GAAP net income attributable to Sonoco in the 2Q was $55 million, or $.53 per diluted share, compared with $51.3 million, or $.50 per diluted share, in 2012. Base earnings were $60.8 million, or $.59 per diluted share, in the 2Q, compared with $59.7 million, or $.58 per diluted share, in 2012.
2Q base earnings excluded after-tax charges of $5.8 million, or $.06 per diluted share, stemming from asset impairment and restructuring costs associated with the anticipated closure of the Company's thermoforming plant in Ireland and other previously announced restructuring activities. Items excluded from base earnings in the 2012 second quarter totaled $8.3 million, after tax, or $.08 per diluted share, for restructuring expenses and impairment charges associated with plant closures and manufacturing rationalization efforts in Germany, Canada and the United States.
Commenting on the Company's 2Q results, Sonoco President and CEO Jack Sanders said, "Overall, we're pleased with our results for the quarter. We were able to achieve records in sales and gross profits, while delivering base earnings near the high end of our guidance. Despite challenging global economic conditions, base earnings benefited from volume gains, productivity improvements and a positive price/cost relationship. These positive factors were partially offset by higher labor, pension and other operating costs and a higher effective tax rate on base earnings."
For the first six months of 2013, net sales were essentially flat at $2.41 billion, compared with $2.41 billion in the first half of 2012. Net income attributable to Sonoco for the first six months of 2013 was $103.1 million, or $1.00 per diluted share, compared with $94.4 million, or $0.92 per diluted share, in the first half of 2012.
Earnings in the first half of 2013 were negatively impacted by after-tax restructuring and other charges of $9.4 million, or $.09 per diluted share, compared with $19.1 million, or $0.19 per dilute share, in the same period in 2012.
Base earnings for the first half of 2013 were $112.6 million, or $1.09 per diluted share, compared with $113.5 million, or $1.11 per diluted share, in the first half of 2012. The 1% reduction in base earnings stemmed from higher labor, maintenance, pension and other expenses, lower volume and unfavorable mix. These negative factors were partially offset by productivity improvements and a positive price/cost relationship.
Gross profit was $428 million in the first half of 2013, compared with $433 million in the same period in 2012. Gross profit as a percent of sales was 17.8%, compared with 17.9% for the same period in 2012.
Sonoco expects 3Q 2013 base earnings to be in the range of $.59 to $.63 per diluted share. The Company's 3Q 2012 base earnings were $.55 per diluted share. Annual base earnings per diluted share are expected to be in the range of $2.26 to $2.32, which is unchanged from previous estimates. Free cash flow is expected to be approximately $150 million for 2013, which remains unchanged from previous estimates. The Company's base earnings guidance assumes modest volume growth and productivity improvements, offset by a negative price/cost relationship and higher year-over-year pension and other expenses. Although the Company believes the assumptions reflected in the range of guidance are reasonable, given the uncertainty regarding the global economy and fluctuating raw material prices and other costs, actual results could vary substantially.
Commenting on the Company's outlook, Sanders said, "While we face negative price/cost headwinds entering the third quarter, we remain optimistic that we'll see a steadily improving operating environment in the second half of 2013. We have three areas of focus: offsetting higher raw material inflation by implementing necessary price increases in our Paper and Industrial Converted and Consumer Packaging segments; bringing recently won business on line as efficiently and profitably as possible; and, optimizing our portfolio of businesses by addressing underperforming operations, boosting efforts to improve productivity and managing costs to improve margins and free cash flow."
Sonoco is a global provider of a variety of consumer packaging, industrial products, protective packaging and packaging supply chain services.