Karat Packaging Delivers Strong Q4 2025 Results Amid Ongoing Trade Volatility
Karact packaging, the leading provider of sustainable disposable food service products, has reported a robust set of financial results for the fourth quarter and full year 2025. Despite the ongoing trade volatility, Karat continues to demonstrate its strength and resilience in delivering profitable growth.
In a conference call held on March 12, 2026, CEO Alan Yu highlighted the company's impressive performance, driven by strong double-digit volume growth across all major markets. Net sales increased by 13.7% in the fourth quarter, with pricing also turning positive for the first time since early 2023. This momentum was further fueled by Karat's ongoing effort to diversify sourcing, which resulted in a more balanced import mix from various countries.
The company's global supply chain proved resilient, enabling Karat to maintain a solid gross margin of 34% despite significantly higher tariff and duty costs during the quarter. Following recent favorable global tariff developments and the stabilization of exchange rates, Karat expects tailwinds on the margin to begin realizing in the second quarter of this year.
The new paper bag business product category continues to gain strong momentum, expanding steadily and driving meaningful revenue growth. In addition to supplying one of its largest national chain accounts, Karat is actively pursuing additional opportunities, with some at the final confirmation stage. The company is also strengthening this category by supplying generic paper bags to smaller customer accounts in addition to custom paper bags.
Eco-friendly product sales grew to 37.3% of total revenue in the fourth quarter of 2025, up from 34.5% in the same quarter of 2024. As Karat's paper bag category business continues to expand, the company is further strengthening its position as a leading provider of sustainable, eco-friendly disposable food service products.
CEO Alan Yu emphasized that Karat's global sourcing flexibility and efficient logistics capabilities position the company well to support continued growth and margin improvement in today's shifting trade environment. The company is also maintaining its focus on operating efficiency, reflected in the improvement of its operating costs leverage to 26.7% in the fourth quarter of 2025 from 32% in the prior year quarter.
The solid foundation laid by these efforts provides a strong base for Karat as it looks forward to another strong year. With its resilient global supply chain, diversified sourcing, and commitment to sustainability, Karat is well-positioned to navigate the complexities of the trade environment and continue delivering profitable growth.
