Smurfit Westrock has lowered its full-year earnings target, driven by the impact of a spike in energy and freight costs.
The Dublin-based cardboard box maker now expects to deliver adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) between $4.9 billion (€4.3 billion) and $5.1 billion this year, having previously guided towards a result between $5 billion and $5.3 billion, it said on Wednesday.
Smurfit Westrock now sees full-year freight costs coming in $300 million above 2025, with energy costs expected to be $200 million higher.
Ebitda for the second quarter dipped 6 per cent to $1.14 billion, at the lower end of its projected range between $1.1 billion and $1.2 billion. Net sales rose 1.1 per cent to $8.03 billion.
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“The quarter was impacted by significantly higher input costs, particularly freight, which we managed to mitigate through our actions. Positively, demand for paper remained strong throughout the quarter with a generally excellent supply/demand backdrop,” said chief executive, Tony Smurfit. “We fully expect to recover input cost inflation through the second half of the year and beyond.”
Shares in the group slumped as much as 7.2 per cent in early trading on Wall Street. Still, they remain up by about a fifth so far this year, having recovered much of the ground lost last year when there had been a sell-off across packaging stocks.
“The revised [Ebitda] range compares with current market consensus of $5.09 billion, leaving consensus towards the upper end of the new guidance range,” said Goodbody Stockbrokers analyst Lewis Roxburgh.
The group was formed two years ago by the merger of Smurfit Kappa and US-based peer Westrock. It dropped its Irish stock market quotation as it assumed Westrock’s New York listing as its main one. It cancelled its secondary listing in London last month.
Much of the rationale behind the merger lies in Smurfit and his senior executives turning around the underperforming Westrock assets. A recent report by analysts at Bank of America estimated that the group has reduced the number of loss-making Westrock plants from an initial 70 per cent at the time of the tie-up to about 30 per cent, by management instilling a “performance-led culture” that was already a feature of Smurfit Kappa.
While the group has also had to grapple with a downturn in the packaging industry following the merger, this has been partly offset by Smurfit Westrock and rivals taking a significant amount of capacity out of the North American market in particular over the past 18 months.
Freight costs have surged this year as conflict in the Middle East has driven up fuel prices. There has also been a fall in the number of available truck drivers as US president Donald Trump’s administration has intensified enforcement of English language proficiency requirements for commercial drivers.
“In the two years since the formation of Smurfit Westrock, we have driven a significant cultural and operational shift in our business,” said Smurfit. “I have always believed that our strongest differentiators are the commitment and dedication of our people and the strength of our culture.”
Smurfit Westrock set out medium-term targets in February, including for Ebitda to grow at a compound annual rate of about 7 per cent a year out to 2030, when it is forecast to reach $7 billion.
