Smurfit Westrock reports ‘excellent’ results in first quarter as merged group

Smurfit Westrock has reported third quarter 2024 results—the first quarter since Smurfit Kappa and WestRock merged to create the world’s largest paper packaging company—and despite a $150 million loss, CEO Tony Smurfit says the results “clearly point to the opportunities ahead for Smurfit Westrock.”

Net sales for the third quarter more than doubled because of the acquisition, going from nearly $3 billion in 2023 to $7.7 billion in the most recent quarter. However, net income is down $150 million with a net income margin of -2 percent, which Smurfit WestRock attributes to transaction-related expenses and purchase accounting adjustments.

“With adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] of $1.27 billion and an adjusted EBITDA margin of 16.5 percent, these results are a strong foundation to build upon,” Tony Smurfit says.

“Our established track record of delivering value to our customers through service, quality and innovation is already beginning to yield results. Equally, we believe our focus on plant-level autonomy, operational improvement and profitability will deliver, in time, benefits at least equal to the state synergy target of $400 million.”

In its first 100 days as a combined company, Smurfit Westrock officials say they have aligned leadership teams around culture and operating model, fostered a sharper commercial focus that prioritizes value over volume and identified opportunities to drive greater operational efficiency, among others.

According to the company’s third quarter earnings presentation, Smurfit Westrock senior management has visited 85 percent of its North American paper capacity.

As part of its ongoing asset optimization strategy, Smurfit Westrock, which has European headquarters in Dublin and North American headquarters in Atlanta, has closed 10 corrugated packaging facilities, 13 consumer packaging facilities and two mills as well as divested four mills in North America, while in Europe and Asia, the company has closed one mill and six packaging facilities.

The company also reports personnel reduction of more than 800 employees.

Smurfit Westrock says the moves are designed to improve operational efficiency through strategic closures, achieve cost savings by reducing redundant facilities and enhance its focus on core facilities to better allocate resources.

“Our third quarter performance, combined with our deeper knowledge of the combination and continuing asset optimization, clearly points to the opportunities ahead for Smurfit Westrock,” Tony Smurfit says. “We are at the start of our journey to build the ‘go-to’ sustainable packaging partner of choice, global leader with an unrivalled scale, geographic reach and product portfolio. Having spend the last number of months visiting our plants, it is also clear that our people are excited and motivated to be a part of this journey.

“We expect 2024 full-year combined adjusted EBITDA of approximately $4.7 billion and we are increasingly excited by our immediate and longer-term prospects.”