Greif leans into plastic containers, closures

Industrial packaging company Greif Corp., which has ambitious plans to dramatically increase both sales and profit, believes plastics will play a key role in that growth.

The Delaware, Ohio-based company is a global company with locations in 35 countries around the world, more than 14,000 employees and $5.45 billion in annual sales.

Plastics are nothing new for the company, which also has strong positions in both metal and paper packaging.

But management believes polymers represent an opportunity to help drive significant future growth.

Greif recently reorganized the company's segments into more specific operations, moving from two to four areas of concentration. This move allows for greater focus on specific business areas, including one now called Custom Polymer Solutions.

"Our overall objective is to double down on growth. It's basically to double the size of the company," CEO Ole Rosgaard said during a recent stock analyst and investor day held by the company.

Greif believes the company's wide-ranging product portfolio — the company is a huge player in steel drums and paper packaging, for example, in addition to its plastics operations — is a natural protection against the ebbs and flows of individual markets.

Greif set out on a push to reshape, in Rosegaard's words, the company's portfolio starting about three years ago. The idea is to push the company's product mix toward more profitable and less volatile situations. "Which happens to be in polymers," the CEO said. "That's exactly what we have done. It's exactly what we have done and will continue to do. We will continue down this path of growth into less cyclical and high-growth end markets where we can earn a premium margin."

Patrick Mullaney is chief business unit officer at Greif and also spoke at the investors conference.

Customized Polymer Solutions includes large and medium-sized packaging formats as well as what the company calls "small plastics." The company's intermediate bulk container business, both new manufacturing and recycling, also is in that segment.

Greif, he said, has spent about eight years building the IBC business and the past three to four years working to expand its small plastics packaging business. IBCs typically feature steel cages that protect a large plastic container that can hold hundreds of gallons or pounds of product for transportation.

Part of the company's smaller format plastics growth includes deals for Lee Container, Reliance Products Ltd. and iPackChem during the past few years.

"We've also invested organically in the business. So it's not just about the acquisitional growth. We've invested in our own network, and we've also invested in technologies," Mullaney said.

"And why is that important? Because the result of the work that we have been doing on the small plastics now puts us in a position where we are a leader when it comes to barrier technologies. And that's really important in plastics, when you are putting solutions, opportunities and proposals forward to our customer base," he said.

While Greif makes a wide range of plastic packaging through the Customized Polymers Solutions segment, the firm also has an industrial caps and closures business that falls under the company's Integrated Solutions segment. These caps and closures include those made from plastic or a combination of plastic and metal.

"We're the leader in industrial caps and closures globally, not consumer caps and closures. This business is highly innovative," Mullaney said.

The sale of containers and caps and closures historically has been separate in the marketplace — with companies specializing in one or the other.

But Greif sees the potential to expand its caps and closures business through an integration with container sales, whether those containers are plastic or metal.

"It's really important where we can that customers combine our caps and closures business with their polymers or with their steel business because that gives us a compelling reason why customers should and need to do business with us," Mullaney said.

Greif is a major player in the steel, fiber and plastic drum markets.

"We're investing in this business for growth," he said, both internally and through acquisitions.

Greif also sees the company moving beyond industrial closures, but not into the commodity closures market.

"I mentioned that we're the leader in industrial closures," Mullaney said. "We have a really strong position in that market. But we want to scale this business outside of industrial closures.

"That will require some M&A, but it will also require organic investment. I don't think we need additional sites, but we definitely do need some additional firepower in our existing locations," he said.

Caps and closures represent a market with attractive margins. "Overall, it's an attractive business, and it's small relative to our other businesses, but it's got a lot of upside," Mullaney said.

While Greif talked about its bullishness on plastics during the recent investor conference, the company separately revealed first quarter fiscal year 2025 financial results on Feb. 26.

Greif earned a profit of $8.6 million, or 15 cents per diluted Class A share, on sales of $1.27 billion for the first fiscal quarter ended Jan. 31. That compares with profit of $67.2 million, or $1.17 per diluted Class A share, and sales of $1.21 billion for the previous first fiscal quarter, the company reported.

Net sales in the Customized Polymer Solution segment increased from $228 million during the previous first quarter to $295.1 million for the latest first quarter, Greif said. The increase was primarily due to acquisitions.

The company also announced plans to sell off 176,000 acres of timberland in the Southeast in a move to lower debt, a decision that follows last month's decision to close two underperforming paper-based mills.

"Greif is actively managing a historical period of industrial activity contraction while simultaneously transforming our internal processes and our portfolio mix for optimal alignment to long-term profitable earnings growth," Rosgaard said in a statement when earnings were released.