Sonoco (SON) has reported a 10.32 percent fall in profit for the quarter ended Apr. 02, 2017. The company has earned $53.73 million, or $0.53 a share in the quarter, compared with $59.91 million, or $0.59 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $59.88 million, or $0.59 a share compared with $66.52 million or $0.65 a share, a year ago. Revenue during the quarter dropped 4.40 percent to $1,172.32 million from $1,226.28 million in the previous year period. Gross margin for the quarter contracted 121 basis points over the previous year period to 18.79 percent. Total expenses were 92.33 percent of quarterly revenues, up from 91.70 percent for the same period last year. That has resulted in a contraction of 63 basis points in operating margin to 7.67 percent.
Operating income for the quarter was $89.97 million, compared with $101.83 million in the previous year period.
However, the adjusted operating income for the quarter stood at $96.78 million compared to $111.47 million in the prior year period. At the same time, adjusted operating margin contracted 84 basis points in the quarter to 8.26 percent from 9.09 percent in the last year period.
Commenting on the Company’s first quarter results, Sonoco president and chief executive officer Jack Sanders said, "Despite an unprecedented and unexpected sharp increase in recovered paper prices, which is the primary raw material used in our Paper and Industrial Converted Products segment, Sonoco was still able to achieve the midpoint of our first- quarter guidance. Overall, compared to the prior-year quarter, the Company's earnings were negatively impacted by lower volume/mix; divestitures, net of acquisitions; a negative price/cost relationship; and higher labor, maintenance, pension and other operating expenses. Partially offsetting the quarter's headwinds were procurement savings, fixed-cost productivity, lower management incentive expense, and a lower effective tax rate."
For fiscal year 2017, Sonoco expects diluted earnings per share to be in the range of $2.73 to $2.83 on adjusted basis.
For the second-quarter 2017, On an adjusted basis, Sonoco expects diluted earnings per share to be in the range of $0.67 to $0.73.
Working capital increases sharply
Sonoco has recorded an increase in the working capital over the last year. It stood at $508.90 million as at Apr. 02, 2017, up 25.90 percent or $104.68 million from $404.22 million on Apr. 03, 2016. Current ratio was at 1.58 as on Apr. 02, 2017, up from 1.44 on Apr. 03, 2016. Cash conversion cycle (CCC) has decreased to 12 days for the quarter from 43 days for the last year period. Days sales outstanding were almost stable at 54 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 21 days for the quarter compared with 38 days for the previous year period. At the same time, days payable outstanding went up to 63 days for the quarter from 48 for the same period last year.
Debt moves up
Sonoco has witnessed an increase in total debt over the last one year. It stood at $1,253.90 million as on Apr. 02, 2017, up 10.68 percent or $120.96 million from $1,132.94 million on Apr. 03, 2016. Total debt was 29.92 percent of total assets as on Apr. 02, 2017, compared with 27.99 percent on Apr. 03, 2016. Debt to equity ratio was at 0.78 as on Apr. 02, 2017, up from 0.71 as on Apr. 03, 2016. Interest coverage ratio improved to 7.46 for the quarter from 7.39 for the same period last year. Disclaimer: Please note that this is an auto-generated article. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website. For queries contact: editor@irisindia.net
