2018 Sustainability Report

arrow blueCommitted to using financial, natural and human resources wisely without compromising the ability of future generations to meet their needs

SUSTAINABILITY STRATEGIES
Financial Performance & Profitable Growth

Focusing on the future while creating value today.

Why Financial Performance & Profitable Growth Matters

103-1
Explanation of the material topic and its Boundary

103-2
Explain management approach components

103-3
Evaluate management approach

201-2
Financial implications and other risks and opportunities due to climate change

GRI 201:
103-1
103-2
103-3
201-2

Our financial performance and sustainability strategy are mutually beneficial. We leverage our strong financial performance to invest in the sustainability efforts that we believe in—a pillar of The Greif Way. Our sustainability strategy enables stronger sales, increased efficiency and reduced costs that create greater value for our shareholders.

Performance

We celebrated our 141st year of operation in FY 2018. We continued our strong trend of financial performance by increasing operating profit by 23.7 percent over FY 2017. We generated over $177.8 million in Free Cash Flow while returning roughly $100 million to our shareholders via dividends paid.

Our commitments to delivering the highest level of customer satisfaction through product quality and service excellence enabled us to improve our Customer Satisfaction Index, Net Promoter and Corrective Action Rate scores, all contributing to our efforts to attract and retain customers. As we worked to incorporate sustainability more into our products and conversations with customers, we have continued to reinforce our belief that our customers value our commitment to sustainability and the added value it provides. We are building stronger relationships with our customers, which is leading to greater strategic partnerships.

We work closely with our customers to create new and innovative products. Our collaborative approach to product innovation and end-of-life solutions enables us to support our customers in solving the business challenges they face while lowering input costs and contributing to sustainability performance. Through our end-of-life services we actively work to provide our customers with efficient steel, plastic and IBC reconditioning options, reducing demand for virgin materials.

Greif’s focus on sustainable activities reduces our operational footprint while providing economic and environmental benefits. We are actively working to reduce energy and waste, as they tie directly to cost savings and our efforts to drive raw material and water efficiencies. Our compliance management system reduces the risk of regulatory fines and aligns to our initiatives that address ethics, security risks and business continuity.

Our colleagues make these efforts possible. We are creating a workplace that our colleagues want to participate in by creating a safe and productive environment. We focus on employee retention and development to ensure our colleagues have a customer service mindset and do business The Greif Way.

Our 2018 financial performance was supported by lower raw material costs, better than anticipated performance in our PPS business and continued growth of our FPS business, offset by weather challenges and raw material and other cost inflation challenges in RIPS. Even with these challenges, we achieved topline growth by continuing to focus on delivering value to our customers. We invested in capital expenditure projects in our RIPS facilities to address maintenance needs and expand capacity to address increasing demand in the U.S. and Russia. We also elected to further strengthen our CorrChoice sheet feeder system by funding a sixth facility to be built in the mid-Atlantic region of the U.S. Finally, we invested in portfolio maintenance needs and continued to make investments in our facilities to protect against the risk of damages from extreme weather events, protecting not just our facilities, but our colleagues.

As a result of our efforts, we generated $3.55 in Class A Earnings per Share before Special Items. We generated $177.8 million in Free Cash Flow, slightly below our target of $200 to $220 million primarily due to higher than expected capital expenditures. We feel the added capital expenditure is in the best interest of the long-term health of the company and positions us to better serve our customers and compete more strongly in the market.

In February 2019, Greif completed the acquisition of Caraustar Industries, Inc. (Caraustar) enhancing the presence and scale of our PPS business in the U.S. and Canada. This acquisition is expected to improve Greif’s overall margin and cash flow profile. During 2019, Greif will begin integrating Caraustar into our operations. We will also continue to advance the implementation of our new single system ERP platform around our portfolio. The integration will provide additional efficiencies in business support services including accounts payable, accounts receivable and general ledger, in support of achieving our 2020 financial goals, and allowing us to continue investing and focusing on delivering high quality, sustainable solutions to our customers.

$1.0M

Savings from Gauge Improvement Program

Working with our suppliers to meet minimum specifications requirements resulted in significant savings in 2018.

Goals & Progress

Our 2019 financial goals include:

  • Generating between $3.55 and $3.95 in Class A Earnings per Share before Special Items.
  • Delivering between $175 and $205 million in Free Cash Flow.

We continue to progress toward our 2020 financial goals:

  • Increasing gross margin to greater than 21 percent of sales.
  • Decreasing selling, general and administrative expenses to 9.7 percent of sales.
  • Delivering Free Cash Flow of between $230–270 million. 

Due to the acquisition of Caraustar, we will update our 2020 financial goals in 2019.

DEFINITION