Graphic Packaging Cuts Cash Outlook as Inflation Weighs
Second-quarter net sales slipped 1% to $2.188 billion as lower pricing offset currency benefits.
Graphic Packaging Holding (GPK), the consumer-packaging maker, reported a 26% drop in second-quarter adjusted EBITDA as inflation and lower pricing compressed profitability.
Adjusted EBITDA margin improved 50 basis points sequentially to 11.3%. The margin remained 350 basis points below the fourth quarter of 2024, extending the broader year-over-year pressure despite the latest improvement.
Net sales fell to $2.188 billion from $2.204 billion a year earlier. Lower pricing reduced sales by $27 million, while favorable foreign exchange and other items provided a $13 million offset. Innovation Sales Growth declined to $40 million from $56 million in the fourth quarter.
Net income dropped to $24 million, or $0.08 a diluted share, from $104 million, or $0.34 a share, a year earlier. On an adjusted basis, diluted earnings fell to $0.14 a share from $0.42.
Adjusted EBITDA declined to $247 million from $336 million. The decrease was principally due to $60 million of commodity-input and operating-cost inflation, alongside lower pricing and volume mix. Positive Net Performance provided a $9 million partial offset.
Graphic Packaging now expects 2025 net sales at the high end of its $8.4 billion-to-$8.6 billion range and adjusted EBITDA at the low end of its range because of heightened inflation. The company also lowered its adjusted-earnings range to account for higher interest expense.
Adjusted cash-flow guidance was cut to $600 million to $700 million from the previous $700 million-to-$800 million target. Structural cost actions are expected to deliver about $85 million of savings in 2025, partially offsetting an anticipated $150 million of full-year inflation.
Capital spending fell to $83 million from $228 million a year earlier, while net debt declined $100 million sequentially to $5.483 billion. Debt remained above its year-end level, and net leverage rose to 4.7 times from 3.8 times at the end of 2024.