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By the numbers: Q1 2025
Net sales: $5.9B
Up 27.8% year over year
Net sales packaging North America: $3.7B
Up 6.2% year over year
Net sales packaging EMEA: $1.66B
Up 345.4% year over year, following DS Smith acquisition
Net loss: $105M
Compared with a net earnings of $56M in Q1 2024
- M&A boost: International Paper’s first quarter 2025 results showed higher sales and earnings, which it largely attributes to the January acquisition of London-based DS Smith. Still, both the North American and European packaging markets are showing demand weakness, said CEO Andy Silvernail on Tuesday’s earnings call.
- Year in review: Silvernail reflected on the company’s transition during his one year as IP’s CEO, a position he assumed on May 1, 2024. He detailed the company’s “step-change improvement” in performance, including from the 80/20 optimization strategy he launched last year. Plus, cost reductions have helped, including numerous facility closures. “Hopefully what you're seeing now is predictability and repeatability of the message because of the actions that we're taking to control our own destiny,” Silvernail said, reiterating the focus on “controlling what we can control.”
- 80/20 progress: Executives updated progress on bringing the 80/20 strategy to DS Smith’s European facilities, a move that executives announced in March during IP’s investor day. By mid-summer, IP will have initiated “the full ramp of initial 80/20 launches through every region in Europe,” Silvernail said, mentioning that he spent 10 weeks in Europe at the beginning of the year to “get that off on the right foot.” He also highlighted the irrelevance of whether the company improvements are specifically coming from 80/20 measures or synergies. “I don't care, right? We're talking about improvement and [getting] better, and the last thing we’re going to do is get caught” up in who owns which impacts, he said.
- Economic uncertainty: IP shifted some of its expectations for the coming quarters, based on shaky conditions across the broader economy. While it originally anticipated a solid U.S. economy this year and improvements in Europe, the new projection is for softer industrial production driven by weaker consumer demand. It tamped down the previous prediction of 1% to 1.5% demand growth in North America to demand that is flat to down approximately 1.5% year over year. “The external world is a little wild right now,” Silvernail said. “If we see meaningful weakness from here, it’s going to stretch us.”
- Outlook: If weakness continues, “there are a handful of levers” IP will pull, Silvernail said, such as accelerating its cost reduction strategy and reevaluating production capacity. Despite the weaker box demand, International Paper still expects to fall within its targeted range for 2025 earnings of $3.5 billion to $4 billion in adjusted earnings before interest, taxes, depreciation and amortization. So far in April, the company has seen demand stabilize compared with where it was in February and March, Silvernail said. “We just don't know where the market is going to be, given the chaos that's been out there,” he said. “We will accelerate and pivot based on what the market gives us, with an eye towards our long-term strategy.”
