- Q3 results: International Paper’s third-quarter earnings were “above our outlook,” according to a statement by CEO Andy Silvernail. This was driven by higher pricing and other strategies. During a Thursday earnings call, Silvernail also outlined early results from his “80/20” business strategy rethink.
- Industrial packaging: Profit in this segment declined, despite higher sales prices, due to 9% lower U.S. box shipment volumes and higher operating costs. IP did see a $70 million benefit from higher pricing indexes taking effect, as well as $17 million from its box go-to-market strategy and $18 million from exports. Silvernail said he expects volumes to return to a market growth pattern by later in 2025.
- Plant closures: IP announced plans to close one mill in South Carolina and conduct a full strategic review of the global cellulose fiber business. This followed the recent announcement of five other plant closures in its packaging business. The company expects to see a $230 million improvement in adjusted earnings before interest, depreciation and amortization as a result of these closures, excluding one-time costs.
- Production rethink: Silvernail said two recent pilots, in which the company had certain facilities focus on volume and others focus on mix, led to a 20% to 30% improvement in output during the early stages and “there’s opportunity to apply this approach across our national box network.” He estimated such opportunities could exist in around half of the 20-plus regions that IP currently manages.
- Corporate reorg: IP recently completed a corporate restructuring to decentralize operations, meaning an estimated 226 people are now considered part of the “corporate center” at IP’s Memphis headquarters versus a prior 2,600. Silvernail clarified that some of these people are still with the company; a prior announcement noted at least 400 layoffs. The company also conducted management trainings on the 80/20 system and updated its sales incentive structure.
- DS Smith acquisition: Timing on this transaction, which was originally targeted to close by the end of 2024, has shifted to “early” Q1 of 2025 as regulatory reviews continue. Silvernail said integration planning is underway and announced that IP’s CFO Tim Nicholls will serve as interim leader of the combined Europe, Middle East and Africa team post-close.
- Future investments: Silvernail also previewed plans to reinvest some of the recent cost savings into new greenfield or brownfield box plants. He said the company had “multiple opportunities” to do this and will share more details in 2025. “As long as our strategy is going in the right direction we’re not going to be scared about investing,” he said.
DS Smith deal close pushed to 2025 as IP touts early results from its own turnaround plan
CEO Andy Silvernail provided numerous updates on a company rethink that has involved site closures, a large corporate restructuring and operational changes.
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