Sonoco Products (NYSE:SON) reported first-quarter 2026 results that matched expectations as management pointed to early benefits from productivity initiatives and the company’s multiyear Profitability Performance Plan, while navigating weather-related disruptions, a facility fire, and rising input costs tied to geopolitical developments.
Quarter performance shaped by productivity, pricing, and disruptions
President and CEO Howard Coker said adjusted earnings per share of $1.20 “met our and consensus estimates,” driven primarily by “strong productivity savings, favorable price cost environment, and a successful start to our Profitability Performance Plan despite lower volume mix.”
Chief Financial Officer Paul Joachimczyk reported net sales from continuing operations of $1.7 billion, down 2% year-over-year, reflecting “lower than expected volumes, weather impacts, as well as macroeconomic and geopolitical pressures.” Pricing actions and foreign exchange—primarily the euro—partially offset those pressures.
Joachimczyk also discussed year-over-year comparability given 2025 divestitures: TFP was divested April 1, 2025 and treated as discontinued operations in last year’s first quarter, while ThermoSafe was divested November 3, 2025 and was included in 2025 continuing operations. ThermoSafe contributed $55 million of sales in the first quarter of 2025; excluding ThermoSafe, Joachimczyk said sales would have increased by about 1% versus the prior year.
Adjusted EBITDA was $277 million, down 4% year-over-year, with margin down about 35 basis points. Excluding ThermoSafe, Joachimczyk said adjusted EBITDA would have been flat, citing “strong cost containment from our profitability programs despite softer volumes.”
Inflation and pricing actions: freight leads near-term pressure
Management highlighted rising costs in March and into the second quarter, with freight and petrochemical-related inputs among the key drivers. Coker said energy, freight, and other petrochemical-related inputs (including resins, coatings, and chemicals) represent roughly 10% of annual sales, and that the first-quarter impact was “under a few million dollars.”
Based on current estimates, Coker said inflation could add $8 million to $10 million of incremental costs in the second quarter. Joachimczyk later described that figure as Sonoco’s “line of sight” exposure for Q2, noting recovery mechanisms have a lag. He told analysts that if conditions hold steady, the impacts “would not recur,” and Sonoco expects to recover the cost pressure by the second half of the year.
In response to questions about the inflation buckets, Joachimczyk said freight was the “primary driver,” with rising diesel costs showing up quickly. He said the company has recovery mechanisms in place, but with a lag of “roughly three weeks, four weeks,” leaving Sonoco exposed for about a month. He added that the $8 million to $10 million estimate is “net” of mitigation actions, including hedging and other programs already in place.
To offset inflation, Coker said Sonoco implemented pricing actions including a $70 per ton increase for uncoated recycled paperboard in the U.S. and an EUR 80 per ton increase in Europe, along with other measures. He said the actions were “showing traction,” referencing Fastmarkets reporting an initial $60 per ton increase in U.S. URB prices.
Business mix and growth investments
Coker said Sonoco has “purposefully shifted” toward more resilient, consumer-focused categories, with “two-thirds of our sales” generated by leadership positions in paper and metal cans. He added that the company is focused on “affordable, center-of-the-store, staple food categories,” which have historically been resilient in economic stress.
Coker also emphasized that portfolio work reduced exposure to resin-based packaging, saying Sonoco used approximately GBP 240 million of petroleum-based resins in 2023 versus about GBP 75 million today, primarily tied to industrial plastics and plastic cartridges where “recovery mechanisms” are in place.
On growth initiatives, management highlighted several projects:
- Thailand paper can plant: Coker said Sonoco opened a new paper can facility in Nong Yai, Thailand, expected to produce about 200 million units annually for stacked chip markets in Asia. Joachimczyk said the plant contributed to a 6% lift in paper can volume in the region in the first quarter and described it as a “significant asset” for regional growth. Coker noted the facility was in its startup phase and designed for future expansion.
- Hartselle, Alabama wood reel investment: Sonoco is investing $20 million to add an automated nailed wood reel production line, expected to open at the end of the second quarter. Coker said the project should increase capacity by 15% and help serve wire and cable demand tied to power infrastructure growth for AI data centers. He added reels sales were up 13% in the quarter.
