WestRock earnings down slightly in Q4

In a fiscal year highlighted by the continued implementation of its optimization strategy, Atlanta-based packaging producer WestRock Co. saw a slight dip in its fourth-quarter earnings, reporting roughly $5 billion in net sales for the three months ended Sept. 30 compared with $5.4 billion earned in the same period last year.

The company also reports a decrease in net income, down to $109.8 million in this year’s fourth quarter compared with $344.5 million in the fourth quarter of 2022—a slump attributed to higher restructuring and other costs, lower volumes and the impact of increased economic downtime, among others.

“I’m incredibly proud of our team’s commitment to serving our customers while executing on and accelerating our transformation actions,” WestRock CEO David B. Sewell says in a statement. “Through our portfolio optimization actions, cost-savings initiatives and strategic growth plans, we are positioning WestRock well to deliver shareholder value.”

WestRock notes one of its biggest fiscal-year highlights is its improved asset base through targeted investments and footprint rationalization. The company closed two higher-cost mills this year, one in North Charleston, South Carolina, and one in Tacoma, Washington, as well as two paper machines at a third facility. The closure of the two mills impacted approximately 900 total employees.

In March, WestRock broke ground on its newest corrugated box plant—a 410,000-square-foot site in Longview, Washington—turning its attention to its operations in the Northwest to “enhance capability” in the region.

However, the fourth quarter saw more significant economic downtime that negatively impacted WestRock’s earnings before interest, taxes, depreciation and amortization (EBITDA) by $64 million year over year and was the fourth-straight quarter of more than 200,000 tons worth of economic downtime.

WestRock took 391,000 tons worth of economic downtime in the fourth quarter—the most all year. The first quarter of 2023 saw 356,000 tons of economic downtime, the second quarter saw 265,000 tons and the third quarter 359,000 tons.

Of its business segments—corrugated packaging, consumer packaging, global paper and distribution--corrugated packaging was the lone segment to see an increase in sales, earning $2.4 billion in this year’s fourth quarter compared with $2.3 billion in the same period last year.

The segment also saw a sequential increase in North American corrugated packaging shipments of 3 percent per day, and WestRock only expects volumes to keep improving through fiscal year 2024.

“As we turn to fiscal 2024, we remain committed to unlocking additional cost savings and driving profitable growth,” Sewell says.