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WestRock Co., a paper and packaging solutions provider based in Atlanta, has released its fourth quarter of 2019 financial results and fiscal year report ended Sept. 30. As it heads into the next year, the company reports that it plans to focus on growth and developing new fiber-based packaging solutions as it heads into the 2020 fiscal year. Earlier in October, Tom Stigers, executive vice president of corrugated paper solutions at WestRock, had shared some of WestRock's perspective on packaging trends to watch during the keynote session at the Paper & Plastics Recycling Conference in Chicago.
“The WestRock team executed well and delivered strong financial results for both the fourth quarter and the fiscal year,” says Steve Voorhees, chief executive officer. “As we move forward into fiscal year 2020, we remain focused on organic growth, including partnering with our customers to develop fiber-based packaging solutions that help them meet their sustainability goals. With uncertain macroeconomic conditions, we are acting to deliver on our productivity and cash flow generation goals.”
For the fourth quarter of 2019, WestRock reports that net sales increased $415 million compared with the prior-year fourth quarter, primarily due to the acquisition of KapStone Paper and Packaging Corp. The KapStone acquisition-related increase in sales was partially offset by lower corrugated volumes and prices, though. The increase in net sales was also partially offset by the absence of $106 million of recycling net sales compared with the prior-year fourth quarter since WestRock has transitioned recycling to a procurement function and ceased recording recycling net sales at the beginning of fiscal 2019.
The company reports that segment income increased $72 million in the fourth quarter of 2019 compared with the prior-year fourth quarter, primarily due to $64 million of increased corrugated packaging segment income. Consumer packaging segment income increased $5 million. The increase in consolidated segment income was primarily due to insurance proceeds related to the receipt of Hurricane Michael that were primarily associated with the Panama City, Florida, mill, the contribution from the acquired KapStone operations, productivity improvements and cost deflation, WestRock reports in a news release on its fourth-quarter earnings.
Also, WestRock had announced in the fourth quarter that it would reconfigure its North Charleston, South Carolina, mill. The company says that mill plans to reduce annual linerboard capacity by about 288,000 tons by shutting down one paper machine there in fiscal 2020, which will reduce annual costs by about $40 million. After that shutdown, the mill will focus on manufacturing differentiated DuraSorb and KraftPak products.
Recovered fiber pricing
During the company’s fourth-quarter earnings report conference call, the company had reported that it expects old corrugated container (OCC) and recycled fiber costs to remain on par with where they have been at in the latter half of 2019. The company stated that it expects OCC prices could see a modest increase by the second half of 2020.
Box demand
WestRock reports that North American Corrugated Packaging box shipments increased 18.9 percent on a per day basis and approximately 2.2 percent on an organic basis for WestRock during the fourth quarter of 2019. The company also reports it experienced about 131,000 tons of maintenance and economic downtime across its North American Corrugated mill system in the fourth quarter.