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Sonoco Unit to Raise Prices for Paper-based Tubes & Core

Zacks

Sonoco Alcore S.a.r.l., a wholly owned subsidiary of Sonoco Products Co. SON, has announced that it will again raise prices for paper-based tubes and core in Europe. The price hike, which will be effective with shipments beginning on Jul 24, has been made to counter rise in prices of coreboard.

Sonoco operates 29 tubes and cores plants, and four paperboard mills in Europe. It manufactures paperboard primarily from recycled materials for both internal use and open-market sale.

Paperboard tubes and cores are the elements of the company’s Paper and Industrial Converted Products segment. This segment accounted for approximately 35% of Sonoco’s consolidated net sales in 2016.

Sonoco Products Company Price

Sonoco Products Company Price | Sonoco Products Company Quote


Fundamental changes in recovered paper markets escalated the prices of paper-based tubes and core. In order to cope with price adjustments, Sonoco raised prices. This move will enable the company to continue providing high-quality, value-adding products to customers.

Last week, Sonoco raised the prices of recycled paperboard effective with shipments on or after Jul 17, owing to the constant rise in raw material costs due to increased demand.

An increase in costs can adversely affect Sonoco’s business and financial results, while the ability to pass them on to customers by raising prices will improve productivity. The company also uses derivatives to mitigate some of the effect of raw material and energy cost fluctuations.

Sonoco underperformed the Zacks classified Containers-Paper/Plastic sub-industry with respect to price performance over the past one year, mainly due to raw material cost inflation and slowdown in manufacturing. The stock gained around 0.6%, while the industry gained 14.4% over the same time frame.



Sonoco currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space include Apogee Enterprises, Inc. APOG, Belden Inc. BDC and Deere & Company DE, each boasting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Apogee has an average positive earnings surprise of 3.42% for the trailing four quarters. Belden delivered an average positive earnings surprise of 7.17% over the trailing four quarters. Deere & Company generated an average positive earnings surprise of 70.41% over the last four quarters.

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