Russia Puts Sonoco's Eviosys Assets Under State Control Weeks After An $828.9 Million Goodwill Write-Off
Sonoco is weighing deconsolidation and more impairments after a Russian decree; Russia was about 1.1% of nine-month net sales.
Russia's government on October 16 placed certain Russian assets from Sonoco's Eviosys metal-packaging purchase under temporary state administration, the company said in its 10-Q filed Wednesday. Sonoco is still deciding whether it has lost control of the operations, which could mean deconsolidation or further impairment charges.
A decree after the quarter closed
Sonoco, which makes metal food and aerosol cans, rigid paper containers and paperboard tubes, cores and cones, said the affected operations came with its December 2024 Eviosys acquisition and are owned through a Dutch subsidiary.
Management is still weighing whether control was lost. Depending on the answer, Sonoco could book further impairments on goodwill and long-lived assets or remove the affected entities from its consolidated results in later periods.
Russia accounted for about 1.1% of consolidated net sales in the nine months ended September 27 and about 0.7% of total assets at that date.
An $828.9 million write-off already on the books
The decree followed a third-quarter charge of $828.9 million in goodwill impairments, $802.0 million of it in the Consumer Packaging EMEA/APAC unit, which includes Eviosys. The second-quarter 10-Q had reported no goodwill impairment. The other $26.9 million hit the Global Paper Products APAC unit.
Sonoco said the Eviosys unit's fair value now approximates its carrying value, so it remains at risk of more impairment if results or valuation assumptions, including the discount rate, worsen. Goodwill left in the unit is $624.2 million. In the prior-year test, the Eviosys unit's fair value had exceeded carrying value by only 3.1%.
Sonoco pointed to U.S. tariff changes, inflation in fuel, energy and raw materials, lost purchasing synergies, and poor European harvests that cut metal can volumes. It also cited the European Union's steel rules, effective July 1, which raised the out-of-quota tariff on imported steel from 25% to 50% and tightened tinplate supply. Sonoco expects higher tinplate costs beginning in 2027.
The quarter in numbers
Net sales fell 4.2% to $2.0 billion in the third quarter. The GAAP net loss attributable to Sonoco was $732.1 million, or $7.36 a share, against income of $122.9 million a year earlier. Adjusted earnings were $1.67 a share, down from $1.92.
Debt due within twelve months stood at $510.0 million at September 27. Sonoco repaid $500.0 million of 4.450% notes on September 1 and borrowed $500.0 million under an amended credit agreement on September 25 to refinance an existing term loan.
Sonoco's next quarterly report will show whether the Russian decree forces deconsolidation or new impairment charges.
Sources
- 10-Q Filing — Sonoco Products (SON) — SEC EDGAR
- 10-Q Filing — Sonoco Products (SON), Q2 FY2026 filed 2026-07-28 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, ex99q32026earningsrelease.htm) — Sonoco Products, filed 2026-10-21 — SEC EDGAR
- Bear of the Day: Sonoco (SON) — Yahoo Finance
- Sonoco Products Company (SON) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
- Taiwan Semiconductor Manufacturing and Sonoco have been highlighted as Zacks Bull and Bear of the Day — Yahoo Finance
- Transcend Shipping Systems, LLC v. Sonoco Products Company — law360.com
