WestRock released results for its fiscal first quarter, which ended Dec. 31, 2023, but did not host a conference call given its pending acquisition by Smurfit Kappa.
The companies had previously stated that the deal was expected to close during the second quarter this year, but they now expect it to close slightly later, in “early July,” WestRock noted in the earnings release.
WestRock noted that it will not release future guidance during its next earnings report to “avoid a delay in this anticipated timeline.” It notes that the transaction preparations are underway, including regulatory submissions. Upon the deal announcement in September, industry analysts generally did not expect major barriers for regulatory approval. Shareholder approval of the deal is still pending.
Results for fiscal Q1 showed an overall dip in sales, barring an uptick in corrugated packaging sales. The company mostly attributed the decrease to an 18.3% decrease in sales for its global paper segment and a 12.8% decrease in sales for consumer packaging. Those numbers include the impacts from divestitures, including for mills and the remaining stake in RTS Packaging, which WestRock sold to Sonoco in September for $330 million.
“During the quarter, we grew external containerboard shipments, while we felt the impact of lower paperboard market demand,” said CEO David Sewell in a statement. “We continue to expect significantly improved demand in the second half of our fiscal year.”
Net income decline precipitously, which the company attributed partly to increased economic downtime, facility closures and restructuring costs. A Feb. 1 Truist Securities analysis of WestRock’s fiscal Q1 earnings noted that although the company took downtime during the quarter, it was less than during the previous sequential quarter.
In 2023, WestRock repeatedly referenced “restructuring” activities due to low demand and announced a string of closures, including in Tacoma, Washington; Anne Arundel County, Maryland; Columbus, Indiana; Hazleton, Pennsylvania; North Charleston, South Carolina; and St. Louis, among other locations. So far this year the company has announced upcoming facility closures in North Carolina and Washington.