Second Quarter Highlights
- Second-quarter 2018 net sales were $1.37 billion, up 10.1% from $1.24 billion in 2017.
- On May 29, 2018, Sonoco signed a definitive agreement with Texpack, Inc. to acquire its 70% interest in the Conitex Sonoco joint venture and Texpack's composite can operation in Spain for approximately $143 million in cash. Conitex Sonoco is a vertically integrated global leader in the manufacturing of paper-based cones and tubes used in the textile industry. The transaction is subject to normal international regulatory reviews and is expected to close early in Q4 2018. Conitex Sonoco will be included in our Paper and Industrial Converted Products Segment and the Spanish composite can operation in our Consumer Segment.
Commenting on the Q2 GAAP and base results, President/CEO Rob Tiede sys, "Sonoco produced an outstanding quarter as our growing diversified mix of global packaging businesses improved both the top-line and bottom-line by double-digits over prior-year consolidated results. Net sales grew by 10.1%, while operating profit improved 25.4% and net income attributable to Sonoco gained 107.3% compared to last year. Base operating profit and base net income attributable to Sonoco improved 16.9% and 30.6%, respectively. Second-quarter GAAP and base operating profit benefited from a positive price/cost relationship and improvements to productivity, which were partially offset by operating cost inflation and higher management incentives. Overall volume/mix was modestly higher compared to the prior-year quarter, with each business segment showing improvement. The year-over-year improvement also reflects a lower effective tax rate due to the 2017 Tax Cuts and Jobs Act. GAAP operating profit was further aided by lower restructuring and impairment charges compared to 2017. In addition, cash flow from operations and free cash flow were extremely strong during the first six months of 2018, with cash flow from operations improving approximately $148.1 million over the prior year.
“Net sales in our Consumer Packaging segment grew 18.2% over the prior year, while operating profit improved by approximately 5.5%. A positive price/cost relationship, solid productivity gains, the benefit of acquisitions and a slight improvement in volume/mix drove the second quarter operating profit increase and more than offset higher operating inflation.
“Our Paper and Industrial Converted Products segment achieved a record second-quarter operating profit, improving 35.4% from last year, while net sales grew 1.1%. The gain in segment operating profit was primarily driven by a positive price/cost relationship and better volume/mix, which more than offset higher operating costs.
“Our Protective Solutions segment produced a solid turnaround, with operating profit improving 23.7% from last year as a positive price/cost relationship and productivity improvements helped offset higher operating inflation. Finally, our Display and Packaging segment operating profit declined as volume growth, a positive price/cost relationship and productivity improvements were more than offset by a negative mix of business and higher operating costs driven by the continued ramp up of operations at our new pack center in Atlanta.”