Packaging producer says results were driven by strong execution in its consumer packaging and industrial paper packaging segments.
Global packaging producer Sonoco, based in Hartsville, South Carolina, has reported record net sales and net income for its second quarter, which ended July 3.
Sonoco reports net sales were $1.91 billion, an approximately 38 percent increase from second quarter 2021 sales of $1.38 billion, and net income per diluted share was $1.33 compared with a loss of $3.34 in the same period in 2021.
"Our Sonoco team delivered strong second-quarter results which exceeded the high-end of our raised guidance," Sonoco President and CEO Howard Coker says. "Our current-quarter performance represents a step-change improvement year over year and resulted in record sales and record net income driven by continued strong execution in our consumer packaging and industrial paper packaging segments."
Coker adds that the company's second-quarter earnings primarily benefited from continued strong strategic pricing performances across most of its businesses, continued strong results from the Sonoco Metal Packaging acquisition and productivity gains.
Sonoco says its consumer packaging segment achieved record sales while operating profit grew nearly 114 percent compared with the same period in 2021, and its industrial paper packaging segment improved nearly 57 percent compared with last year.
The company also reports its operating profit is up approximately 6 percent.
"I am extremely proud of the way our team has advanced our value-creation strategy to produce the best first-half financial operating performance in the history of Sonoco," Coker says.
Sonoco also provided an update for its Project Horizon, which includes a planned shutdown of its corrugated medium machine in Hartsville to transform the machine into what it calls the "lowest-cost producer of uncoated recycled paperboard (URB) in North America." The eight-week shutdown is expected to negatively impact the company's third-quarter industrial paper packaging operating profit between $10 million and $15 million.
Project Horizon is a $125 million investment to update the Hartsville machine and will have an annual production capacity of 180,000 tons. The project is expected to be completed at the end of the third quarter and, once finished, will use 100-percent-recycled fibers to produce paper and will allow Sonoco to eliminate the manufacturing complex's virgin pulp mill and chemical recovery operation.
Sonoco's full second-quarter financial report can be found here.
The company's Aluminum Metals and Extrusions businesses posted record results in Q2 2022, but Hydro sees growing market uncertainty going forward.
Norway-based Hydro ASA has reported earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2022 of 11,594 million Norwegian kroner, or $1.18 billion, compared with 6,598 million kroner, or $670 million, for the same quarter last year, resulting in a 12-month rolling adjusted return on capital employed of 27 percent. Hydro says its Aluminum Metal and Extrusions businesses delivered their strongest quarterly results on record, fueled in part by higher metal and alumina prices, stronger margins in Extrusions and currency effects. However, these positive factors were offset in part by higher fixed and raw material costs upstream, the company adds.
President and CEO Hilde Merete Aasheim says the company’s results are backed by strong markets, continued demand for Hydro’s greener aluminum products and its 2025 improvement program, which calls for strengthening the company’s position in low-carbon aluminum and metal recycling and diversifying and growing in the area of new energy.
“We continue to implement initiatives to support our 2025 strategy of low-carbon aluminum and renewable energy,” Aasheim says. “This quarter we have pursued strategic recycling growth projects to meet increasing customer demand for low-carbon aluminum, and we have progressed on our decarbonization road map.”
In the last quarter, the company announced the groundbreaking for its aluminum recycling plant in Cassopolis, Michigan, which will produce some 120,000 metric tons of aluminum extrusion ingot per year from scrap. Hydro says it plans to double its use of postconsumer scrap by 2025. Hydro’s Extrusion North America division is upgrading recycling capabilities at its site in The Dalles, Oregon, allowing it to process an additional 10,000 metric tons, or 11,023 short tons, of postconsumer scrap annually and to increase overall recycled aluminum output by 27,000 metric tons, or nearly 30,000 short tons.
More recently in Europe, the company began construction on the expansion of its aluminum recycling plant in Rackwitz, Germany, in July, enabling the plant to produce 25,000 metric tons of HyForge per year and increasing recycling capacity of postconsumer scrap. In addition, Hydro made the decision to upgrade and restart the foundry alloy casthouse in Årdal, Norway, to increase capacity for recycling of PCS by 25,000 metric per year. The two investments further support Hydro’s ambition to double recycling of postconsumer scrap by 2025.
Despite the record quarterly performance, Aasheim says the company sees “increasing market uncertainty” going forward, noting rising energy prices and a softening market for aluminum products.
The war in Ukraine has affected second-quarter growth and 2022 forecasts, with Europe being the most exposed to the resulting economic and social impact, Hydro says. Global supply chain shortages, high energy prices and concerns about inflation and increasing interest rates are sources of uncertainty. Hydro is facing a new reality and the changes are happening faster than before.
Although realized aluminum prices and results were strong in the second quarter of 2022, the three-month aluminum price decreased during the quarter as fears of recession and weak demand in China led to a large drop in base metal prices, the company says. The outlook for some aluminum production capacity remains uncertain as high global energy prices put pressure on smelter margins, resulting in producers in Europe and the U.S. curtailing parts of their production.
