WestRock reports Q1 income decline

Atlanta-based packaging producer WestRock released its first-quarter earnings Feb. 1, covering a period from October to December 2022, and though the company says it remains committed to executing its strategy, it has pulled its full-year 2023 guidance because of uncertain market conditions.

The company reports a first-quarter net income of $45.3 million, down 75.2 percent from the same period in 2021 when it reported $182.3 million in net income. Net sales decreased year over year by 0.6 percent, or $29 million.

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In its earnings report, WestRock says the steep decline in net income was driven by increased net cost inflation, lower volumes, economic downtime and costs related to its acquisition of Grupo Gondi in July of last year. Production impacts from a monthslong labor dispute at WestRock’s kraft pulp and paper mill in Cottonton, Alabama, which was resolved this week, also impacted results.

WestRock’s packaging revenue, however, increased in the fourth quarter. The company reports a 6.7 percent jump to $76 million in consumer packaging sales, citing higher selling price that partially was offset by “the unfavorable impact of foreign currency.”

Corrugated packaging sales increased $15 million year over year because of higher selling price largely offset by lower volumes.

Higher operating costs and weather disruptions impacted the company’s global paper business. Segment sales decreased $229 million (16.9 percent) and adjusted earnings before taxes, depreciation and amortization in the segment decreased $75 million (32.3 percent).

“During the quarter, elevated inflation and softening macroeconomic conditions negatively impacted our global paper business,” WestRock CEO David B. Sewell says. “While we expect these market conditions to continue in the near term, we remain committed to executing on our strategy and delivering on our productivity efforts.

“WestRock’s broad range of portfolio products provides us with flexibility to manage through changing market conditions to maximize our performance.”

However, because of uncertain macroeconomic conditions, the company is removing its fiscal 2023 earnings guidance to focus on quarterly guidance.