Navigating Macroeconomic Pressures: Is Sonoco Products (SON) a Resilient Bet for 2025?

In 2025, Sonoco Products (SON) faces a dual challenge: navigating macroeconomic headwinds while executing a strategic transformation to secure long-term resilience. The company’s recent financial performance—marked by an adjusted EPS miss in Q2 2025 and volatile stock reactions—has raised questions about its ability to adapt to shifting demand and global pressures. However, a deeper analysis of Sonoco’s strategic initiatives, regional pivots, and operational discipline reveals a company actively countering these challenges through innovation, divestitures, and sustainability-driven growth.

EPS Misses and Macroeconomic Headwinds

Sonoco’s Q2 2025 adjusted EPS of $1.37 fell short of estimates by 5.52%, attributed to macroeconomic pressures in Europe and higher interest expenses [2]. This follows a prior EPS miss that triggered a 12.32% share price drop [3]. While the stock declined 2.07% post-earnings and an additional 0.99% in premarket trading [2], the company’s underlying fundamentals remain robust. Revenue surged 49% year-over-year to $1.9 billion, driven by the acquisition of Sonoco Metal Packaging EMEA (Eviosys) and pricing strategies to offset inflation [1]. The Consumer Packaging segment, now a cornerstone of growth, saw sales jump 110%, reflecting strong demand for sustainable metal packaging solutions [5].

Strategic Resilience: Divestitures and Core Focus

Sonoco’s resilience lies in its disciplined approach to portfolio optimization. The $1.8 billion divestiture of its Thermoformed and Flexibles Packaging business in April 2025 reduced net debt by $1.9 billion, strengthening its balance sheet and enabling reinvestment in high-margin operations [1]. This aligns with a broader strategy to focus on sustainable metal and fiber packaging, as highlighted by the acquisition of Eviosys, which bolstered its European footprint and contributed to 25% EBITDA growth in Q2 2025 [6]. Analysts note that such moves position Sonoco to capitalize on global trends favoring circular packaging and advanced material science [5].

Regional Adaptation: Europe and Asia-Pacific

In Europe, Sonoco has responded to demand shifts with sustainability-driven innovation. The GREENCAN® packaging, featuring 92–98% paper content and curbside recyclability, has gained traction with partners like Austria’s Kotányi, reflecting a strategic alignment with the EU’s circular economy goals [4]. Meanwhile, in Asia-Pacific, Sonoco’s 100% recycled fiber Paper Can solutions address Thailand’s stringent environmental regulations and consumer preferences, with 74% of Thai consumers prioritizing sustainability [7]. These regional adaptations underscore Sonoco’s ability to tailor offerings to local markets while advancing global sustainability targets.

Cost Management and Operational Efficiency

Cost discipline has been pivotal in mitigating macroeconomic pressures. In Q2 2025, Sonoco achieved $15 million in productivity gains through procurement savings, production efficiencies, and fixed-cost reductions [1]. The company also invested $94 million in growth projects, balancing short-term profitability with long-term resilience [6]. Howard Coker, CEO, emphasized that these initiatives enabled margin expansion despite inflationary and interest rate challenges [1].

Valuation and Analyst Outlook

Despite a weak momentum grade of “D” from AAII’s A+ Investor [2], Sonoco’s value score of 68 suggests it trades at an attractive price relative to fundamentals [2]. Analysts maintain a “Buy” consensus, with a $55.80 price target implying 16.4% upside from current levels [3]. The company reaffirmed full-year revenue guidance of $7.75–$8.0 billion and adjusted EBITDA of $1.3–$1.4 billion, albeit with a revised EPS target of $6.00 [5].

Conclusion: A Resilient Bet?

Sonoco’s strategic resilience in 2025 is evident in its ability to transform its portfolio, adapt to regional demand shifts, and maintain operational efficiency amid macroeconomic turbulence. While EPS misses and stock volatility reflect near-term challenges, the company’s focus on sustainable, high-margin packaging solutions and disciplined capital allocation positions it to outperform in a cyclical recovery. For investors, Sonoco represents a compelling case study in balancing short-term pragmatism with long-term vision—a trait critical for navigating an uncertain economic landscape.

Source:
[1] Sonoco Reports Second Quarter 2025 Results [https://investor.sonoco.com/news/news-details/2025/Sonoco-Reports-Second-Quarter-2025-Results/default.aspx]
[2] Does Sonoco Products Company (SON) Have Momentum? [https://www.aaii.com/investingideas/article/318661-does-sonoco-products-company-son-have-momentum]
[3] Analysts Offer Insights on Consumer Cyclical Companies [https://www.theglobeandmail.com/investing/markets/stocks/BYD/pressreleases/33643120/analysts-offer-insights-on-consumer-cyclical-companies-sonoco-products-son-boyd-gaming-byd-and-hilton-worldwide-holdings-hlt/]
[4] Consumer Packaging - Sonoco Europe [https://sonocoeurope.com/tag/consumer-packaging/]
[5] Sonoco Q2 2025 slides: revenue surges 49%, Consumer segment leads growth [https://www.investing.com/news/company-news/sonoco-q2-2025-slides-revenue-surges-49-consumer-segment-leads-growth-93CH-4149411]
[6] Earnings call transcript: Sonoco Q2 2025 shows strong EBITDA growth [https://www.investing.com/news/transcripts/earnings-call-transcript-sunoco-q2-2025-shows-strong-ebitda-growth-93CH-4173843]
[7] Sustainable Food Packaging Solutions in Thailand [https://www.sonocoasia.com/products/rigid-paper-containers/insights/sustainable-food-packaging-solutions-in-thailand]