Sonoco Earnings Beat Estimates on Productivity in Q2, Sales Miss

Net sales of $1.885 billion declined 1.3% year over year and missed the consensus mark of $1.886 billion by 0.05%. SON’s top line declined from the prior-year period primarily due to the absence of sales from the ThermoSafe business, which was divested in November 2025. 

The profitability performance program delivered $10 million in savings during the quarter. Annualized savings reached approximately $38 million, representing 25% of the minimum target under Sonoco’s three-year goal of $150-$200 million.

Sonoco’s Gross Profit Falls in Q2

The cost of sales was $1.49 billion, down 0.7% from the year-earlier quarter. Gross profit totaled $392 million, declining 3.4% year over year. The gross margin was 20.8% compared with 21.3% in the prior-year quarter.

Selling, general and administrative expenses amounted to $200 million, down 8.5% year over year.

Adjusted operating income was $242 million, down 1.8% from the prior-year quarter’s $246.9 million. The adjusted operating margin was 12.9%, broadly unchanged year over year.

Adjusted EBITDA was $324 million, down 1.2% from the year-ago quarter.

Sonoco’s Segmental Performance

The Consumer Packaging segment’s net sales rose 1.2% year over year to $1.24 billion. The increase reflected pricing actions to offset inflation and tariff-related costs, along with favorable foreign-currency movements, partially offset by softer volumes. The segment’s adjusted EBITDA amounted to $206.7 million, down 3.1% from the prior-year quarter.

Net sales in the Industrial Paper Packaging segment were $643.6 million, reflecting year-over-year growth of 4.2%. The increase was driven by successful pricing actions and favorable foreign exchange. Adjusted segment EBITDA totaled $122.2 million, up 2.9% year over year, as productivity and procurement savings helped offset higher raw-material, freight and other operating costs.

Sonoco’s Cash Flow & Balance Sheet Updates

The operating cash flow reached a second-quarter record of $301 million, up 56% year over year. The free cash flow climbed 139% to $237 million, reflecting disciplined working-capital management and a capital expenditure of $64 million.

Cash and cash equivalents were $168.6 million at the quarter-end, down from $378.4 million at the end of the prior-year quarter. Total debt and net debt stood at $4.5 billion and $4.3 billion, respectively, while available liquidity totaled $1.3 billion.

SON Reaffirms 2026 Outlook

Sonoco maintained its 2026 net sales guidance of $7.25-$7.75 billion and the adjusted EBITDA outlook of $1.25-$1.35 billion. The company also reiterated its operating cash flow forecast of $700-$800 million.

Adjusted earnings guidance is pegged at $5.80-$6.20 per share, with the company continuing to expect results near the low end. Pricing actions, contract resets and productivity initiatives are expected to improve margins in the second half, although inflation and macroeconomic uncertainty remain the key risks.

Sonoco’s Price Performance

The company’s shares have gained 21.2% in the past year against the industry’s 5.3% decline.

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SON’s Zacks Rank

Sonoco currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Packaging Stocks Awaiting Results

Ball Corporation BALL is scheduled to release second-quarter 2026 results on Aug. 4. The Zacks Consensus Estimate for BALL’s second-quarter 2026 earnings is pegged at 99 cents per share, suggesting year-over-year growth of 10%.

The Zacks Consensus Estimate for Ball Corp’s top line is pegged at $3.67 billion, indicating growth of 9.8% from the prior-year reported figure. Ball Corp has a trailing four-quarter average surprise of 3.7%.

Silgan Holdings Inc. SLGN is scheduled to release second-quarter 2026 results on July 29. The Zacks Consensus Estimate for SLGN’s second-quarter 2026 earnings is pegged at 96 cents per share, implying a year-over-year dip of 4.9%.

The Zacks Consensus Estimate for Silgan Holdings’ top line is pegged at $1.62 billion, suggesting an increase of 5.1% from the prior-year reported figure. Silgan Holdings has a trailing four-quarter average surprise of 1.8%.

AptarGroup, Inc. ATR is scheduled to release second-quarter 2026 results on July 30. The Zacks Consensus Estimate for AptarGroup’s second-quarter 2026 earnings is pegged at $1.34 per share, indicating a year-over-year dip of 19.3%. 

The Zacks Consensus Estimate for the company’s top line is pegged at $1 billion, implying growth of 3.8% from the prior-year reported figure. ATR has a trailing four-quarter average surprise of 3.1%.

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