Greif Hikes Prices for Uncoated Recycled Paperboard Grades

Greif, Inc. GEF is implementing price hikes of USD50 per ton for all grades of uncoated recycled paperboard (URB). The price rise will be effective relating to the shipments on or after Nov 9.

Greif is executing price-increase actions in response to the higher material costs in transportation, insurance, labour and chemicals as well as matching supply with the current demand across its paperboard network.

The company continues to face challenging industrial markets across its portfolio and the overall demand environment remains soft. It is witnessing sluggish demand within the textile, industrial paints, coatings and lubricant industries due to the pandemic. Around 60% of the Rigid Industrial Packaging & Services segment’s revenues are generated from steel drums. The ongoing volume declines in steel drums will continue hampering the segment’s results.

Further, forecasting volatile global macroeconomic conditions throughout the remainder of fiscal 2020, Greif expects adjusted earnings per share between USD3.00 and USD3.20. The mid-point of the guidance indicates a decline of 22% from the prior year.

Greif expects fourth-quarter fiscal 2020 earnings to be around 66 cents per share, suggesting a slump of 47% and 22% on a year-over-year and sequential basis, respectively. Profits might be lower sequentially in the quarter due to normal business seasonality, higher SG&A expenses, lesser opportunistic sourcing cost benefits, reduced sales in the high margin filling business in the United States and a sequentially higher tax rate in the fiscal fourth quarter.

The company will keep benefiting from focus on operational execution, capital discipline, and a strong and diverse product portfolio. Meanwhile, the company continues to witness increase in demand in the food, pharmaceutical and household goods industries owing to the COVID-19 pandemic. This is likely to prevail until the situation stabilizes. Some of the prominent stocks in the Containers – Paper and Packaging industry, like Sonoco Products Company SON, Packaging Corporation of America PKG and Sealed Air Corporation SEE, are also benefiting from the escalating packaging demand for essential products owing to the pandemic.