Nordic power prices increased significantly compared with the same quarter last year and are relatively stable compared with the previous quarter, Hydro says, adding that Norwegian transmission system operator, Statnett, has stated that energy security in Norway may be a concern towards the end of the year.
In these volatile markets, Hydro says it continues to address challenges and mitigate risks while also continuing to position the company according to the Hydro 2025 strategy.
Greener aluminum with a lower carbon footprint is seen as a key enabler for the green transition, and in the second quarter, Hydro continued to see increased demand for the greener products, Hydro Circal and Hydro Reduxa. In the second quarter of 2022, sales were 89 percent higher year on year, supporting Hydro’s ambition to double sales of greener products by 2025, the company says.
A significant step in Hydro’s recycling ambitions could be delivered if its acquisition of the Polish recycler Alumetal S.A., announced in May, is successful. Following the launch of a tender offer for 100 percent of the shares of the company in the start of the second quarter, Hydro announced in July that it will extend the subscription period to Oct. 10 to provide additional information requested by the European Commission.
In the second quarter, Hydro Extrusions decided to invest 300 million kroner, or $30.5 million, in a new extrusion press in Tønder, Denmark. The 12-inch press will serve the European automotive and electric vehicle market. Automotive customers continue to set ambitious decarbonization targets, Hydro says, and low-carbon and recycled aluminum will be key levers to meet their Scope 3 emissions targets.
At its Capital Markets Day in December 2021, Hydro launched a new climate ambition, confirming the target of cutting its own carbon emissions by 30 percent by 2030 and setting new ambitions of becoming net zero in terms of Scope 1 and 2 carbon emissions by 2050 or earlier. An important enabler to meet the ambition is the decarbonization of the Brazilian alumina refinery Alunorte, where the Alunorte fuel switch project to replace heavy fuel oil with natural gas is progressing according to plan, the company says.
In the second quarter, Hydro Rein announced two renewable energy projects in Brazil that will supply Hydro’s bauxite and alumina operations with renewable power for existing and planned electrical boilers, supporting Alunorte’s decarbonization efforts. Hydro Rein and Macquarie Asset Management’s Green Investment Group entered into agreements to form a joint venture to build and operate Feijão, a 586-megawatt combined wind and solar power project in the northeast of Brazil. Hydro Rein, together with Equinor and Scatec, also started construction activities for the 531-megawatt Mendubim solar project in Brazil.
The transition to a lower-carbon society also provides opportunities for Hydro's new energy areas. In May, Hydro's 50/50 joint venture with Northvolt, Hydrovolt, commenced operations of its industrial-scale battery recycling pilot in Norway. In parallel, Hydrovolt will, in the second half of 2022, be taking steps to develop production in Europe to support growing demand.
A central pillar in Hydro’s 2025 strategy is the financial framework, and the company says its profitability and sustainability agenda continues to guide capital allocation. Hydro says it continues its commitment to an investment grade credit rating and aims to keep adjusted net debt less than 2x adjusted EBITDA throughout the cycle.
Hydro has updated its targeted capital structure, aiming to have adjusted net debt of around 25 billion kroner, or $ 2.5 billion, over the cycle.
Hydro strives to drive a cost of capital advantage based on the sustainability of its operations, and in the second quarter Hydro launched a green and sustainability-linked financing framework, including a second-party opinion by the Centre for International Climate and Environmental Research (CICERO). Hydro’s framework is ranked Medium Green by CICERO, the second greenest ranking after dark green, and can be used for future sustainability-linked financing products.
Steelmaker’s CEO also says company has no immediate plans to install EAF in Ohio.
Cleveland-Cliffs Inc. has reported second-quarter 2022 consolidated revenue of $6.3 billion, representing a 26 percent increase compared with 2021 second-quarter revenue of $5 billion.
The company’s second-quarter net income of $601 million included deductions for one-time charges for debt extinguishment, accelerated depreciation related to idling a coking facility in Middletown, Ohio, and some severance costs. Thus, the firm’s income fell 24.4 percent from $795 million one year ago.
Lourenco Goncalves, Cleveland-Cliffs board, president and CEO says, “We were able to achieve our largest quarterly debt reduction since our transformation began a couple years ago while delivering substantial capital returns via share repurchases. As we move into the second half of the year, we expect this healthy level of free cash flow to continue, as a result of declining capex needs, the accelerating release of working capital, and the heavy use of fixed-price sales contracts. In addition, we expect to see further significant increases in the average selling prices for these fixed contracts resetting on Oct. 1.”
Goncalves adds, “Our industry-leading exposure to the automotive sector separates us from all other steel companies in the United States. With automotive demand outpacing production for more than two years now, the consumer backlog for cars, SUVs and trucks has become enormous. As supply chain problems continue to be resolved by our automotive clients, pent-up demand for electric vehicles continues to increase, and light vehicle manufacturing catches up with demand, Cleveland-Cliffs will be the primary beneficiary among all steel companies in the U.S. This important distinction of our business relative to other steel producers should become clear as we progress through the remainder of this year and into next year.”
