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By the numbers: Q2 2025
Net sales: $7.94B
North America net sales: $4.76B
EMEA and APAC net sales: $2.78B
Net loss: $26M
- One year as Smurfit Westrock: In early July, Smurfit Westrock reached its one-year mark as a company, after Smurfit Kappa combined with WestRock in 2024. “We’ve come a long way in a short space of time,” said CEO Tony Smurfit on Wednesday’s second-quarter earnings call, noting that the North American business, in particular, has “seen significant improvements.” The company already has invested $1 billion into its system, roughly split between paper and converting assets. It’s on track to deliver $400 million of full-year, run-rate synergies and has identified $400 million of additional opportunities stemming from the “sharper operating and commercial focus,” said CFO Ken Bowles.
- Optimization: Smurfit Westrock “will continue to optimize our system through the elimination of non-strategic or inefficient assets,” Smurfit said, reiterating an announcement from May about eliminating 600,000 tons of capacity. Despite current lower demand trends, the company doesn’t anticipate taking downtime in the second half of 2025, except for typical maintenance. The company already has cut its “loss-making” by approximately 40% for its North American corrugated box plants, Smurfit said, referencing both underperforming company assets and customer contracts. Some factories “will be unsavable for different reasons, but the vast majority of them are savable,” he said.
- Box system contracts: Ongoing box system improvements involve sifting through customer contracts and cutting those that are loss-making, Smurfit said. He acknowledged “you can't get out of all contracts that we're in that are not necessarily good ones.” However, when it comes to replacing “bad volumes” with beneficial ones, “every plant I go to, you can see the enthusiasm of the sales team,” he said. The company already is moving toward profitability at certain plants where some “bad volume” has been eliminated, Smurfit said, noting that such contracts “will all be gone at this time next year.”
- Tariffs: Overall, executives report not seeing noteworthy changes in the flow of paper into or out of North America due to the tariffs that have been implemented so far, but margins could take a hit going forward. Referencing the 15% tariff rate announced earlier this week in a trade deal between the U.S. and the European Union, Bowles pointed out that it’s only incrementally higher than the 10% that had already been in place since spring for U.S. paper imports. Consumers already have been hit with some trickle-down tariff costs, Bowles said, pointing out that “historically, the consumer tends to take on about 70% of a tariff increase.”
- Consumer confidence: The real impact on the company’s system will be from what happens with consumer demand, Bowles said, pointing to a decrease in the second quarter that was likely partially linked to tariffs and economic uncertainty. Consumer confidence might return in certain lagging areas as the tariff picture becomes clearer, he said. The company is awaiting a typical summer seasonal demand boost in the United States, which didn’t materialize in July. “Hopefully we'll start seeing that come forward in August and September, based on the settling of the tariff situation — if that happens,” Smurfit said.
- Outlook: Smurfit Westrock executives continue to view the corrugated business as an area of opportunity for improvements in the second half of 2025 and into next year. In the second half of 2025, they anticipate more customer promotional activity and flat volumes. “We don't expect deterioration, but neither do we expect things to be materially better,” Smurfit said. The company expects to deliver $1.3 billion for third-quarter adjusted earnings before interest, taxes, depreciation and amortization, and it stuck with previous guidance of $5 billion to $5.2 billion for full-year EBITDA.
