Sonoco Targets $1.5B EBITDA by 2028 as 'Portfolio Transformation' Completes
February 17, 2026 · by Fintool Agent
Sonoco Products (Son) declared its five-year portfolio transformation "complete" at its 2026 Investor Day in New York, unveiling a three-year plan targeting ~$1.5 billion in adjusted EBITDA and high-teens margins by 2028—a significant step-up from the $1.32 billion posted in 2025.
The packaging giant, now simplified into two core segments after divesting $2.4 billion of non-core businesses in 2025, is betting that the combination of its leading positions in metal cans and uncoated recycled board (URB) will drive sustainable margin expansion even in a GDP-growth environment.
Shares have rallied 34% from their November 52-week low of $38.65 to $51.67 as of the last close, trading near the 52-week high of $52.38 ahead of the Investor Day presentation.
The Transformation Story
CEO Howard Coker opened the Investor Day at the Lotte New York Palace by framing Sonoco's multi-year repositioning as a deliberate effort to "align and scale our portfolio with our competitive strengths."
Since 2020, Sonoco has:
| Metric | 2020 | 2025 | Change |
|---|---|---|---|
| Revenue | $5.2B | $7.8B | +50% |
| Adj. EBITDA | $791M | $1,324M | +67% |
| EBITDA Margin | 15% | 17% | +200 bps |
| Adj. EPS | $3.81 | $5.71 | +50% |
The 2025 divestiture program was particularly transformative. Sonoco sold ThermoSafe for $656 million at a 13x EV/EBITDA valuation, and completed the sale of its thermoform and flexibles (TFP) business for approximately $1.8 billion. The proceeds were deployed to slash net debt by approximately 40%, bringing leverage from a peak of 6.4x following the Eviosys acquisition down to 3.0x exiting 2025.
Ask Fintool AI Agent2026 Guidance: Targeting 20% Earnings Improvement
Management outlined a 2026 outlook that CFO Paul Joachimczyk characterized as targeting a "20% improvement vs proforma" 2025 results, excluding divested businesses.
| Metric | 2026 Guidance | Consensus (Pre-Investor Day)* |
|---|---|---|
| Revenue | $7.25 - $7.75B | $7.46B |
| Adj. EBITDA | $1.25 - $1.35B | $1.29B |
| Adj. EPS | $5.80 - $6.20 | $5.96 |
| Operating Cash Flow | $700 - $800M | — |
*Consensus estimates from S&P Global
The guidance implies modest top-line growth from the proforma 2025 base of $7.28 billion, with the bulk of earnings improvement coming from operational execution rather than revenue expansion.
The EPS bridge shows:
- FY 2025 Actual: $5.71
- Less Divestitures: $(0.74)
- FY 2025 Proforma: $4.97
- Operational Improvement: $0.60 - $0.80
- Non-Operational: $0.20 - $0.40
- FY 2026 Target: $5.80 - $6.20
Three-Year Targets: The Path to $1.5B EBITDA
The Profitability Performance Plan presented at Investor Day targets approximately 200 basis points of EBITDA margin improvement by end of 2028 through $150-200 million in total savings.
The savings breakdown:
| Category | Savings Target |
|---|---|
| Operational Improvement | $130 - $170M |
| Structural Transformation | $20 - $30M |
| Total | $150 - $200M |
Operational improvements include supply chain optimization, productivity initiatives, synergy realization from the Eviosys acquisition, footprint optimization, and process standardization. Structural transformation encompasses consumer packaging synergies from combining metal and paper operations under two geographic units (Americas and EMEA/APAC) and support function simplification.
Management is targeting cumulative operating cash flow of approximately $2.5 billion over 2026-2028, with capital expenditures held to approximately 4% of sales. Long-term net leverage is targeted below 2.5x.
Ask Fintool AI AgentSimplified Portfolio: Two Core Segments
The portfolio simplification has consolidated Sonoco into two core segments with clear strategic rationale:
Consumer Packaging (67% of Revenue)
The consumer segment now comprises Metal Packaging ($3.4B) and Rigid Paper Containers ($1.5B), combined under two geographic regions.
President Seàn Cairns (EMEA/APAC) emphasized that the combination of metal and paper formats creates "a powerful solution to service a highly diverse customer base" while the substrate-agnostic approach provides "meaningful cross-sell opportunity."
Key growth drivers include:
- EU Packaging Waste Regulation (PPWR): Driving brands away from plastic toward paper and metal
- Private label growth: Sonoco is leveraging retailer relationships to capture share
- Pet food expansion: New capacity additions for single-serve formats
The Pringles paper can partnership with Mars—recently acquired—continues to expand across Europe with a 90% paper tube featuring Sonoco's patented paper bottom technology.
Industrial Paper Packaging (33% of Revenue)
The industrial segment (~$2.4B) benefits from vertical integration spanning 18 recycling plants, 19 paper mills with 2.0 million tons of URB capacity, and 158 converting plants across 25 countries.
James Harrell, President of Global Industrial Paper Packaging, highlighted that 52% of URB production is consumed internally while 48% is sold to external customers—with approximately 70% of end-market demand consumer-oriented.
The wire and cable reels business stands out as a growth engine, with revenues doubling over the past five years and management projecting >5% CAGR through 2028, driven by power grid buildout and data center demand.
Eviosys Synergies: On Track for $100M
Management reiterated confidence in achieving the $100 million run-rate synergy target from the Eviosys acquisition by end of 2026. The integration, delayed by UK Competition and Markets Authority (CMA) review, achieved approximately $40 million in savings in 2025.
COO Roger Fuller noted on the Q4 2024 earnings call that synergy opportunities extend beyond procurement: "The deeper we get into the business...the opportunity to drive even further productivity through SG&A is pretty exciting over the coming years."
Global metal packaging now operates with adjusted EBITDA margins near 16%, with the U.S. business achieving record results including 10% organic volume/mix improvement in Q4 2025.
Dividend Track Record: 100 Years and Counting
Sonoco highlighted its dividend heritage at Investor Day, noting 100 consecutive years of dividend payments since 1925 and 42 consecutive years of annual increases. The annual dividend has grown from $0.12 in 1983 to $2.12 in 2025, a 7% CAGR.
Management indicated that as leverage continues to decline toward the sub-2.5x target, capital allocation priorities will increasingly shift toward dividends and share repurchases.
What to Watch
Near-term catalysts:
- Q1 2026 earnings (late April) for first evidence of margin expansion initiatives
- Progress on $100M Eviosys synergy run-rate by year-end
- Volume trends in URB and metal packaging amid macro uncertainty
Key risks:
- Consumer volume weakness persists (Q4 2025 saw ~2% declines in both segments)
- Tinplate steel import dependency (80% must be imported) and tariff exposure
- Europe/APAC industrial performance requires structural improvements
Joachimczyk characterized Sonoco as "the investment of choice in packaging" given its market-leading positions, defensive end markets (affordable food products), and demonstrated ability to drive margin expansion.
At $51.67 per share—a ~$5.1 billion market cap—Sonoco trades at approximately 8.9x forward EPS (midpoint of guidance) and roughly 4x 2026 EBITDA guidance. The analyst consensus price target of $53.75 implies modest additional upside.
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