Sonoco-Alcore to Increase Tube & Core Prices in the EMEA Region

Rhea-AI Summary

On June 6, 2024, Sonoco-Alcore announced a 7% price increase on all tube and core grades in the EMEA regions, effective June 15, 2024. The decision stems from ongoing inflationary pressures and rising costs, particularly in core board production. Karsten Kemmerling, Division VP of Sales & Marketing EMEA, emphasized the necessity of this price adjustment to maintain supply security and quality. Sonoco-Alcore, a subsidiary of Sonoco, operates 19 tube and core plants and five paperboard mills in Europe, including a major facility in Cirie, Italy.

Positive

• Price increase of 7% may boost revenue.
• Emphasis on maintaining supply security and quality.
• Operates 19 plants and five mills in Europe, showing strong presence.

Negative

• Rising costs and inflationary pressures impact profitability.
• Passing costs to customers may affect demand.
• Price increase indicates challenges in absorbing costs internally.

Insights

Financial Analyst

Sonoco-Alcore's decision to increase prices by 7% on all tube and core grades sold in the EMEA region is an important development for investors. This move is a direct response to inflationary pressures and rising costs within their supply chain. From a financial perspective, an increase in prices can help offset these elevated costs and stabilize profit margins in the short term. The company’s strategy to ensure supply security and quality while managing cost pressures indicates a proactive approach to maintaining operational stability.

However, it's important to consider potential drawbacks. The price hike could lead to decreased demand if customers are unwilling or unable to absorb the additional cost, potentially impacting sales volume. It's also worth noting the competitive landscape; if competitors do not raise their prices, Sonoco-Alcore could lose market share.

In the long term, maintaining a balance between passing on costs to customers and retaining market competitiveness will be key. Investors should monitor how this price increase affects Sonoco-Alcore’s revenue and profitability in upcoming quarters. Additionally, keeping an eye on broader economic conditions in the EMEA region will be essential to gauge the sustainability of this pricing strategy.

Market Research Analyst

The EMEA region, which encompasses Europe, the Middle East and Africa, is a diverse market with varying economic conditions. Sonoco-Alcore’s focus on this region suggests that inflationary pressures are significant across these areas. The company’s decision to raise prices indicates their assessment that the market can absorb these increases without severely impacting demand.

From a market perspective, understanding the competitive dynamics in the tube and core industry is vital. If other players in the market are similarly affected by rising costs, Sonoco-Alcore's price increase might not significantly alter competitive positioning. However, if competitors manage to keep their prices stable, Sonoco-Alcore may need to justify their higher prices through superior quality or supply reliability.

Investors should also consider the potential impact on customer relationships. Long-term contracts and customer loyalty could be tested by this price hike. Monitoring customer retention rates and feedback will provide insights into how well the price increase is being received and whether it might lead to longer-term issues.

BRUSSELS, June 06, 2024 (GLOBE NEWSWIRE) -- Sonoco-Alcore S.a.r.l. announced today that due to continued inflationary pressure on the business, it will raise prices by 7% on all tube and core grades sold in the company’s EMEA regions. The increase is in direct response to the continued escalation of its cost base and will be effective for all shipments made on or after 15^th June, 2024.

“We continue to experience further cost increases in all sectors of our operations and supply chain, mainly related to increasing cost for core board. We are forced to pass on cost increases to the market, as we are unable to absorb them any further. Supply security and quality remains our primary focus. No shortage is currently foreseen, but we need to keep pace with this cost curve,” said Karsten Kemmerling, Division VP - Sales & Marketing EMEA.

Sonoco Alcore S.a.r.l. is wholly-owned by Sonoco (NYSE:SON) and operates 19 tubes and core plants and five paperboard mills in Europe including the Company’s largest European uncoated recycled paperboard mill in Cirie, Italy.

Contact Information:
Lisa Weeks
Vice President of Investor Relations & Communications
lisa.weeks@sonoco.com
843-383-7524

About Sonoco
With net sales of approximately $6.8 billion in 2023, Sonoco has approximately 22,000 employees working in more than 300 operations around the world, serving some of the world’s best-known brands. With our corporate purpose of Better Packaging. Better Life., Sonoco is committed to creating sustainable products and a better world for our customers, employees, and communities. Sonoco was named one of America’s Most Responsible Companies by Newsweek. For more information on the Company, visit our website at www.sonoco.com.

FAQ

Why is Sonoco-Alcore increasing tube and core prices in the EMEA region?

Due to continued inflationary pressures and rising production costs, particularly in core board, Sonoco-Alcore will increase prices by 7%.

When will the new pricing be effective for Sonoco-Alcore's tube and core products?

The new pricing will be effective for all shipments made on or after June 15, 2024.

What is the impact of inflation on Sonoco-Alcore's business?

Inflation has led to increased costs in all sectors of Sonoco-Alcore's operations and supply chain, necessitating a price increase.

How many plants and mills does Sonoco-Alcore operate in Europe?

Sonoco-Alcore operates 19 tube and core plants and five paperboard mills in Europe.

Where is Sonoco-Alcore's largest European uncoated recycled paperboard mill located?

Sonoco-Alcore's largest European uncoated recycled paperboard mill is located in Cirie, Italy.