By the numbers: Fiscal Q3 2024
Net sales: $1.45B
Up 9.3% year over year
Net sales for global industrial packaging: $846M
Up 11.1% year over year
Net sales for paper packaging and services: $603.6M
Up 7% year over year
Net income attributable to Greif: $87.1M
Down 3.5% year over year
- Overview: During a Thursday earnings call covering Greif’s fiscal third quarter, which ended July 31, executives discussed early signs of volume recovery across the company’s businesses following a post-pandemic dip. “There's still significant runway to reaching a normalized level of volumes, but recent trends have us cautiously optimistic that we have exited the drop,” said CEO Ole Rosgaard. CFO Larry Hilsheimer added that although volumes are improving, they are “still down significantly on a two-year stack.”
- Business reorganization: The company’s organizational shift from geography-based to substrate-based operations, first announced in December 2023, will take effect on Nov. 1. The core business unit changes emphasize Greif’s shifting product mix, such as the growth of polymer-based packaging solutions as a percentage of sales — an increase from 10% in 2015 to 20% today. “We now have better clarity on the likely material solution verticals which will encompass that organizational structure: polymers, metals, paper, integrated products and our land portfolio,” Rosgaard said. The reorganization is not designed to affect headcount, either positively or negatively, he said.
- M&A: Aligning with the change in core businesses, Greif completed the sale of its subsidiary Delta Petroleum Co. to PSC Group on July 31. “While Delta is a solid business and we received great value for it, it's not core to Greif’s growth priorities and core competitive advantages, as it serves much more cyclical end markets,” Rosgaard said. Greif also continues to integrate Ipackchem, which it acquired this year.
- Price increases: Executives discussed their most recent fiber price increases. During the most recent quarter, “we ended up benefiting a little better than we anticipated from the price increases,” Hilsheimer said. He described “volatile recognition, typically through RISI,” that led to Greif and other companies only achieving partial recognition of price increases earlier this year. The impact of the “index-driven price-cost dynamic, which we still view to not be in sync with real market trends, is a headwind we have and will continue to aggressively work to offset,” Hilsheimer said. He does not anticipate further hikes this fiscal year and said Greif is optimistic about further price recognition in 2025.
- Outlook: Executives did not discuss future guidance. “Things are changing so rapidly in the environment,” Hilsheimer said. But they plan to monitor economic conditions — including a possible demand boost following a potential Federal Reserve rate cut next month — and will give guidance during the next earnings call. They also expect to have more information on contributions from the new bulk corrugated facility in Dallas, which became operational in June. Greif’s reorganization will be a key discussion topic during the company’s investor day on Dec. 11.
