Sonoco CEO Blames A Lost Leader For A 'Sluggish' Start At Its Food-Can Acquisition After $829 Million Writedown
The packaging maker took a non-cash goodwill charge of $829 million and cut its full-year outlook.
Sonoco CEO Howard Coker said on the company's earnings call that its food-can acquisition got off to "a sluggish type of start" after the loss of its key leader, as the packaging maker booked an $829 million non-cash goodwill charge.
A leader lost in year one
Sonoco, which makes metal food and aerosol cans, paper containers and paperboard tubes, was pressed by a Bank of America analyst on what drove the charge. Coker said that inside the acquisition's "four walls" the start had been slow, and that "we lost our key leader midway through the first year."
He said the company is "as bullish about the strategy as we've ever been." He pointed to the August merger of its consumer businesses into one global segment of about $5 billion, now led by Ernest Haynes, whom Coker described as having 30 years of leadership experience at the company.
Coker added that the acquisition's promised global scale benefits were never how the unit is tested; it is tested on its own performance.
The CFO's account of the test
CFO Paul Joachimczyk said the charge is primarily tied to the consumer EMEA business and does not touch adjusted results. The company's release attributed $802 million to consumer EMEA/APAC businesses and $27 million to industrial paper in APAC.
He said the annual test is a normal cycle and "there was no triggering event." Last year the unit passed with a 3% margin, disclosed in the company's filings. It performed on track in the first half, then third-quarter volume and inflation pressure led to the charge. The unit must now stand alone in testing, without credit for global synergies, he said, and the long-term strategy is unchanged.
Coker said weather- and agriculture-related exposure is now roughly 15% to 17% of the total company, against about 5% to 7% in 2019.
Lower outlook, 2027 guide in February
Third-quarter sales were $2 billion, down 4%, and adjusted EPS was $1.67, down 13%. Consumer volume and mix fell 3% as drought hit crop yields and food-can demand. The company now expects 2026 net sales of $7.2 billion to $7.4 billion, adjusted EBITDA of $1.2 billion to $1.25 billion and adjusted EPS of $5.30 to $5.50.
It is closing two European sites, expected to save $15 million to $20 million in 2027. Shares traded at $49.05, down about 4% in Thursday trading.
Management will give its full 2027 outlook, and context on its 2028 target, in February, after consumer contract talks with customers begin.
Sources
- Sonoco Prods Q3 2026 Earnings Call Transcript — benzinga.com
- Sonoco Products Non-GAAP EPS of $1.67 misses by $0.12, revenue of $2.04B misses by $40M (NYSE:SON) | Seeking Alpha — seekingalpha.com
- Sonoco Reports Third Quarter 2026 Results | Financial Post — financialpost.com
- Sonoco Products Lowers FY2026 Adj EPS Guidanc... — benzinga.com
