Smurfit Westrock highlights ‘strong’ results 6 months postmerger

In the six months since officially becoming one of the world's largest paper and packaging companies, Smurfit Westrock CEO Tony Smurfit is “immensely proud” of what the company has achieved as it recently revealed its fourth quarter 2024 financial results.

Smurfit Westrock has reported $7.54 billion in net sales and $146 million in net income for the fourth quarter, and reports $21 billion in full-year net sales $319 in full-year net income.

“While we are at the beginning of our journey, I am immensely proud of what our teams have achieved in our first six months as Smurfit Westrock,” Smurfit says in a statement accompanying the financial results. “The operational and financial expertise that are hallmarks of this management team are already being applied as we transform the combined business.”

The company also reports $401 million in operating profit in the fourth quarter of 2024 and $1 billion for the full year.

New reportable segments

After the merger was finalized this past summer, Smurfit Westrock reassessed its reportable segments and now reports financials for three operating segments: North America, including operations in the U.S., Canada and Mexico; Europe, the Middle East and Africa (MEA) and Asia-Pacific (APAC); and Latin America, including operations in Central America and Caribbean, Argentina, Brazil, Chile, Colombia, Ecuador and Peru.

According to Smurfit Westrock, the North America, Europe, MEA and APAC, and Latin America segments are each highly integrated within the segment and have many interdependencies within these operations. They each include a system of mills and plants that primarily produce a full line of containerboard.

The North America segment also produces paperboard, kraft paper and market pulp; other paper-based packaging, such as folding cartons, inserts, labels and displays as well as engages in the assembly of displays and the distribution of packaging products.

The Europe, MEA and APAC segment also produces paper such as solid board, kraft paper, and graphic paper, other paper-based packaging, such as honeycomb, solid board packaging, folding cartons, inserts and labels and bag-in-box packaging (located in Europe, Argentina, Canada, Mexico and the U.S.).

The Latin America segment also comprises forestry, other types of paper, such as paperboard and kraft paper and paper-based packaging, such as folding cartons, honeycomb and paper sacks.

In the fourth quarter of 2024, the North America segment is reporting $4.6 billion in aggregate net sales and $710 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), while the Europe, MEA and APAC segment is reporting $2.5 billion and $371 million, respectively, and the Latin America segment $524 million and $121 million, respectively.

The third-party pricing debate

With several major industry players transitioning away from third-party pricing indexes, including Graphic Packaging, Smurfit said the plan at Smurfit Westrock is to “stick with where we’re at.”

“We, in a sense, are decoupling to some extent, because whenever we feel that the pricing of individual customers is badly done then clearly we’ll talk to them,” he said. “If there are other extraneous factors such as inflation, such as higher costs in a particular region of energy, then we will again address that individually with our customers. We have made a lot of provisions in many of our contracts in Europe, specifically about putting in inflation clauses that weren’t there in the previous cycle, if you want to go back to prior to the inflation movements.

“We try to be fair with all our customers over the long period of time and, basically, there is one benchmark out there for our customers and ourselves to try and look to see where pricing movements of paper are going … so, we don’t have a better benchmark than that. … I think over time, it has proven to be a reasonably good benchmark, but you do have to have within your own pricing with customers ways to move things … and that’s what we do.”

Fourth-quarter highlights

In a fourth quarter/full-year earnings presentation, Smurfit Westrock highlights several milestones and continued investments across its various segments.

The focus of the North American segment has been “value over volume,” which Chief Financial Officer Ken Bowles says began on Day 1.

“[It] has been embraced right across the legacy operations,” he said during Smurfit Westrock’s earnings call Feb. 12. “Knowledge transfer and the rollout of our unique innovation applications has commenced, and we are changing the business model to drive profit responsibility at the mill and the box plants while retaining strong central capital controls where we see significant opportunities to replicate a performance-led and owner-operator culture to deliver for our customers and to drive profitable growth.”

The Europe, MEA and APAC segment saw record safety performance, on-time-in-full statistics and corrugator productivity, according to the company, as well as the installation of 10 converting machines and further investment in new corrugators, safety systems, efficiency projects and capacity expansion in its paper and converting operations.

Finally, in the Latin American segment, the company highlights further investment this year on mill expansion projects, new converting equipment and paper machine upgrades to “capture growth in this dynamic region,” noting that Brazil and Colombia make up 75 percent of the region’s earnings.

“The scale and dimension of this company is quite remarkable,” Smurfit said during the earnings call. “We have many operating facilities in many regions across the world, with principal operations in North America with approximately 60 percent of our business, EMEA and APAC with 33 percent of our business with the balance being in the Latin America, and that's based on revenue.”

He also highlighted the company’s 500 converting facilities, whether in corrugated, consumer, bag-in-box or specialty packaging, and 62 mills that consume more than 14 million tons of recovered paper.

“With over 100,000 people worldwide operating in 40 countries, generating net sales of over $31 billion last year, it's important to remember that in creating this company, we didn't want it to be just big, but we wanted it to be the best,” Smurfit said.

“In the [nearly] seven months, I believe there has been a tremendous foundation and platform for growth for the future.”

Smurfit Westrock’s fourth-quarter and full-year 2024 results can be viewed here.