.
The detailed financial comparison between Q1 2025 and Q1 2024 further illustrates this strong performance:
Segment Performance Analysis
Sonoco’s Consumer Packaging (NYSE:PKG) segment was the standout performer in Q1, with sales surging 83% to $1.07 billion and adjusted EBITDA more than doubling with 127% growth to $190 million. This exceptional performance was driven by the SMP EMEA acquisition and strong volume growth in Metal Packaging US, which achieved approximately 10% volume/mix growth.
The following chart details the Consumer Packaging segment’s impressive results:
In contrast, the Industrial Paper Packaging segment saw a 6% decline in sales to $558 million, though adjusted EBITDA still increased by 6% to $101 million. The segment benefited from favorable price/cost dynamics and productivity improvements of $7.1 million, offsetting volume challenges in Europe.
The All Other segment, which includes businesses like ThermoSafe, reported sales of $85 million (down from $134 million in Q1 2024) and adjusted EBITDA of $14 million (down from $21 million). The sales decline primarily reflects the divestiture of Protective Solutions and slower Industrial Plastics volume. Notably, the company is continuing to evaluate the divestiture of ThermoSafe, which showed an 8% sequential improvement in adjusted EBITDA.
Strategic Initiatives & Transformation
A major milestone in Sonoco’s strategic transformation was the closing of the TFP (Thermal & Fiber Packaging) sale for $1.8 billion, representing approximately 10x trailing twelve months adjusted EBITDA. The proceeds were used to pay off a $1.5 billion term loan, significantly strengthening the company’s balance sheet.
The company also completed the rebranding of its recently acquired Eviosys business to Sonoco Metal Packaging (SMP) EMEA, further integrating this strategic acquisition into its global operations.
Over the past five years, Sonoco has undergone a significant transformation, evolving from a business with a 56%/44% Industrial/Consumer mix in 2005 to a 34%/66% mix in 2025. This shift has created a more defensive business profile, with the company now operating 285 plants across 40 countries and projected annual sales of $7.75-8.0 billion.
Debt Management & Financial Outlook
Following the TFP divestiture, Sonoco has made substantial progress in reducing its debt load. The company’s pro forma net leverage is now below 4x, with a target to reach 3.3x to 3.0x by the end of 2026. The weighted average interest rate on remaining debt is 3.7%, and the company maintains total liquidity of approximately $915 million.
The following chart illustrates Sonoco’s debt reduction progress and maturity schedule:
For the full year 2025, Sonoco reaffirmed its financial guidance:
The company expects adjusted EBITDA of $1,300-$1,400 million, adjusted EPS of $6.00-$6.20, and operating cash flow of $800-$900 million. Key factors that could impact these projections include currency fluctuations, price/cost dynamics, productivity initiatives, and volume trends in both consumer and industrial segments.
Dividend History & Shareholder Value
Sonoco highlighted its impressive dividend history, having paid dividends for 100 consecutive years with increases for 42 consecutive years. The current quarterly dividend is $0.53 per share, to be paid on May 9, 2025.
As shown in the following chart, Sonoco’s annual dividend has grown steadily from $1.19 in 2012 to $2.11 in 2025:
CEO Howard Coker outlined six key priorities for the company: managing core businesses, integrating SMP EMEA, optimizing the organization for the future, maintaining culture through effective change management, preparing to divest ThermoSafe, and driving value creation for shareholders.
These priorities align with Sonoco’s transformation into a more consumer-focused packaging company with a defensive business profile, strong global presence, and consistent record of shareholder returns.
Full presentation:
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