Smurfit Westrock Q1 Earnings Call Highlights

Key Points

• Smurfit Westrock reported Q1 adjusted EBITDA of $1.076 billion (14% margin) but said severe weather and downtime trimmed about $65 million; North American volumes were down ~7% in Q1 with demand improving in April and company-wide price increases (two planned $50/ton steps) being implemented.
• Energy costs emerged as a material headwind—CFO now expects roughly a $270–290 million hit for the year (versus ~$80 million previously) and freight adds about $50 million—even as EMEA/APAC outperformed peers (15.2% margin) and the company announced closures of small converting sites and a ~200,000 tpa UK mill.
• Management reiterated medium-term targets—aiming for $7 billion adjusted EBITDA and a 19% margin by 2030—provided Q2 EBITDA guidance of $1.1–1.2 billion, reaffirmed full-year 2026 guidance of $5.0–5.3 billion, and said it is reviewing its London Stock Exchange listing, which could lead to delisting.

Smurfit Westrock NYSE: SW reported first-quarter results that management described as “solid” and largely in line with internal plans, despite weather-related disruptions and downtime that weighed on performance. President and CEO Anthony Smurfit said the company generated adjusted EBITDA of $1.076 billion, representing a 14% adjusted EBITDA margin, and noted that severe weather events spanning January and February reduced adjusted EBITDA by about $65 million across the group.

Weather, downtime pressure results in North America

In North America, Smurfit said adjusted EBITDA was $597 million with a 13.3% margin. The quarter was “heavily impacted” by approximately $55 million of weather issues, primarily in February, along with $74 million of downtime, about half of which was unplanned. Smurfit also cited “generally tepid demand” tied to muted consumer confidence, as well as logistical challenges in Mexico “as a result of local domestic security-related issues.”

Still, he said the demand environment improved notably as the company moved into the second quarter. “We begin the second quarter, we are seeing much improved demand with strengthening order books across all grades of both paper and converting products,” Smurfit told analysts. He added that price increases have been announced for all containerboard grades and some consumer grades.

On unplanned downtime, Smurfit attributed issues to factors including an electricity outage near a key mill that shut operations for several days. He said the company does not expect a repeat in the current quarter, noting, “We do not anticipate any material downtime in Q2. As I say, we’re sold out.”

Demand strengthens quickly; pricing actions underway

Responding to questions about demand, Smurfit said he has not seen such a rapid shift in the industry in a long time. He described most paper grades as effectively sold out, with one exception in CRB that remained weaker. He acknowledged there could be some pre-buying ahead of announced price increases, but also pointed to the effect of industry capacity reductions over the last 18 months.

Smurfit also discussed progress in attracting new business. He said the company signed contracts with “over 600 new corrugated customers” during the quarter and that the pace accelerated in April. While acknowledging the company is still “washing through” business it exited because it was uneconomic, he said management expects to show growth later in the year as new customers are onboarded.

In response to a question on volume trends, Smurfit said North American volumes were down about 7% in the first quarter after being down roughly 8.5% in the fourth quarter, but he reported improvement in April. “As we sit here today, we’re down 4% in April versus last year,” he said, adding that seasonality typically supports demand from April through November.

On North American containerboard pricing cadence, Smurfit said the first $50-per-ton increase (which he characterized as “-20 +70”) should be fully implemented by July 1, progressing through May and June. A second $50-per-ton increase, if successful, would likely be fully implemented by the end of September, he said.

Europe outperforms peers; closures and energy headwinds discussed

In EMEA and APAC, Smurfit Westrock posted adjusted EBITDA of $421 million and a 15.2% margin. Smurfit said the region is “significantly outperforming our peers” and highlighted the company’s innovation platform, including a network of 34 innovation centers, as a differentiator. He noted the company recently hosted more than 200 customers at a sustainability and innovation event in Amsterdam.

The company also announced consultations to close four smaller converting operations in the U.K. and the Netherlands and one U.K. paper mill with capacity of about 200,000 tons per year. Smurfit said the Birmingham mill played an important role supplying the company’s U.K. and Ireland business but was among the company’s highest-cost assets and had “the wrong width for the long term.” He said supply arrangements have been put in place both internally and externally to maintain service.

Energy costs were a key focus in the Q&A. Smurfit said the first quarter was not affected by higher energy prices due to hedging, but he expects the impact in coming quarters. CFO Ken Bowles provided hedging detail: “Broadly speaking, for the second quarter, about 50% hedged and about a third and a third for quarter three and quarter four,” he said.

Bowles also updated cost expectations versus the company’s February view. He said energy headwinds have increased materially. “Back in February…we would have guided energy to about $80 million higher year-over-year for the group,” he said. “I think that’s…probably more like between $270 million and then $290 million in terms of total impact for the year.” Bowles added that freight costs have also been affected, and later characterized freight as “probably a $50 million headwind” for the year based on current conditions.

In Europe, Smurfit said the company implemented higher recycled paper prices of EUR 100 per ton, along with increases in Kraftliner and some specialty grades, and expects these moves to translate into higher converting prices as the year progresses. He said price increases for sheet feeding were already being implemented across most markets, with limited benefit expected in the second quarter and more meaningful flow-through in the second half as contractual lags roll through.

Latin America delivers strong margins; Ecuador acquisition completed

In Latin America, Smurfit said the business delivered adjusted EBITDA of $109 million and an adjusted EBITDA margin “of over 20%.” He described the region as a strategic asset for supplying both global and regional customers and said Smurfit Westrock is the only pan-regional player in the area.

During the quarter, the company completed a corrugated box plant acquisition in Ecuador. Smurfit said the deal aligns with the company’s objective to expand in the region through organic growth and selective acquisitions, and he added it will also allow integration of paper from the North American mill system.

Medium-term targets reiterated; LSE listing review underway

Smurfit reiterated the company’s medium-term plan targets through 2030, including an aim to reach $7 billion in adjusted EBITDA and a 19% adjusted EBITDA margin by 2030. He also said the company expects to generate $14 billion of discretionary free cash flow over the life of the plan, supporting growth investments, balance sheet strengthening, and shareholder returns.

The company also disclosed it is reviewing its listing on the London Stock Exchange, with the outcome potentially resulting in a delisting. Smurfit said the review is intended to align the listing structure with where shares trade and to reduce complexity and costs, with an update expected after the review concludes in May.

Looking ahead, Smurfit said the industry outlook appears stronger than it did earlier in the year, assuming current conditions persist. The company expects second-quarter adjusted EBITDA of $1.1 billion to $1.2 billion and reaffirmed its full-year 2026 adjusted EBITDA guidance of $5.0 billion to $5.3 billion.

About Smurfit Westrock NYSE: SW

Smurfit Westrock Plc, together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products in Ireland and internationally. The company produces containerboard that it converts into corrugated containers or sells to third parties, as well as produces other types of paper, such as consumer packaging board, sack paper, graphic paper, solid board and graphic board, and other paper-based packaging products, such as consumer packaging, solid board packaging, paper sacks, and other packaging products, including bag-in-box.

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