SEE Q2 Deep Dive: Stable Volumes, Internal Initiatives, and Cautious Outlook Amid Market Shifts

Integrated packaging solutions provider Sealed Air Corporation (NYSE:SEE) announced better-than-expected revenue in Q2 CY2025, but sales were flat year on year at $1.34 billion. The company expects the full year’s revenue to be around $5.3 billion, close to analysts’ estimates. Its non-GAAP profit of $0.89 per share was 23.8% above analysts’ consensus estimates.

Is now the time to buy SEE? Find out in our full research report (it’s free).

StockStory’s Take

Sealed Air’s results for Q2 reflected stable overall performance, with revenue and margins largely unchanged from the prior year. Management credited ongoing cost reduction efforts and productivity gains—such as network optimization and G&A streamlining—as key drivers of financial stability amid flat sales volumes and persistent market pressures. CEO Dustin Semach emphasized the company’s ability to offset weaker demand in its Food segment through operational efficiencies and highlighted the early impact of a turnaround strategy in the Protective business. The quarter saw minimal effect from recent tariff changes, supporting the company’s operational resilience.

Looking ahead, Sealed Air’s guidance remains cautious as management expects continued headwinds from the U.S. beef cycle and shifting consumer spending patterns, particularly in North America. The company is focusing on capturing demand in value grocery and retail packaging while navigating volatility in protein markets. Management plans to further streamline operations, leverage external partners to accelerate product development, and invest in network optimization. CEO Dustin Semach stated, "Our priorities are unchanged and remain keeping the customer front and center, operating with urgency, driving further productivity and transforming the business to deliver long-term sustainable growth."

Key Insights from Management’s Remarks

Management attributed the steady quarter to productivity improvements, targeted cost reductions, and early progress in segment turnarounds, while flagging ongoing demand and pricing pressures in core markets.

• Protective turnaround progress: The Protective segment began to show early signs of improvement, with sequential sales and EBITDA growth for the first time in two years, driven by enhanced go-to-market strategies and increased field engagement. Management noted that "turnarounds are typically nonlinear," yet highlighted greater customer trust and better alignment with distribution partners.
• Food segment resilience and challenges: While Food remained the company’s most resilient segment, volume declines were notable, particularly in North America’s industrial food processing due to accelerated declines in U.S. beef production and shifting consumer preferences toward value grocery and private-label products. Management expects these factors to remain headwinds for the remainder of the year.
• Cost takeout and efficiency gains: Sealed Air’s $90 million cost reduction program remained on track, with significant savings achieved through back-office optimization, plant network rationalization, and delayering of organizational structures. These measures were key to offsetting lower volumes and pricing headwinds.
• External partnerships for R&D: To speed up product development and reduce capital intensity, the company expanded the use of external partners in research and development, especially for new packaging solutions in Protective. This approach is expected to lower time-to-market and improve cost efficiency, aligning with the company’s current focus on debt reduction over M&A.
• New CFO appointment: Kristen Actis-Grande was named the incoming Chief Financial Officer, bringing experience in managing complex industrial portfolios. Management expects her expertise to complement ongoing transformation and operational improvement initiatives across both the Food and Protective businesses.

Drivers of Future Performance

Sealed Air’s near-term outlook is shaped by ongoing shifts in demand patterns, cost savings initiatives, and variable raw material pricing, with management highlighting both risks and opportunities across segments.

• Beef cycle and consumer shifts: Management cited the multiyear downturn in the U.S. beef cycle as a key headwind for Food volumes, expecting continued declines into 2026. The company noted that consumer behavior is shifting toward value-oriented grocery and larger packaging formats, impacting product mix and volume across North American markets.
• Operational streamlining and cost focus: Ongoing network optimization, supply chain improvements, and back-office consolidation are expected to drive further cost efficiencies. Management underscored that these actions are necessary to “balance out earnings power” as top-line pressure persists, with additional network rationalization plans under review for 2026 and beyond.
• Raw material pricing and tariffs: The deflationary trend in polyethylene and other raw materials has created a persistently negative price-cost gap in the Protective segment, with management relying on internal efficiencies and selective price adjustments to mitigate margin risk. Tariff exposure remains minimal, but management is closely monitoring developments for potential future impact.

Catalysts in Upcoming Quarters

Over the coming quarters, our analysts will be tracking (1) volume trends and sales mix shifts in North American Food markets as the beef cycle unfolds, (2) the pace and impact of cost reduction and network optimization initiatives on overall margins, and (3) continued progress in the Protective segment’s turnaround, particularly as new product formats and external R&D partnerships scale. Updates on tariff developments and raw material price trends will also be closely watched.

Sealed Air currently trades at $29.86, up from $29.01 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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