SEE Q2 2024: Protective Volumes to Stay Weak Through 2025
- New leadership focus and management transformation: CEO Patrick Kivits is rapidly completing the senior leadership team and driving a renewed focus on commercial execution and accountability, which builds confidence in accelerated long‑term growth.
- Strong performance in the Food segment: The call highlighted mid-single-digit volume growth, significant share gains in case-ready solutions, and momentum in automation and customer wins across regions, positioning the company well in its strongest market.
- Robust financial fundamentals: The company reported strong free cash flow performance and progress in deleveraging its balance sheet, combined with cost optimization initiatives that support sustained operational excellence.
- Persistent Protective Weakness: Executives repeatedly noted that the Protective segment is facing ongoing volume declines with no anticipation of a turnaround in 2024 or 2025, underlining continued market and execution challenges.
- Negative Net Price Realization: Despite some improvement (from a negative impact of approximately $80 million to $70 million), persistent net price headwinds remain a drag on margins, particularly in the Protective business.
- Portfolio and Integration Challenges: The call highlighted significant focus on addressing gaps in the product portfolio—especially in areas such as void fill and fiber mailers—as well as challenges in executing the required commercial and operational transformation, which could delay overall business turnaround.
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Free Cash Flow
Q: How is FCF guidance characterized?
A: Management described FCF guidance as conservative, noting strong first-half performance with expectations for a robust second half, even if historical second-half figures have been higher. -
Protective Outlook
Q: When will protective volumes improve?
A: Management explained that the protective business will remain weak through 2025, with no positive volume inflection expected, underscoring ongoing challenges and the need for continued transformation. -
Net Pricing
Q: What drove net pricing improvement?
A: Management attributed the improvement to better pricing in the protective segment, with net pricing headwinds narrowing from –80M to –70M, largely due to lower resin cost effects. -
CTO2Grow Effectiveness
Q: Is CTO2Grow meeting its cost-savings goal?
A: Leaders noted that CTO2Grow is being recalibrated to focus on sales-force effectiveness and targeted investments, with further cost takeout expected as part of the broader commercial transformation. -
Commercial Strategy
Q: How is innovation shaping sales tactics?
A: Management highlighted a renewed focus on specialized, accountable sales efforts—especially in case-ready solutions and automation—to win back market share and drive growth.
Research analysts covering SEALED AIR CORP/DE.