2007-12-08 Manufacturing News

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Sonoco optmistic for future growth in packaging market

Sonoco to achieve profitable sales growth by expanding and providing total packaging solutions in response to customer and market demands.

At Sonoco’s annual conference, addressing the New York investment community, Chairman, President and Chief Executive Officer Harris E. DeLoach, Jr., and Charles J. Hupfer, senior vice president and chief financial officer, outlined a new five-year growth strategy and provided updated financial guidance for 2007 and 2008. Sonoco is a global manufacturer of industrial and consumer packaging products and provider of packaging services.

The new five-year strategic growth initiative called "Progress Forward," which is aimed at continuing the Company’s profitable growth momentum established over the past five years as sales have grown from $2.7 billion in 2002 to a projected $4 billion in 2007, for a compound average growth rate of 8.1 percent.

DeLoach said Sonoco intends to achieve its aggressive profitable sales growth objectives by increasing organic sales; expanding geographically in response to customer and market requirements; providing total solutions to its consumer product company customers; developing new products and services; and making strategic acquisitions.

" The steps we must take to profitably grow our business for the next five years are similar to the successful path we have taken during the past five years,? said DeLoach. ?Looking over what we have accomplished, we believe this strategy is sound. Yet to meet our aggressive goals in the next five years, we must sharpen our execution."

Sonoco’s Consumer Packaging and Services businesses are projecting to grow at a compound average growth rate of approximately 6.5 percent over the next five years, DeLoach said. This objective will be accomplished by developing new, innovative products and services to meet changing consumer needs; providing cradle-to-cradle sustainability solutions ranging from providing more environmentally friendly packaging to improving recycling for customers’ manufacturing and distribution facilities; promoting cross-selling of products and services from throughout Sonoco’s diverse mix of businesses to its large consumer product customers; and by pursing strategic acquisitions.

Through the third quarter of 2007, DeLoach said that Sonoco had generated record sales from new products of approximately $70 million. "Our goal over the next five years is to annually generate $125 million to $150 million in new product sales," DeLoach said.

DeLoach showed a number of Sonoco’s award-winning packaging innovations for 2007 and new packaging launches planned for 2008 in flexible, rigid paper and rigid plastic containers, ends and closures and packaging services. Some of the new products and services introduced included:

• SmartSeal* packaging system, a second generation easy-open and reclosable flexible packaging technology, which is being extended into many of Kraft’s Nabisco** cookies in 2007 and 2008.
• Ultrapeel* retort membrane ends which are being introduced in January 2008 on Campbell’s Soup Company’s popular Soup At Hand** product.
• Sonoco Keating automated gravure engraving and pre-press graphics management services, which doubled capacity in 2007.
• Dor-Pak* rectangular composite pails used for large volume packaging of Meow Mix** brand cat food.
• LinearPak* paperboard cans that are being used by Cadbury Adams for its Halls Cough Drops.
• A new Sonoco composite can that is being used in the United Kingdom to convert Farley’s powdered infant formula from an existing metal can.
• Award-winning retail merchandising displays developed for a Jergens** moisturizer product launch.

DeLoach pointed out that Sonoco has substantially grown its rigid plastic container business as a result of recent acquisitions of Clear Pack Company, Matrix Packaging, Inc., and Caraustar Industries’ plastic cartridge business.

" As a result of these acquisitions, along with growth in our base business, we expect sales of rigid plastic containers to increase nearly five-fold from 2006 through 2008, with sales approaching $300 million annually," DeLoach said. "We now employ technologies covering blow-molding, thermoforming, injection molding and extrusion. Because of these broad capabilities, we are targeting aggressive growth in the retail food, health and beauty, food service and medical products markets."

DeLoach said the steps Sonoco is taking to further build its market leading global tube, core and paper and other converting businesses include protecting and growing the Company’s base business while working to gain share in key markets; growing sales through acquisitions, joint ventures and alliances to satisfy customers’ unmet needs; expanding geographically with customers in underserved markets; developing new products and services; and maximizing cash flow from operations by managing price, reducing structural costs and improving productivity.

" We will continue to investigate strategic acquisitions globally to consolidate mature markets and work with alliances to improve our service offerings," DeLoach said. "Much like our consumer businesses, we are making progress in developing new products to increase sales in existing markets. For example, since 2005 we have nearly doubled the sale of new products in our North American tube and core business to a projected $23 million in 2007."

* Are either applied trademarks or registered trademarks of Sonoco.
** All other trademarks or registered trademarks are the property of their respective intellectual property owners.

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