Graphic Packaging 2025 Q2 Earnings Misses Targets as Net Income Declines 45.3%

Graphic Packaging (GPK) reported its fiscal 2025 Q2 earnings on Jul 29th, 2025. Graphic Packaging's earnings fell short of expectations, with revenue totaling $2.20 billion compared to the consensus estimate of $2.13 billion. The company’s EPS and net income also missed projections, with a significant decline year-over-year. Despite these results, Graphic Packaging maintained its full-year guidance for net sales and adjusted EBITDA, indicating a stable outlook despite current market challenges.

Revenue
Graphic Packaging's total revenue decreased by 1.5% to $2.20 billion in 2025 Q2 from $2.24 billion in 2024 Q2. The Americas Paperboard Packaging segment contributed $1.51 billion, while the International Paperboard Packaging segment generated $560 million. Additionally, the Corporate and Other segment accounted for $133 million, culminating in the total revenue figure of $2.20 billion.

Earnings/Net Income
Graphic Packaging's EPS declined 43.5% to $0.35 in 2025 Q2 from $0.62 in 2024 Q2. Meanwhile, the company's net income decreased to $104 million in 2025 Q2, down 45.3% from $190 million reported in 2024 Q2. The sharp decline in EPS signifies a challenging quarter for the company.

Price Action
The stock price of Graphic Packaging has dropped 3.77% during the latest trading day, has dropped 3.36% during the most recent full trading week, and has climbed 6.14% month-to-date.

Post-Earnings Price Action Review
Buying Graphic Packaging shares after its quarterly earnings report and selling them 30 days later has consistently yielded gains over the past three years. This strategy has resulted in an average gain of approximately 7.14%, translating to a total gain of $7.14 per share. The performance underscores the effectiveness of this approach, especially given its simplicity and the relatively short holding period involved. Investors leveraging this strategy have benefited from its historical reliability, demonstrating the potential for profitable outcomes despite the company's recent earnings challenges. This pattern suggests that investing post-earnings could be a lucrative opportunity for those looking to capitalize on short-term market dynamics.

CEO Commentary
Michael Doss, President and CEO, noted that promotional activities led to modestly better-than-expected packaging volumes in the second quarter. He emphasized that discussions with customers indicate a potential focus on volume growth and market share protection moving forward. As the Waco, Texas recycled paperboard investment nears completion, Doss highlighted a significant reduction in capital spending anticipated for 2026, which will enable the company to generate substantial cash flow beyond internal needs. He expressed optimism about returning cash to shareholders and achieving investment-grade status over time, attributing the company's strong position to strategic investments and innovation.

Guidance
The Company expects full-year 2025 Net Sales to range from $8.4 billion to $8.6 billion, Adjusted EBITDA between $1.45 billion and $1.55 billion, and Adjusted EPS of $1.90 to $2.20. These projections reflect actual first-half performance and a modest increase in second-half revenue expectations amid ongoing volume and market uncertainty. Capital expenditures are anticipated to be approximately $850 million due to increased costs at the Waco facility; however, this is not expected to materially impact total project returns. Overall, free cash flow expectations remain unchanged.

Additional News
Graphic Packaging has been actively engaging in non-earnings activities over the past few weeks. The company executed a strategic share repurchase plan in Q2, buying back 5 million shares for $111 million, reducing the number of outstanding shares by 1.6%. Additionally, Graphic Packaging secured dual honors at the Environmental Packaging Awards 2025, winning gold and silver accolades, reflecting its commitment to sustainability. Furthermore, the company partnered with Unilever to deliver innovative packaging for WHITE NOW toothpaste, showcasing its expertise in designing striking packaging solutions that align with consumer needs. These initiatives highlight Graphic Packaging's focus on enhancing shareholder value, sustainability, and innovation in packaging solutions.