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New York Analysts Meeting Sonoco Products Company December 1, 2017

New York Analysts Meeting - Sonoco

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Page 1: New York Analysts Meeting - Sonoco

New York Analysts MeetingSonoco Products CompanyDecember 1, 2017

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Executive Leadership Team

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Forward-Looking Statements

Today’s presentation contains a number of forward-looking statements based on current expectations, estimates and projections. These statements are not guarantees of future performance and are subject to certain risks and uncertainties. Therefore, actual results may differ materially.

Information about the Company’s use of non-GAAP financial measures, why management believes presentation of non-GAAP financial measures provides useful information to investors about the Company’s financial condition and results of operations, and the purposes for which management uses non-GAAP financial measures is included in the Company’s Annual Report and on the Company’s website at sonoco.com under Investor Relations, Webcasts & Presentations, Non-GAAP Reconciliations.

Pursuant to the requirements of Regulation G, the Company has provided definitions of the non-GAAP measures discussed during this presentation as well as reconciliations of those measures to the most closely related GAAP measure on its website at sonoco.com.

This presentation does not constitute the solicitation of the purchase or sale of any securities.

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Jack SandersPresident and CEO

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Portfolio Optimization

Paper Polymer Protective

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Five-Year Results

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Safety Performance

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Net Working Capital Days

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Total Productivity

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State of Sonoco is Strong

Consumer Packaging Display and PackagingPaper and Industrial Converted Protective Solutions

2016 2015

Sales $2,043 $2,123

Base EBIT $240.9 $231.6

2016 2015

Sales $520 $606

Base EBIT $14.8 $10.9

2016 2015

Sales $1,694 $1,730

Base EBIT $129.7 $124.1

2016 2015

Sales $526 $506

Base EBIT $51.5 $46.0

3Q 2017 YTD 2017

Sales $566 $1,569

Base EBIT $67.9 $185

3Q 2017 YTD 2017

Sales $483 $1,395

Base EBIT $42.2 $110

3Q 2017 YTD 2017

Sales $140 $408

Base EBIT $11.3 $33

($million)

3Q 2017 YTD 2017

Sales $136 $366

Base EBIT $2.0 $6.6

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Grow & Optimize

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Video

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Grow & Optimize

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Grow & Optimize

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Portfolio Optimization

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Sonoco 2017 Projected Segment Sales Analysis

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*

*Projected 2017 sales of approximately $5.0 billion

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Leadership to 2020 and Beyond

Harris E. DeLoach2000-2013

M. Jack Sanders2013-2018

Major James Lide Coker 1899-1918

Charles Westfield Coker1918-1931

James Lide Coker III1931-1961

C. W. Coker1961-1976

Charlie Coker1976-1998

Peter Browning 1998-2000

Robert C. Tiede2018-

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O Canada, Eh

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Rob Tiede

Executive Vice President, COO and CEO Elect

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“You miss 100% of the shots you never take.”–WAYNE GRETZKY

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Disrupter or Disrupted?

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Big Shifts Shaping Strategy

Fresh & Natural Millennials & Aging Populations Digital Disruption Emerging Market Growth

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is the state that is most dangerous in highly competitive environments, because it allows for inertia and power to build up along the lines of an existing business model

Stability, not change,

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Thinking differently can make all the difference

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Video

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Growing Around the Perimeter of the StorePeninsula Packaging Offerings

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Growing Around the Perimeter of the StoreClear Lam Offerings

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Market Adoption of Flexible Packaging

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Leverage Acquisition Capabilities

FlexiblesShort Run Capability Forming Films Blown Films Hybrid Flexible

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Vicki Arthur

Senior Vice President, Polymer and Protective Solutions

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The Perimeter Powerhouse

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Video

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Fresh Thinking, Fresh OpportunitiesSonoco and Clemson Rethinking Innovations in Fresh Packaging

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Making the Center of the Store the Center of Attention

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PrimaPak Creates the Ultimate in Convenience

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ClearGuard® Packaging Creates Clear Opportunities

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Thermoforming Growth Opportunities

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TruVue: Clearly Appealing. Clearly Ready to Grow.