In a conference call with steel sector analysts held late last week, Goncalves also noted, “We are seeing a lot less competition for prime scrap. At the beginning, we had to really fight to get the deals done. But now, apparently, the competition is not really looking for a prime scrap. They should have their reasons. To be honest with you, I don’t care. For us, prime scrap is important. We prefer to use prime scrap. Prime scrap allows me to use less cook and using less coke to generate less CO2, and that's a good thing. And prime scrap that I use coming from automotive to go back to automotive in the steel that I produce is great to create a closed loop solution with our clients, and there’s a value on that.”
Last year, Cleveland-Cliffs cited access to prime scrap as a key reason for its acquisition of Detroit-based Ferrous Processing & Trading (FPT).
Although in a previous earnings call Goncalves had hinted at possible additional electric arc furnace (EAF) melting capacity, last week he said, “There’s no EAF coming at Middletown. We are good with the footprint that we have. We are probably the most environmentally friendly blast furnace operator in the entire world.”
Investors back 20,000-tons-per-year plant using Pyrum technology.
Pyrum Innovations AG, Germany, says it has established the first joint venture to build and operate a pyrolysis plant to process scrap tires in Bavaria in southern Germany.
Under the company name Revalit GmbH, the plant has been designed with the capacity to accept 20,000 tons per year of discarded tires. It will be located in the Danube River port city of Straubing and is scheduled to start operating in 2024.
“The planned location is characterized by excellent connections to the road network and also offers the possibility of transporting the goods to and from the site by rail and ship,” Pyrum says.
In addition to Pyrum, other shareholders of Revalit include MCapital GmbH, Textor GmbH and Auer Holding GmbH, all based in Munich and each with a 25 percent stake.
The contract for the start of the development activities and the start of the work for the required approval documents was concluded in mid-July, Pyrum says. “Preliminary discussions with the authorities have already taken place [and] the signing of a reservation agreement with the landowner will take place immediately after the entry of the company in the commercial register.”
Pyrum says “initial financing discussions with banks are currently underway.”
Pyrum CEO Pascal Klein says, “We are very pleased about the realization of our first joint venture and the future cooperation with our new partners. With our planned pyrolysis plant in Bavaria, we will reach an important milestone on the way to the commercial rollout of our pyrolysis technology.”
Jens Weinberger, managing director of MCapital, says, “We are proud to have found an innovative partner in pyrolysis technology in Pyrum Innovations AG, with whom we are jointly building our first plant in Bavaria.”
Research firm says global market will reach $7.5 billion by 2030.
The New York office of India-based Straits Research Pvt. Ltd. says a predicted rise the global recycled textile market is driven by an increase in recycling operations and an increase in demand from various industries, such as the retail sector, the automotive industry and the building and construction industry.
The company’s newly released report predicts more recyclable textiles will be harvested from the municipal solid waste (MSW) stream, plus more carpet, furniture fabric, footwear and “nondurable items such as sheets and towels” will be collected.
Straits Research’s study predicts the global recycled textile market size will reach $7.56 billion by 2030, growing at a compound annual growth rate (CAGR) of 3.6 percent. The research house says the global recycled textile market size was valued at $5.5 billion in 2021. “North America is anticipated to grow with the highest CAGR of 4.5 percent during the forecast period,” the firm adds.
“Environmental and economic benefits of recycled textiles include a reduction in the demand for virgin materials such as wool and cotton, pollution, and water and energy use,” Straits Research says. “Through recycling, businesses can increase their profits by avoiding the costs of dumping in landfills while simultaneously contributing to the value and quality of the environment, jobs for marginally employable laborers, charitable donations and disaster relief, and the transport of used clothing to regions of the world in need."
Straits Research lists several textile recycling firms poised to grow in the next 10 years, including India-based Khaloom Textiles Pvt. Ltd.; South Korea-based Kisco Group; India-based Anandi Enterprises; India-based Usha Yarns Ltd.; Sweden-based Renewcell AB; South Korea-based Hyosung TNC Co. Ltd.; South Carolina-based Martex Fiber Southern Corp.; Germany-based Otto Garn; South Carolina-based Leigh Fibers Inc.; and Germany-based Gebrueder Otto GmbH & Co. KG.
Based on type, the global recycled textile market is segmented by Straits Research into Recycled Cotton, Recycled Wool, Recycled Polyester, Recycled Nylon, and Others. Recycled Polyester is expected to command the largest market share during the forecast period, growing at a CAGR of 3.7 percent.
Straits Research separates end markets for the global recycled textile sector into Automotive, Retail, Mining, Building & Construction and Others categories. Retail is expected to own the largest market share, growing at a CAGR of 3.7 percent during the forecast period.