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By the numbers: Q1 2026
Net sales: $5.97B
Up 13.4% compared with Q1 2025, the quarter the DS Smith acquisition closed
North America packaging net sales: $3.63B
Down 2.1% compared with Q1 2025
EMEA packaging net sales: $2.32B
Up 49.9% compared with Q1 2025
Net profit: $76M
Compared with a $124M net loss in Q1 2025
- Overview: International Paper faced difficult macroeconomic conditions, including inflation, during the first quarter, executives said during a Thursday earnings call. Overall market demand was softer than expected to start the year, said CEO Andy Silvernail. However, “January in the U.S. was really strong,” he said, in part because of the industry’s nearly 10% production capacity cuts announced in 2025. “And now we're kind of seeing the market in the U.S. is basically flat.”
- Unexpected factors: Several conditions that emerged unexpectedly in the first quarter negatively impacted the business, executives explained. Impacts from geopolitical factors such as the conflict in the Middle East are bumping up costs, especially for freight, and ongoing uncertainty clouds longer-term visibility. “I'm coming up on my two-year anniversary,” Silvernail said. “Global trade war and bombing Iran — I would not have had those on my bingo card.” Severe weather in late January also hit operations and shipments, causing $53 million in costs, said CFO Lance Loeffler.
- Transformation and cost cuts: IP implemented its 80/20 business optimization plan in the Europe, Middle East and Africa business later than in North America, and to date that segment has experienced more than $200 million in run-rate savings. There have been 31 facility closures and more than 2,800 positions eliminated there. IP is evaluating additional cost-out measures including footprint reduction in that region. Overall, the company has had to make tough decisions about cuts to re-invest in the business, Silvernail said. “I’m not going to back down on that strategy. ... It’s damn messy as we’ve gone through this. But we’re doing the right things.”
- Investments: Executives confirmed that IP is accelerating investments in its network. That includes upgrades to box plants as well as greenfield projects, such as the March announcement about building a new $225 million box plant in Mississippi that’s expected to open in Q4 2027. IP also announced in Q1 that it would acquire Washington-based North Pacific Paper Co. from private equity firm One Rock Capital Partners for $360 million. The location will complement IP’s network and boost efficiencies. “We're significantly short paper on the West Coast; we’re shipping paper to the West Coast uneconomically,” Silvernail said.
- Company split update: IP is progressing on its announced plan to split into two geographic regions, one in North America and one in EMEA. IP will retain a 20% ownership stake in the EMEA spinoff company for 12 to 18 months after the split, Silvernail said. Timing for deal close remains 12 to 15 months from the January announcement. “This move is the right step to accelerate value creation for both businesses,” he said.
- Pricing: Price increases are a key strategy intended to help recover some higher costs, especially from freight and OCC. The company had announced a $70 per ton increase on containerboard prices to take effect in March, with Fastmarkets RISI recognizing a $50 per ton net increase to date. IP expects pricing to benefit the North American business by $175 million for the year. Benefits are expected to start showing up in July, but especially should be reflected in second-half results, executives said.
- Market conditions: When an analyst pointed out that Smurfit Westrock on Tuesday announced another $50 per ton increase to take effect in June, Silvernail responded: “We have not announced an increase yet, but we don't really talk about future stuff.” The analyst suggested that the containerboard market so far hasn't showed the anticipated tightness from the industry’s nearly 10% cuts that would support price hikes, but Silvernail reiterated that "the paper market in the U.S. is very tight."
- Outlook: IP lowered its guidance for the year in light of market conditions. It now projects North America business adjusted earnings before interest, taxes, depreciation and amortization for 2026 will be $2.35 billion to $2.5 billion, down from $2.5 billion to $2.6 billion. EMEA adjusted EBITDA is now $900 million to $1 billion, down from $1 billion to $1.1 billion. The company expects volumes to be up 3% in Q2. Due to challenging conditions, full-year demand expectations now are flat instead of the previous projection of flat to up 1%.
