By the numbers: Q2 2024
Net sales: $2.24B
Down 6.5% year over year
Net income: $190M
Up 26.7% year over year
- Q2 overview: Graphic Packaging International experienced a decrease in second-quarter sales, executives said on Tuesday’s earnings call. The dip occurred in part due to the company’s sale of its mill in Augusta, Georgia, to Clearwater Paper on May 1. Besides Augusta, other M&A deals had a $16 million favorable impact on sales. Sales in food and beverage end markets were strong, said CEO Mike Doss, and GPI’s cup business was particularly “busy.”
- Upcoming closures: The company expects to reach $80 million in earnings before interest, taxes depreciation and amortization in both 2026 and 2027 after closing two older, smaller coated recycled paperboard production facilities; the closures have been planned for after the new mill being built in Waco, Texas, begins operations. After the closures, GPI will have a total of five “modern and well-invested” paperboard production facilities in its system, said CFO Stephen Scherger.
- Innovation: GPI is on track to deliver $200 million of “innovation sales” growth in 2024, according to executives. Doss highlighted an innovation out of Europe that GPI announced in June: a new paperboard-based grocery tray, PaperSeal Shape, created in partnership with food company Moy Park. The change is expected to eliminate the use of 300 metric tons of plastic annually. Sainsbury’s grocery store chain is the first U.K. customer to use the product, introducing it for own-brand bread and chicken. The paperboard trays can run on existing lines that handle plastic trays without modifications. “PaperSeal Shape exemplifies our success in creating packaging solutions that are more circular, more functional and more convenient,” Doss said.
- Pricing: GPI is in the process of raising prices on several grades, in a move that is similar to competitors’. Most of the industry’s big players in North America implemented their second price increases of the year this summer to account for the Fastmarkets RISI monthly index, only registering partial recognition for the first increase. “The vast majority of the [increased] pricing that would be recognized would show up in 2025,” Doss said.
- Outlook: July is “off to an encouraging start,” Doss said. GPI expects capital expenditures for 2024 to be $1 billion, up from an expected $950 million. The company adjusted to 3% to 4% volume growth for the second half of 2024, compared with the first half. It is “quite unusual for Graphic Packaging” to experience this significant level of H2 growth, Scherger said. Doss noted that GPI expects to experience effects in the coming quarters from customer McDonald’s extending its value meal past the initial four-week period. The food service giant’s executives discussed the move during their second-quarter earnings call Monday as a way to potentially regain cost-hit consumers who pulled back and drove McDonald’s first sales drop in four years.
