Packaging Corporation of America

Packaging Corp of America delivered a disappointing set of quarterly results given the challenging environment as it failed to meet the revenue expectations and the earnings expectations of Wall Street. Domestic containerboard and corrugated product pricing and mix were steady compared to the third quarter of 2022. Export containerboard prices and mix were down $0.01 and $0.02 per share, respectively. Besides that, shipments of corrugated products decreased significantly. Freight and logistics costs were unfavorable. Demand in the Packaging segment was also lower than expected for the quarter. Therefore, the company used its containerboard system to meet these reduced demand levels. The team performed excellent cost control and process optimization at these decreased production rates to compensate for the negative volume impact. The total economic downtime for the fourth quarter was roughly 231,000 tonnes. The scheduled maintenance outage and conversion work at their Jackson, Alabama mill were completed successfully during the fourth quarter. The company anticipates reduced pricing for wood and recycled fiber, cheaper energy prices, and lower costs for scheduled maintenance outages in the future. We give Packaging Corporation of America an ‘Underperform’ rating with a revised target price.