WestRock delivers 'outstanding' second quarter

WestRock Co., an Atlanta-based containerboard and packaging producer, has reported its second-quarter 2022 financial results for the period ending March 31, and the company says it delivered what it's calling an "outstanding" quarter.

The company reported net sales of $5.4 billion, up 21.3 percent year over year, with its packaging sales up 15 percent and paper sales up 36 percent year over year "driven by successful implementation of price increases and solid demand."

WestRock's net income declined $73 million to $40 million year over year, or 64.5 percent, while its adjusted net income increased $164 million, or 112.9 percent. to $309 million. The company says its second-quarter net income was impacted by $363 million of pretax restructuring and other costs, or $1.04 per diluted share, which it says primarily was associated with the previously announced closure of the Panama City, Florida, paper mill.

In early April, the company announced that the mill would close by early June of this year. The Panama City mill produces containerboard—primarily heavyweight kraft—and fluff pulp, with a combined annual capacity of 645,000 tons. At the time of the announcement, WestRock said the mill would require significant capital investment to maintain and improve going forward, and that the production of fluff pulp is not a priority in the company's strategy to focus on higher-value markets.

WestRock says select grades of containerboard will be produced at other facilities and employees are to receive severance and outplacement assistance. The financial impact of the closure is $450 million of one-time costs and approximately $65 million impact to annual earnings before interest, taxes, depreciation and amortization (EBITDA).

Included in the Q2 2022 financial report was a record consolidated adjusted EBITDA of $854 million, a 33-percent year-over-year increase, and an adjusted earnings per share of $1.17, up 117 percent.

WestRock says cost inflation and supply chain disruptions negatively impacted earnings, noting key drivers as fiber, labor, freight, energy and chemicals, but CEO David B. Sewell says, "We delivered an outstanding second quarter, reporting record revenue and impressive adjusted earnings growth despite facing challenges from inflation, higher supply chain costs and labor shortages."

He adds, "This strong performance speaks to the resiliency of our broad portfolio and the resolve of our 50,000 talented employees. We remain focused on execution and today have increased the midpoint of our full-year guidance."