- Transformational 2025: Smurfit Westrock is beginning its first full-year as a company, having formed through the combination of Smurfit Kappa and WestRock in July. 2025 is when the company starts its “transformation journey,” CFO Ken Bowles said on an earnings call Wednesday.
- Results: Corrugated sales volumes were flat, but the company experienced a strong fourth quarter 2024, said CEO Tony Smurfit. The North American market pulls in about 60% of overall business; Europe, the Middle East and Africa, and the Asia-Pacific segment draws 33% of business; and the remainder comes from Latin America, Smurfit said.
- Streamlining: Executives have previously talked about implementing a more decentralized model under the new company, and that means “it has been necessary to streamline the business,” Smurfit said. More than 1,000 people already left or soon will leave the company during this process, he said. During the last earnings call in October, Smurfit said the company had recently eliminated 800 positions. The company also continually optimizes production and therefore “difficult decisions have been made to streamline assets,” Smurfit said.
- Box business investments: Much of the streamlining is occurring in the box network, but that’s also accompanied by strategic investments to drive growth. Capital expenditures in 2025 are expected to be between $2.2 billion and $2.4 billion, including for projects such as mill expansion, new converting machines, corrugator upgrades and safety system upgrades.
- Tariffs: It’s too early to tell the impact of the numerous tariffs that President Donald Trump has announced in recent weeks, executives said. Addressing the company’s notable footprint in Mexico, Smurfit said only a small amount of Smurfit Westrock’s products cross the border into the U.S. as-is, but the packaging is used to move customers’ products — primarily produce and protein — over the border. “So there will be, I would say, a very significant customer effect,” and costs likely would be passed to consumers, Smurfit said, adding that consumers’ willingness to pay higher prices will affect demand. Smurfit Westrock also has one large mill in Canada that exports to the U.S. “If that mill had to apply a 25% tariff, we'll have to figure out how we would adjust ... because that would be very uncompetitive very quickly,” he said.
- Pricing: Executives are watching the industry’s North American pricing trends and the influence of third-party indexes, specifically Fastmarkets RISI, that sparked controversy by showing no recognition of fiber companies’ recent price increases in January. This index only covers the open market, which makes up less than 10% of the total market and continues to shrink, but still is a leading index that companies tie to customer contracts. “There’s a lot of noise about RISI and whether we should decouple” from the index, Smurfit said. But so far Smurfit Westrock doesn’t have a better benchmark, so it will stick with the current model until presented with a viable alternative. Still, “I'm not saying [Fastmarkets RISI gets] it right all the time. They don't,” Smurfit said.
- Outlook: Assuming current market conditions persist, Smurfit Westrock anticipates delivering adjusted earnings before interest, taxes, depreciation and amortization of $1.25 billion in Q1 2025. Synergies from the merger are expected to meet or exceed $400 million, with benefits realized this year and next; executives also have identified opportunities to create an additional $400 million in value.
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Smurfit Westrock balances closures, investments in ‘transformation’ year
The company also is assessing the potential impacts of new tariffs and eyeing other pricing models, executives said on an earnings call.
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