Smurfit Westrock (NYSE:SW) reported fourth-quarter 2025 adjusted EBITDA of $1.172 billion and full-year adjusted EBITDA of $4.939 billion, with CEO Tony Smurfit calling it “by far the largest outturn by any packaging company in the world.” Management emphasized cash generation in the company’s first full year of operations, delivering $679 million of adjusted free cash flow in the quarter and more than $1.5 billion for the year.
The company’s adjusted EBITDA margin was 15.5% in the fourth quarter and at a similar level for the full year, which Smurfit described as a “launching pad” for future improvement despite what he characterized as difficult market conditions across many countries.
Regional performance and volume trends
On volumes, management noted a sharp decline in North America, stable volumes in Europe, and stronger growth in Latin America. Smurfit attributed part of the North American volume decline to deliberate actions to exit uneconomic business, while also pointing to broader market weakness earlier in the quarter and improvement later in the period.
North America: exiting “loss-making” business and managing downtime
In North America, Smurfit said management identified parts of the legacy WestRock portfolio that were “heavily loss-making” and moved to shed uneconomic volume. He said the company lost about 1.2 billion square meters of volume, with roughly half already replaced and being implemented. He added that the company’s pipeline “significantly exceed[s]” the lost business in both volume and quality.
The near-term impact of that volume loss included additional mill downtime in the fourth quarter, which management said cost about $85 million. For the full year, CFO Ken Bowles later quantified downtime at $220 million, though he said it could not be split between corrugated and consumer for disclosure reasons. Bowles said the company proactively manages downtime to avoid building unnecessary inventory and tying up working capital.
Smurfit said the company has already reduced the number of loss-making operations, made closures, and will continue to evaluate footprint optimization. He also highlighted changes aimed at strengthening execution, including investment programs and “putting in place the right people” to move the North American business forward.
Balance sheet, dividend actions, and synergies
Management highlighted balance sheet progress during 2025, including refinancings and bond redemptions that pushed the next maturity to 2028 and resulted in an average interest rate of 4.64%. Smurfit said year-end leverage declined to 2.6x, with a longer-term target of 2x. He also noted Fitch upgraded the company to BBB+.
Smurfit reiterated the company’s commitment to a progressive dividend and said the dividend was increased by 5%.
On integration, Smurfit said the company “well overachieved” its initial synergy target of $400 million. Bowles later told analysts there were additional synergies expected in 2026, estimating roughly $40 million to $50 million still to come through.
2026 outlook: no pricing baked in, improving conditions expected
For 2026, management guided to first-quarter adjusted EBITDA of $1.1 billion to $1.2 billion and full-year adjusted EBITDA of $5.0 billion to $5.3 billion. Bowles said the company has not baked pricing assumptions into the forecast, noting that the company’s approach is to wait for pricing actions to be in effect before incorporating them. He also cautioned that offsetting moves in other paper grades could influence the net impact.
Smurfit said order books firmed in late December and looked “decent” into January across most businesses and countries, though weather disruptions in both the U.S. and Europe interrupted activity and created logistical challenges that the company was still working through in mid-February. Management said it expected volumes to return to more normalized levels in the second half of the year, and Smurfit pointed to potential U.S. stimulus as a possible positive.
Bowles also outlined several quantified 2026 moving pieces discussed on the call: he characterized energy as a net headwind of roughly $60 million to $70 million, fiber as a tailwind of about $50 million, and synergies as noted above. He said the company also runs active cost takeout programs intended to offset inflationary pressures such as wage increases.
Medium-term plan: targeting $7 billion adjusted EBITDA by 2030
In its medium-term plan presentation, management set out goals to reach $7 billion of adjusted EBITDA by the end of 2030, representing a 7% adjusted EBITDA CAGR and margin expansion of more than 300 basis points. The company also projected approximately $14 billion of adjusted free cash flow from 2026 through 2030, implying a 17% CAGR.
Subject to board approvals and other factors, management said it expects approximately $5 billion of dividends over that period and to commence share buybacks from 2027 onward. Management repeatedly emphasized that the plan does not assume pricing momentum, including not incorporating recently announced North American paper price increases.
Key elements highlighted in the plan included:
- North America: Targeting adjusted EBITDA rising from about $3 billion to $4.2 billion over five years, ending above 20% margin, supported by operational and commercial changes, restructuring in paperboard, strategic investments, and continued footprint optimization.
- EMEA and APAC: Aiming for adjusted EBITDA increasing from about $1.6 billion in 2025 to around $2.21 billion by 2030, with margins returning to above 16%, based on what management described as conservative market assumptions.
- Latin America: Targeting adjusted EBITDA to $800 million by 2030 with an 11% CAGR and margin increasing to about 28%, with additional upside tied to acquisitions not included in the figures.
Bowles said the plan assumes market growth rates of 1.6% in North America, 1.7% in Europe, and 2% in Latin America, and is based on pricing broadly in line with current levels through the cycle. He also outlined a capital framework that includes $13 billion of total capital expenditure from 2026 to 2030 (about $2.6 billion per year on average), with roughly $9 billion for maintenance and $4 billion for growth. He said the average project is less than $4 million and that no project exceeds $200 million.
In Q&A, management reiterated its “grade agnostic” approach across consumer and corrugated packaging, discussed further actions to rebalance exposure in grades such as SBS following the La Tuque shutdown, and said its value-selling approach in North America is being supported by experience centers and a broader set of design and AI-enabled tools. Smurfit said he would be “very disappointed” if volume and performance did not “lap positively” by this time next year, citing momentum in the company’s sales pipeline and efforts to replace exited low-margin business.
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.