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TruVue Growing with Fruits and Store Brands

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Emerging Market Opportunities

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Asia Emerging as Fertile Frontier for Growth

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Howard Coker

Senior Vice President, Rigid Paper and International Industrial Products

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Composite Can Growth in Europe is Strong

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Southeast Asia: Expanding Exponentially

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Opportunities for Composite Can Growth by 2020

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Grow Integrated International Industrial Products

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Growth Potential in Protective SolutionsTemperature Assured Packaging. Protective Packaging. Industrial Packaging.

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Expansion in eCommerce Packaging

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The New Moment Of Truth

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Capturing Margin by Creating Value

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Getting It Right

The RightCustomers

The RightProducts

The RightValue

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Rodger Fuller

Senior Vice President,Paper and Industrial Converting, U.S./Canada; Display & Packaging

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Using Data To Drive Decision Making

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Investing in Optimization$60 to $70 million investment over 3 years

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Improving Margins by Improving Cost Structure

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Changing the Game by Changing Your Point of View

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Financial Review and Outlook

Barry Saunders, Senior Vice President and CFO

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YTD 3Q 2017 Financial Performance($ Millions except Base EPS)

YTD 2017 YTD 2016 $ %

Net Sales 3,737.6 3,640.7 96.9 2.7

EBIT, Base 335.0 342.4 (7.4) (2.2)

Net Income, BaseAttributable to Sonoco

208.3 214.7 (6.4) (3.0)

EPS, Base - Diluted 2.07 2.11 (0.04) (1.9)

Better/(Worse)

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4Q and 2017 Base EPS Guidance Update

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Pension Assumptions

* Includes voluntary contribution of $50MM made to the U.S. qualified plan in October 2017** Excludes settlement charges totaling $33MM

($ Millions)

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2017P 2018P

U.S. Qualified Pension Plans

Assumed Rate of Return 6.86% 6.87%

Discount Rate 4.14% 3.77%

Pension Benefit Obligation (1,304.2) (1,296.6)

Pension Assets 1,004.7 1101.2

Funded Status (299.5) (195.4)

Funded Status % 77.0% 84.9%

Global Pension & Postretirement Plans

Cash Contributions 107.4 * 34.2

Net Periodic Benefit Cost - GAAP 78.7 37.7

Net Periodic Benefit Cost - Base 45.7 ** 37.7

Change in Presentation of Pension Costs

Non-Service Cost Components of Net Periodic Pension Expense 12.4 0.3

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2018 Net Sales Bridge

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2018 Base EPS BridgeCompany Guideline for 2018 Base EPS: $3.00 to $3.10

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Estimated Key Components of Projected Cash Flow($ Millions)

2017P 2018P

Operating Cash Flow 415 532

Capital Expenditures, net of Dispositions

(190) (220)

Dividends (155) (162)

Free Cash Flow 70 150

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Capital Structure($ Millions)

Baa2

BBB+

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2016 Q3-2017

Total Debt $1,053 $1,426

Cash $ 257 $ 248

Net Debt $ 796 $1,178

Net Debt to EBITDA 1.1 2.0

Net Debt to Total Cap 34% 40%

Q3-2017

Commercial Paper $ 98

Term Loan due 2022 $ 250

1.0% Euro Debt due 2021 $ 174

9.2% Bonds due 2021 $ 4

4.375% Bonds due 2021 $ 249

5.75% Bonds due 2040 $ 604

Other Debt $ 47

Total Debt $1,426

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Capital Deployment Strategy

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CEO Key Takeaways

Jack SandersPresident and CEO

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US Economic Outlook is Looking Up

Source: Wells Fargo

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Optimistic 2018 Outlook

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20/20 Vision: Ascent to $6 Billion

Total Projected Sales = $6.3 Billion Total Projected Sales = $5 Billion

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20/20 Vision: Ascent to 16%EBITDA Margin Improvement Expectations

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Why Invest in Sonoco?

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Fireside Chat