International Paper (NYSE:IP) reported second-quarter operational progress as it worked through a heavy maintenance outage schedule, completed a key machine conversion and advanced restructuring efforts in Europe. The company said execution was stronger than expected despite softer demand in some markets, higher costs and the temporary shutdown of its Pine Hill mill for structural roof repairs.
Chairman and Chief Executive Officer Andy Silvernail said the company’s priorities for 2026—improving reliability, simplifying operations, strengthening its cost structure and investing in higher-value assets—were progressing as planned.
North American volumes and mill performance improve
North American box volumes increased 1.7% year over year on a daily basis during the second quarter. Silvernail said International Paper expects to outperform the broader industry by about 2% for the full year, attributing the growth to customer relationships and new business wins.
The company also reported a roughly 500-basis-point year-over-year improvement in mill performance, with stronger capacity utilization across its system. International Paper has been simplifying its mill network, closing or exiting lower-returning operations and directing investment toward selected assets.
Packaging Solutions North America generated $425 million in adjusted EBITDA in the second quarter. Compared with the first quarter, favorable price and mix contributed $37 million, while volume contributed $16 million. Operations and costs were $1 million favorable, helped by improved mill performance, an insurance recovery related to Ixtoc and the absence of first-quarter winter storm effects.
Those gains were offset in part by $127 million of unfavorable maintenance-outage costs. Chief Financial Officer Lance Loeffler said the quarter included roughly twice the company’s normal outage activity, as well as conversion and reliability work at the Riverdale mill.
International Paper completed the Riverdale machine conversion on time. The ramp-up is expected to be largely completed by the end of 2026, with the machine reaching its full run rate in the first quarter of 2027.
Pine Hill shutdown expected to weigh on third quarter
The company suspended operations at its Pine Hill mill to complete structural roof repairs and expects the facility to return to operation by the end of August. International Paper forecast an approximately $85 million third-quarter impact before anticipated insurance recoveries.
Silvernail said the company has reduced export sales and redirected production toward serving core customers during the outage. He acknowledged that July and August would be tight for the company’s supply network and the broader market but said International Paper expects to recover relatively quickly after the mill resumes operations.
For the third quarter, International Paper projected Packaging Solutions North America adjusted EBITDA of approximately $555 million to $585 million, including the Pine Hill impact. The company expects favorable price and mix, operating improvements from Riverdale and a contribution from the recently acquired NORPAC mill to help offset higher old corrugated container, or OCC, and energy costs.
International Paper acquired NORPAC in June. Silvernail said the mill, located in Longview, Washington, expands the company’s ability to supply lightweight packaging grades and improves its West Coast distribution position. Operations at NORPAC had temporarily slowed following a May incident at a neighboring Nippon facility that reduced steam supply, but Silvernail said the mill had returned to pre-incident operating levels.
EMEA restructuring and separation efforts advance
Packaging Solutions EMEA delivered $182 million in adjusted EBITDA during the second quarter, ahead of the company’s expectations. Results were affected by softer demand tied to geopolitical uncertainty and consumer sentiment, as well as pressure from higher paper and distribution costs.
International Paper expects third-quarter adjusted EBITDA for Packaging Solutions EMEA of approximately $230 million to $250 million. The outlook assumes improved price and mix as prior paper price increases flow through box contracts, seasonal volume improvement, customer wins, continuing cost reductions and lower distribution costs.
The company said it has announced more than $210 million of run-rate footprint and cost-savings actions in EMEA. These actions include 31 manufacturing facilities and a central office that have closed or are in the process of closing, with net reductions of more than 3,000 positions expected. About half of planned equipment moves have been completed, according to Silvernail.
International Paper is also pursuing investments in its EMEA operations, including a new lightweight recycled containerboard machine in Lucca, Italy, expected to come online in the third quarter; consolidation of smaller German facilities into more efficient plants; and capacity expansion in Romania.
The planned separation of the EMEA packaging business remains on schedule, Silvernail said. The company is establishing governance, legal, operational and technology infrastructure and advancing transaction documents. He added that International Paper’s focus remains on completing the separation, though the company would consider an appropriate alternative proposal consistent with its fiduciary responsibilities.
Full-year outlook revised amid macro pressures
International Paper reaffirmed expectations for a significant second-half improvement, supported by pricing realization, Riverdale’s ramp-up, cost-reduction initiatives and the completion of major planned outages. The company set its full-year adjusted EBITDA outlook at $2.35 billion to $2.45 billion, reducing the top end by approximately $50 million due primarily to the macroeconomic environment and the prolonged effects of the Middle East conflict.
Loeffler said the company now expects macro headwinds of roughly $150 million, compared with an earlier estimate of about $50 million. The higher figure reflects elevated transportation spot rates, OCC and diesel costs, and employee medical expenses.
Second-quarter free cash flow was negative $7 million as the company used cash from operations to fund transformation initiatives and capital investments totaling $533 million. International Paper said it expects to continue investing aggressively in North America over the next two to three years, focusing on lower-cost operations, more integrated paper and box production, and improved customer responsiveness.
About International Paper (NYSE:IP)
International Paper is a global producer of renewable fiber-based products, focused primarily on pulp, paper, and packaging. The company manufactures containerboard and corrugated packaging used for shipping and retail display, as well as a range of specialty papers and pulp products that serve industrial, consumer goods, and e-commerce customers. Its product portfolio is oriented toward large-scale packaging solutions, tissue and paper grades, and raw pulp for a variety of manufacturing uses.
Founded in 1898, International Paper is headquartered in Memphis, Tennessee, and is one of the largest and longest-established companies in the forest products sector.
