Hartsville, South Carolina-based packaging company Sonoco has reported that for the first half of 2017 its net income was $96.9m, or $0.96 per diluted share, compared with $116.2m, or $1.14 per diluted share, in 2016.
Net sales were $2.41bn for the first six months of 2017, down $19.0 million, compared with $2.43bn in 2016.
Gross profit for the period was $456.1m, compared to $487.3m for the same period, last year. As a percentage of sales, gross profit stood at 18.9% for the period, while it was 20% last year.
Cash flow from operations stood at $104.3m for the period and last year it was $186.0m. Free cash flow during the period was negative $68.2m, while it was positive $9.8m for last year.
The company expects earnings per share for third quarter to range between $0.71 and $0.77. The forecast takes into consideration the impact of acquisitions, net of divestitures and elevated recovered paper prices for third quarter.
For the whole year, earnings per share has been forecast to range between $2.73 and $2.80, which includes the $0.07 earnings per share expected to come from acquisitions.
Operating cash flow and free cash flow, for the period were calculated to be $445m and $100m. The company stated that higher than expected increase in working capital and also due to higher selling prices and higher material costs.
Base earnings for the period was $131.7m or $1.31 per share, compared to $141.2m or $1.38 per share for the same period, last year. There was a decline of 6.7%.
Sonoco president and CEO Jack Sanders said: “Sonoco's balanced portfolio of consumer-related, industrial and protective packaging businesses continues to produce consistent results despite generally weak market demand and fluctuating raw material costs.
“Compared to the prior-year quarter, the Company benefited from a positive price/cost relationship, manufacturing productivity improvements, and lower management incentives. However, these positive factors were offset by lower volume/mix, operating cost inflation and higher taxes on our base operating results.
"Our Display and Packaging segment's operating profit declined from last year's quarter on lower volume/mix and manufacturing productivity declines. Segment sales declined 11.7 percent due to loss of the Company's contract packaging business in Mexico and Brazil, as well as lower volumes in our domestic display and retail packaging businesses.
Sanders stated that operating profit from the company’s protective solutions segment had fallen by 23% compared to the same period, last year due to negative price/ cost relationship and declining manufacturing productivity resulting from lower volumes were only partially offset by fixed-cost productivity improvements.
On the other hand sales increased by 3.2% during the period, mainly due to acquisitions and higher selling prices which offset lower volume.