Smurfit Westrock reported higher third-quarter sales but lower profit, adjusted EBITDA and operating cash flow compared with a year earlier. The packaging company said results reflected significant cost inflation and converting volumes that were weaker than expected.
Management pointed to pricing actions, a sold-out North American containerboard business and ongoing efforts to improve returns. It said the price increases are expected to more than offset higher input costs as they pass through to customers.
Key details
- Sales rose to $8.16 billion for the quarter ended Sept. 30, from $8.00 billion a year earlier.
- Net income fell to $219 million from $245 million. Net margin declined to 2.7% from 3.1%, while basic earnings per share decreased to 42 cents from 47 cents.
- Adjusted EBITDA was $1.21 billion, down from $1.30 billion. Adjusted EBITDA margin narrowed to 14.8% from 16.3%. Adjusted basic earnings per share were 45 cents, compared with 58 cents.
- Cash from operating activities fell to $874 million from $1.13 billion.
- North America generated $760 million of adjusted EBITDA, at a 15.6% margin. The company said it remained sold out in all containerboard grades and most consumer grades in the region, and that its converting businesses were improving.
- Management said it has introduced significant price increases across most paper grades, which it expects to more than offset input-cost inflation as those increases reach customers.
- The company said it is working to improve quality, service, productivity and efficiency, while reducing unprofitable business and optimizing its Corrugated and Consumer operations.
- Smurfit Westrock announced a quarterly dividend of 45.23 cents per ordinary share.
Additional disclosure
The company scheduled a conference call for Oct. 28 to discuss the quarter’s results and provided a presentation for the call.
What changes for investors
The quarter showed modest sales growth alongside lower earnings, margins and operating cash generation. The announced dividend sets the quarterly payout at 45.23 cents per share; no change to the company’s broader dividend policy was described.