Graphic Packaging plunges after slashing 2026 outlook by up to 58%
Packaging company misses earnings estimates and announces comprehensive operations review
Graphic Packaging Holding Company shares tumbled in pre-market trading Tuesday after the packaging manufacturer reported fourth-quarter earnings that fell short of expectations and slashed its 2026 profit outlook by more than half, underscoring mounting pressure on the once-robust paper-based packaging sector.
The Atlanta-based company reported adjusted earnings per share of $0.29 for the fourth quarter of 2025, missing analyst consensus estimates of $0.34 to $0.40 per share. While revenue of $2.10 billion topped expectations of approximately $2.03 billion to $2.04 billion, the earnings miss and dramatically reduced outlook overshadowed the sales beat.
More concerning for investors was the company's 2026 guidance. Graphic Packaging projected adjusted EPS of $0.75 to $1.15 for the fiscal year, significantly below the analyst consensus of roughly $1.74 to $1.77 per share. The guidance range represents a decline of 35% to 58% from analyst expectations, prompting shares to fall more than 2.6% in pre-market trading.
Robbert Rietbroek, who took over as chief executive on January 1, cited a confluence of headwinds facing the company and the broader packaging industry. In announcing the results, Rietbroek said the company is operating in a "challenging market due to consumer affordability issues and ongoing competitive pressure."
The new chief executive moved swiftly to address deteriorating conditions, initiating a "comprehensive review of our organization structure, operations, and footprint, and a selective review of our portfolio," according to the company's press release. The strategic review aims to ensure resources are directed toward areas that will generate the most value for shareholders.
The challenges facing Graphic Packaging reflect broader pressures on the packaging industry, including slowing consumer demand, rising input costs, and increased competition. The company's net leverage ratio increased to 3.8 times from 3.0 times, highlighting mounting financial pressure at a time when access to capital has become more expensive.
Graphic Packaging had previously signaled trouble in December 2025 when it announced cost-cutting measures including employee layoffs in 2026, with anticipated savings of approximately $60 million. The company also established a Transformation Office with a new Chief Transformation Officer to enhance productivity and achieve cost reductions.
Wall Street analysts have grown increasingly bearish on the stock. Wells Fargo downgraded Graphic Packaging from "Equal-Weight" to "Underweight" on January 6, while RBC Capital Markets cut its rating to "Sector Perform" from "Outperform" in October 2025, citing inflation, oversupply issues, and cost overruns.
The company's strategic priorities for 2026 include driving operational excellence, delivering exceptional customer service, improving the cost structure, and generating substantial free cash flow to strengthen its balance sheet and return capital to shareholders, according to the earnings announcement.
Graphic Packaging projects full-year 2026 net sales between $8.4 billion and $8.6 billion, adjusted EBITDA of $1.05 billion to $1.25 billion, and adjusted free cash flow of $700 million to $800 million. Capital expenditures for 2026 are estimated at approximately $450 million.
The packaging industry's recent struggles contrast sharply with the robust demand experienced during the pandemic years, when e-commerce growth and shifting consumer patterns benefited companies like Graphic Packaging. Now, as consumers face affordability challenges and packaging costs rise, the sector is undergoing a painful adjustment period.
For Graphic Packaging, the coming months will be critical as Rietbroek, who previously served in senior roles at major consumer goods companies, attempts to navigate the company through what he described as a "challenging" environment. Investors will be watching closely for details of the operations review and any concrete steps taken to improve the company's cost structure and competitive positioning.