Sonoco (SON) Raises Recycled Paperboard Prices In Italy

Sonoco Alcore S.a.r.l., a wholly owned subsidiary of Sonoco Products Co. (NYSE:SON) , has announced a price hike by $44.60 (€40) per ton on all recycled paperboard grades sold in the company’s Italian markets to combat rising material and manufacturing costs. The increased price will be effective on shipments from or after Jun 6, 2016.

Sonoco Alcore operates 29 tubes and cores plants and four paperboard mills in Europe, including Sonoco’s largest European uncoated recycled paperboard mill in Italy. Sonoco manufactures paperboard primarily from recycled materials, for both internal use and open-market sale.

Paperboard tubes and cores are the key products of Sonoco’s Paper and Industrial Converted Products segment. The segment accounted for approximately 34% of Sonoco’s consolidated net sales in 2015. It operates around 182 plants across five continents. Sonoco’s paper operations provide primary raw material for the company’s fiber-based packaging.

For 2016, Sonoco reiterated its earnings per share guidance in the range of $2.64 to $2.74. Compared to prior-year results, the guidance reflects an expected benefit of approximately 7 cents per share due to lower pension expenses. Sonoco remains focused on further improving its cost competitiveness by optimizing its supply chain, enhancing productivity, and streamlining corporate and business unit structures.

The company expects volumes to improve roughly 2% in 2016, reflecting a robust economic outlook and an expected return to volume growth in its industrial-focused businesses. Moreover, the company will continue to benefit from low resin prices due to lower annual average oil and natural gas prices.

However, a slowdown in manufacturing in the U.S. and emerging markets, along with headwinds from a strong dollar, is expected to hurt its industrial businesses. Moreover, tough comparisons, macroeconomic weakness in the European region and strong competition remain headwinds for Sonoco.

South Carolina-based Sonoco is a global provider of a variety of consumer packaging, industrial products, protective packaging and packaging supply chain services. The company is also the largest producer of paper-based tubes and cores in North America.

At present, Sonoco carries a Zacks Rank #2 (Buy).

Other favorably placed stocks in the same industry include Avery Dennison Corporation (NYSE:AVY) , Berry Plastics Group, Inc. (NYSE:BERY) and Crown Holdings Inc. (NYSE:CCK) . All of these stocks carry the same Zacks Rank as Sonoco.



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