- New URB applications: In Q&A, Coker said Sonoco is entering new markets for URB that were historically served by other paper grades, citing mill closures elsewhere. He said the company has been successful converting customers in “saturating kraft,” with “our first customer and a line of customers in the funnel,” which he said could help lift operating rates from around 90% toward 92%-93% as volume flows through.
Segment results: Consumer sales rise, EBITDA pressured by volume; Industrial hit by fire
In the Consumer segment, Joachimczyk reported sales increased 3% year-over-year to $1.1 billion, driven by pricing and favorable FX, partially offset by weaker volume and mix amid macro conditions. Adjusted EBITDA from continuing operations declined 7% due to lower volumes, partially offset by productivity, pricing, and early transformation savings. He also noted a disclosure affecting comparability: Consumer segment adjusted EBITDA in the first quarter of 2025 did not include $18 million of unallocated corporate costs. Adjusting for that, he said Consumer adjusted EBITDA “would’ve been up with margins flat.”
Industrial segment sales were $579 million, down 1% year-over-year due to softer volumes, partially offset by pricing and FX. Adjusted EBITDA declined $7 million to $100 million, down 7%. Joachimczyk attributed margin pressure to unfavorable volume and mix as well as losses tied to the Greenville recycling facility fire.
Cash flow, savings plan progress, and outlook
Operating cash flow in the first quarter was a use of $368 million, which Joachimczyk said was consistent with normal seasonality as the company builds inventory ahead of canning season. Gross capital investment was $62 million, below expectations. He said Sonoco is “actively monitoring capital spending” given the macro environment while aiming to stay disciplined against targets.
Joachimczyk said the year-over-year decline in cash flow was primarily driven by about $140 million of higher tax payments, including $103 million tied to capital gains from prior divestitures that “will not repeat.”
On cost initiatives, Joachimczyk said Sonoco delivered $8 million of savings in the quarter toward its $150 million to $200 million three-year Profitability Performance Plan target. He said the savings were primarily from structural transformation initiatives and were already flowing through the P&L, representing about $32 million of annualized recurring savings as they roll forward.
Sonoco maintained its full-year outlook while acknowledging macro and geopolitical uncertainty. Joachimczyk guided to:
- Sales: $7.25 billion to $7.75 billion
- Adjusted EBITDA: $1.25 billion to $1.35 billion
- Adjusted EPS: $5.80 to $6.20, trending toward the lower end
- Operating cash flow: $700 million to $800 million (including the $103 million of tax payments made in Q1 related to 2025 divestitures)
Joachimczyk said EPS would be more sensitive than EBITDA to inflation and volatility due to the tighter EPS range, and during Q&A he emphasized the term loan announced at the end of March—a delayed draw facility intended to refinance debt due later in the year—was “not a significant impact” to guidance compared with near-term inflation pressure.
Looking to the second quarter, Joachimczyk said Sonoco expects earnings to grow year-over-year, though he acknowledged a near-term margin drag from Q2 inflation exposure. Coker said April showed “encouraging signs” in several areas, including early positive signs in southern Europe as the pack season begins and strength in the tuna pack. He also cited increasing salted snack volumes typical of a World Cup year, and noted that North American industrial pricing resets should provide more benefit in the second half, with some incremental help in Q2.
Sonoco also highlighted shareholder returns: Coker said the board authorized the company’s 43rd consecutive annual dividend increase, raising the payout to $2.16 per share, which he said implies an annual yield of about 3.8%. Coker added Sonoco is among a small group of public companies that have paid dividends consecutively for more than 100 years.
About Sonoco Products (NYSE:SON)
Sonoco Products Company (NYSE: SON) is a global provider of diversified packaging solutions, serving a wide range of consumer, industrial and retail markets. The company offers a broad portfolio that includes rigid paper and plastic containers, flexible packaging, industrial core and tube products, thermoformed plastics, retail point-of-purchase displays, and packaging supply chain services. Through its solutions, Sonoco helps customers in food and beverage, personal care, chemicals, healthcare, home and garden, and electronics industries address their packaging needs, improve product shelf appeal, and optimize logistics efficiency.
With operations in more than 30 countries across North America, South America, Europe, Asia and Africa, Sonoco leverages a global network of manufacturing facilities, recycling centers and distribution channels to meet the demands of multinational and regional customers.
