Sonoco Products Co. SON declared that it will increase the price of all grades of uncoated recycled paperboard (URB) products by $40 to $60 per ton depending on grade. The raised price will be effective on shipments in the U.S. and Canada beginning Oct 3, 2016.
The price rise has been necessitated chiefly by the increasing operating costs. This move will assist Sonoco to continue providing high-quality, value-adding products to customers.
URBs are the key products of Sonoco’s Paper and Industrial Converted Products segment. The segment accounted for approximately 34% of its consolidated net sales in 2015.
The company witnessed solid results in 2015 led by the strong year-over-year improvement in Consumer Packaging and Protective Solutions segments, partially offset by lower results in its Paper and Industrial Converted Products segment. The Paper and Industrial Converted Products segment was affected by higher labor, pension, maintenance and other operating costs as well as the impact of foreign currency translation.
Sonoco is constantly seeking the most cost-effective means and structure to serve its customers. As such, restructuring costs are expected to be a recurring component of the company’s operating costs.
Thus, Sonoco normally increases prices to counter the rising raw material costs. It will continue to monitor market conditions to determine if additional pricing actions will be required.
South Carolina-based Sonoco is a global provider of a variety of consumer packaging, industrial products, protective packaging and packaging supply chain services. It is also the largest producer of paper-based tubes and cores in North America.
At present, Sonoco carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same industry include Berry Plastics Group, Inc. BERY, Packaging Corporation of America PKG and UFP Technologies, Inc. UFPT. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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