Sonoco (SON) Arm to Hike Prices for Paper-Based Tubes & Core

Sonoco Alcore S.a.r.l., a wholly owned subsidiary of Sonoco Products Co.SON , has announced a price hike of up to 7% for paper-based tubes and cores in Europe. The price increase, which will be effective with shipments beginning in February 2018, has been made to counter price rise in OCC (old corrugated containers) in a number of European countries.

OCC prices across Europe have reportedly soared a whopping 250% over the past 10 years. This follows the continued rise in coreboard prices, stemming from strong demand and elevated recovered paper and energy costs. Higher OCC recovery rate will escalate OCC collection costs, along with rising transportation and labor costs. An increase in costs can adversely affect Sonoco's business and financial results. The company also uses derivatives to mitigate some of the impact of raw material and energy-cost fluctuations.

Paperboard tubes and cores are the key elements of Sonoco's Paper and Industrial Converted Products segment. The segment, which serves its markets through 177 plants on five continents, accounted for approximately 35% of Sonoco's consolidated net sales in 2016.

Sonoco Products Company Price

Sonoco Products Company price | Sonoco Products Company Quote

In December 2017, Sonoco Alcore announced a price hike of $55 (€50) per ton on all recycled paperboard grades sold in the Central European regions in order to combat elevated raw material and energy prices. The price hike became effective with shipments after Jan 1, 2018.

For fourth-quarter 2017, the company projects earnings per share in the range of 68-74 cents. This guidance takes into consideration the impact of acquisitions, net of divestitures, and higher recovered paper prices during the quarter. Compared with the prior-year quarter's earnings per share of 62 cents, the mid-point of the guidance reflects year-over-year growth of 14.5%.

Share Price Performance

In the last year, Sonoco has underperformed the industry it belongs to, led by sluggish demand trends in the consumer business. The stock has gained just 0.3%, while the industry has ascended 17.1%.

Zacks Rank & Stocks to Consider

Currently, Sonoco carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the sector are Deere & Company DE , H&E Equipment Services, Inc. HEES and Graphic Packaging Holding Company GPK . While Deere and H&E Equipment sport a Zacks Rank #1 (Strong Buy), Graphic Packaging carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Deere has a long-term earnings growth rate of 8.2%. Its shares have rallied 34.5%, over the past six months.

H&E Equipment Services has a long-term earnings growth rate of 18.6%. The company's shares have been up 89.1% during the same time frame.

Graphic Packaging has a long-term earnings growth rate of 5%. The stock has gained 19.9% in six months' time.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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