Sonoco Products Tightens FY21 Base EPS Outlook, Warns On Cost Pressure

Sonoco Products Co SON reported third-quarter FY21 sales growth of 7.8% year-on-year, to $1.42 billion, beating the analyst consensus of $1.38 billion.
Consumer Packaging sales rose 9.7% Y/Y to $599 million, and the Industrial Paper Packaging sales gained 29.5% to $635.2 million.
Base EPS of $0.91 beat the analyst consensus of $0.90.
Gross profit rose 0.3% to $257.7 million. The gross margin declined 140 basis points to 18.2%.
Selling, general and administrative expenses rose 3.5% Y/Y to $130.6 million. The operating margin was 8.9%, and the operating income was $126.5 million.
The company held $160 million in cash and equivalents as of October 3, 2021. Cash provided by operating activities in the nine months was $220.1 million with a free cash flow of $74 million.
Outlook: Sonoco sees a Q4 base EPS of $0.84 - $0.90 versus the consensus of $0.91.
The company expects FY21 base EPS of $3.49 - $3.55 (prior view $3.50 - $3.60), against the consensus of $3.55.
"Entering the final three months of 2021, we remain upbeat as demand for our products across most of our businesses remains strong despite supply chain challenges. That said, our cost inflation expectations have grown and we project certain raw materials, energy, freight, packaging and other costs pressures will continue well into 2022, said CEO Howard Coker.
Price action: SON shares are trading lower by 3.26% at $59.56 on the last check Thursday.

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