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By the numbers: Q1 2026
Net sales: $1.68B
Down 1.9% year over year
Consumer packaging net sales: $1.10B
Up 2.9% year over year
Net income: $68M
Compared with $54M in Q1 2025
- Overview: Volatility was a prominent theme during Sonoco’s first-quarter earnings call on Wednesday, with executives repeatedly citing effects of geopolitical and macroeconomic conditions. “We are in uncertain times. Things are changing on a daily basis,” said CEO Howard Coker, adding that he’s impressed with the team’s performance given the current environment. “February was a much better month from a volume perspective. But with the onset of the Middle East conflict, we began experiencing rapid input cost inflation in March,” he said.
- Cost-cutting progress: Executives detailed progress on goals in the three-year plan introduced in February, namely to achieve $150 million to $200 million in cost savings by 2028. During Q1, the company delivered $8 million in savings, with approximately $6 million coming from structural transformation initiatives and $2 million from operational improvements, said CFO Paul Joachimczyk.
- Reworked portfolio outcomes: In light of the Iran war causing plastic prices to climb, “I’m happy that our recent portfolio work financially reduced our exposure to resin-based packaging,” Coker said. That was in reference to the company de-emphasizing plastic products as part of multiple business unit revamps during the last couple years. Overall, the numerous company changes have boosted resilience, Coker suggested. “We live in a massively different world. Without our simplification efforts, we would not be driving the level of SG&A and other savings today, and we would be facing serious supply chain issues and a much larger degree of inflation.”
- Weather and disaster impacts: Like numerous other packaging companies, a winter storm in late January impacted Sonoco’s mill and converting operations and that of its customers. Certain resulting power outages lasted for more than a week, Coker said. The company also took a hit from a March fire that destroyed its recycling facility in Greenville, South Carolina. Nobody was hurt in that incident, Coker said, but the company incurred $2 million in costs in Q1 from the fire.
- Investments: Sonoco is investing $20 million to add a new manufacturing line at its reels plant in Hartselle, Alabama, slated to come online in Q2. “We expect it will increase our capacity by 15% and enable us to meet the needs of the fast-growing wire and cable industry as it supplies the booming power infrastructure demand for AI,” Coker said. He also highlighted the March grand opening for a new paper can plant in Thailand, which is expected to become one of the company’s largest global production sites for this product. Coker said this plant will manufacture 200 million units annually for the “growing stacked chip market in Asia”; during Sonoco’s February investor day, executives said this plant is connected to a Pringles factory.
- Inflationary costs: Company executives noted a lag in experiencing inflationary costs from the Iran war and other conditions. They anticipate these factors will result in an additional $8 million to $10 million in costs in Q2 for inputs such as energy, freight and petrochemicals. While the global sourcing and supply assurance team is working to offset these costs, “we must recover this inflation,” Coker said. He pointed to Sonoco’s recent price hike announcements as a mitigation measure: In early March it declared a $70 per ton price increase on uncoated recycled paperboard to begin April 3, and an 80-Euros-per-ton increase on that grade in Europe.
- Outlook: Despite executives’ talk of added costs, Sonoco’s full-year guidance remains unchanged: net sales of $7.25 billion to $7.75 billion and operating cash flow of $700 million to $800 million. In light of geopolitical and macroeconomic uncertainty, “I want to underscore the importance of what we're doing to drive margins for the rest of the year by controlling the controllables,” Joachimczyk said. He pointed to pricing discipline, accelerating productivity, advancing the profitability performance plan and tightly managing costs and capital.
