Sonoco has withdrawn its full-year 2020 guidance for base earnings, cash flow from operations and free cash flow due to the unknown severity and duration of the COVID-19 pandemic and the related lack of visibility to the impact on the company's served markets.
Commenting on Q1 2020 performance, Howard Coker, president/CEO, says, "I could not be more proud of the heroic efforts our associates are making every day to meet the critical needs of our customers during a period of unprecedented disruption and uncertainty. By focusing daily on controlling what is vitally important, including the health and safety of our people, the quality of our products, productivity improvements and cost management, Sonoco was able to report strong bottom-line results in the first quarter with GAAP earnings up 9.2% from last year and base earnings up 10.6%, exceeding the high-end of our base earnings guidance.
"Although we saw strong results in March across many of our businesses, which we believe was largely attributable to consumers spending more time at home as a result of COVID-19, the pandemic’s impact has clearly started to weigh on certain of our served markets. We expect that weaker demand due to COVID-19 in certain parts of our business, along with unprecedented increases in recycled fiber costs, will have a significant negative impact on our second-quarter results. We have been responding aggressively to this global crisis by implementing new workplace controls to protect our people and by taking actions to improve our liquidity and reduce our operating costs."
Around the world, Sonoco is an essential provider of consumer, industrial and medical packaging. Sonoco associates are deemed “Essential Critical Infrastructure Workers” under the guidance of the US Dept. of Homeland Security and have received similar designations by the vast majority of other governmental agencies in the 36 countries where the company operates. As a result, nearly all of the company’s global operations continue to operate and are serving our customers’ critical needs. Certain customers whose products have not been deemed “critically essential” have had to suspend operations due to COVID-19 pandemic, while some others have been unable to fully staff their operations, and as a result these customers are taking temporary downtime or furloughing employees. Sonoco is following these developments closely and responding with cost-reduction initiatives.