Sonoco Products (NYSE:SON) said second-quarter 2026 results met company expectations and topped consensus estimates, as productivity gains and cost controls helped offset inflation in freight, chemicals, coatings and raw materials.
President and CEO Howard Coker said the company delivered “solid second quarter results,” with particular strength in its industrial segment. Chief Financial Officer Paul Joachimczyk said the quarter reflected progress on priorities outlined at Sonoco’s Investor Day, including earnings growth, cash generation, margin maintenance and early benefits from the company’s profitability performance plan.
Joachimczyk noted that prior-year results included contributions from the divested ThermoSafe business, which had generated $66 million of revenue, $11 million of EBITDA and $0.08 of EPS in the second quarter of 2025. Excluding ThermoSafe, he said second-quarter 2026 revenue and EBITDA grew 2%, and adjusted EPS rose 17%.
Industrial Segment Benefits From URB Demand, Productivity
Sonoco’s industrial segment outperformed management’s expectations, with operating profit up 4% from a strong year-earlier quarter and up 29% sequentially from the first quarter, Coker said. Segment sales rose 4% year over year to $643 million, supported by three points of pricing and one point from foreign exchange. Volume and mix were flat.
Coker said industrial results were driven by $16 million in productivity gains, which more than offset price-cost headwinds tied to higher freight, chemicals, old corrugated containers, or OCC, and lumber. North American uncoated recycled paperboard, or URB, mills posted a 6.4% increase in trade tons, lifting mill utilization to 95%, which Coker described as the highest level in years.
Demand was supported by new market development, including saturated URB used in laminates, as well as share gains. Reels volumes rose 10%, helped by demand from wire and cable customers tied to artificial intelligence data center infrastructure, as well as power grid and communications markets.
In response to analyst questions about trade publication commentary suggesting the URB market had loosened, Coker said Sonoco was not seeing weakness in the markets it serves. He said the company’s URB backlogs extend through the third quarter and require imports from mills in Europe and Latin America to support North American demand. Joachimczyk added that North American mills were operating at 95% utilization and European mills at 92%.
Consumer Segment Sees Mixed Demand
Consumer segment sales rose 1% year over year to $1.24 billion. Pricing contributed two points of growth, while foreign exchange added one point. Operating profit declined 5% from the year-earlier period but increased 22% sequentially from the first quarter.
Coker said productivity and cost containment helped support consumer results. Paper can volumes rose 9% in EMEA and APAC, including a 29% increase in Asia. Joachimczyk said metal cans saw double-digit unit growth in pet food in EMEA, which now represents 15% of Sonoco’s global food can units.
Overall consumer volume mix declined 1.8%, primarily due to weaker U.S. demand for metal aerosol cans and adhesives and sealants. Coker said the slowdown in adhesives and sealants appeared macro-related, tied to housing and remodeling activity. Joachimczyk said aerosols faced a tough comparison after a large player exited the space in 2024, which shifted volumes in 2025.
Management said it does not expect material improvement in adhesives and sealants in the second half, but early indicators for the pack season were strong. Coker said Sonoco is modeling low- to mid-single-digit year-over-year volume growth in consumer in the second half and low-single-digit growth in industrial.
Inflation Recovery and Pricing Actions in Focus
Coker said global inflationary pressures, driven in part by higher energy expenses related to the Middle East situation, reduced operating profit by roughly $10 million in the quarter. Freight was the largest component, while raw materials also rose. OCC increased $40 per ton year to date to $100 per ton.
While Sonoco was behind the price-cost curve in the second quarter, Coker said recovery mechanisms are now in place. These include an April URB and converted product price increase that fully takes effect in the third quarter, a $60-per-ton URB increase implemented July 8, contracted global paper can price increases and diesel-related surcharges.
Joachimczyk said about 70% of industrial paper pricing is tied to an index and is recovered at the start of the following quarter. He also said a $10 movement in the Tan Bending Chip index represents about a $10 million annualized impact, or roughly $2.5 million per quarter.
Cash Flow Strengthens as Cost Program Gains Traction
Operating cash flow totaled $301 million, up 56% year over year and more than $100 million above the prior year. Free cash flow was $237 million, up 139%. Gross capital investment was $64 million, consistent with first-quarter spending.
Joachimczyk said Sonoco remains focused on funding the business, supporting the dividend and strengthening the balance sheet. He said the company’s profitability performance plan delivered $10 million of savings in the second quarter and $18 million year to date. Annualized savings now stand at about $38 million, representing 25% of the low end of the three-year target range.
The company maintained its full-year guidance, expecting:
- Net sales of $7.25 billion to $7.75 billion
- Adjusted EBITDA of $1.25 billion to $1.35 billion
- Adjusted EPS of $5.80 to $6.20
- Operating cash flow of $700 million to $800 million
Joachimczyk said the third quarter is Sonoco’s most important quarter because it is closely tied to pack season, and management wanted to preserve flexibility in its guidance range until those results are clearer.
Management Highlights Growth Investments
Coker said Sonoco is increasing production of saturated URB for high-pressure laminates used in countertops, flooring, composite boards and decorative panels. The company expects to produce roughly 10,000 tons annually by year-end and increase that to 20,000 tons annually by the end of 2027.
Sonoco also completed a $20 million expansion at its Hartselle, Alabama, wire and cable reels production center. Coker said the business has been “essentially sold out” and that new robotic equipment will increase nailed wood reels production by about 15%.
In consumer packaging, Coker pointed to a new paper can plant in Thailand, additional planned paper can production lines in South America and the U.S. in 2027, new metal can lines in Italy for tomato and tuna customers, and a new metal can and ends production line in France to support pet food growth. He also cited product developments including Orbit easy-open closures, Eco-Fill metal food can features, microwaveable-safe metal bowls and the company’s GreenCan packaging innovation.
“While we remain mindful of external macroeconomic conditions, we are confident in our strategy, our portfolio, and ability to execute through economic cycles,” Coker said.
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.
