Sonoco felt a pinch from global inflation impacting logistics, petroleum-based chemicals and coatings and raw materials, including OCC — amounting to a $10 million headwind, the company reported in its second-quarter earnings release this week. Sonoco said that will be recovered in the second half of the year thanks to price increases and freight surcharges.
Industrial packaging: URB stars in Q2
CEO Howard Coker reported that industrial segment results exceeded Sonoco’s expectations. Operating profits were up 29% sequentially from the first quarter and up 4% year over year.
Sonoco’s North American URB mills had a 95% utilization rate, “the highest level in years,” Coker said
Sonoco is capitalizing on the data center boom. Sonoco supplies nailed wood, metal and polyfiber reels for wire and cable. Reels sales rose 13%, and volumes were up 10% in Q2. During the quarter, Sonoco completed a $20 million expansion at a Hartselle, Alabama, facility. “We have been essentially sold out and needed this additional capacity to meet market demand,” Coker said.
The company is planning to expand with further automation in Q3, which Sonoco expects will grow capacity by 15%.
Sonoco also highlighted opportunity in saturating URB, including ventures outside of packaging.
“Recognizing an unmet need in this market, we took more than a year of technical development, trialing and testing to develop a recycled paper grade that can be used in making laminate products for countertops, flooring, composite boards and decorative panels,” Coker explained.
By the end of 2026, Sonoco projects a run rate of 10,000 tons. It wants to double that by the end of next year, with additional growth by 2030.
Consumer packaging: Varied cans demand
U.S. demand for metal aerosol cans, adhesives and sealant tube lagged. Conversely, metal pet food cans experienced double-digit unit growth in the Europe, Middle East and Africa region, which Sonoco reported now account for 15% of its global food can units.
Sonoco continues to tout opportunities in paper cans. In Asia, volumes were up 29%. Sonoco is building out production going forward, including plans for new capacity in the Americas in 2027 and 2028.
“New paper can growth in Europe, Asia, South America and North America has us exploring additional capacity expansions, while customer promotions and new product launches are projected to lift can volumes as we enter the important pack season in both the U.S. and EMEA,” Coker said.
Sonoco did not change any of its guidance metrics for 2026. Executives still expect net revenues will total $7.25 billion to $7.75 billion.
