Sonoco Shares Drop 6% After Q1 Revenue Miss Despite Meeting Profit Expectations

Overview#

Sonoco Products Company, based in Hartsville, South Carolina, reported its first-quarter results, which met earnings expectations but fell short on revenue. This led to a 6.5% drop in its share price as the company adjusted its full-year profit outlook amid ongoing economic uncertainties.

Earnings and Revenue Details#

The company reported adjusted earnings per share (EPS) of $1.20, aligning with analyst forecasts. However, its revenue of $1.68 billion was below the expected $1.71 billion and represented a 1.9% decline compared to the same quarter last year. The revenue shortfall was mainly due to the divestiture of the ThermoSafe business and a decrease in sales volume, although this was somewhat mitigated by price increases and favorable foreign exchange rates. Sonoco has now revised its full-year adjusted EPS guidance to the lower end of its previous range, targeting between $5.80 and $6.20, compared to the analyst consensus of $5.92.

Profitability Metrics#

Adjusted operating profit for the quarter decreased by 5.6% to $201 million, while adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell 18.1% to $277 million. Despite these declines, the company maintained its full-year adjusted EBITDA guidance of $1.25 billion to $1.35 billion and projected operating cash flow between $700 million and $800 million.

Segment Performance and Future Outlook#

The Consumer Packaging segment saw net sales rise to $1.10 billion, a 2.9% increase year-over-year, driven by price hikes and favorable foreign exchange conditions. However, adjusted EBITDA for this segment dropped 6.9% to $177 million. Conversely, the Industrial Paper Packaging segment experienced a 1.4% decline in sales to $579 million, with adjusted EBITDA down 7.2% to $100 million.

Cash flow from operating activities showed a negative figure of $368 million, which included about $103 million in one-time taxes related to the 2025 divestiture gains. Sonoco is also expanding its operations, having recently opened a new paper can facility in Thailand and investing $20 million to enhance wood reel capacity in Alabama.