Lewis Roxburgh

Lewis Roxburgh inquired about the expected relief on OCC pricing and other cost buckets like energy, and sought more detail on the 2026 CapEx spend, specifically how much is related to Legacy WestRock assets versus other projects, and if this level represents a new normal.

Answer

CEO Tony Smurfit explained that the CapEx spend is slightly skewed towards Legacy WestRock assets to improve quality and service, aligning with past Smurfit Kappa strategies. CFO Ken Bowles provided updates on cost trends: fiber is a $130 million-$140 million tailwind, while energy and labor are headwinds of approximately $180 million each, and downtime impact is $180 million-$200 million.

Lewis Roxburgh asked about the realization of expected OCC pricing relief and other cost buckets like energy, and sought details on the proportion of 2026 CapEx allocated to legacy WestRock assets versus other projects, and if this CapEx level represents a new normal.

Answer

CEO Tony Smurfit confirmed a slight skew of 2026 CapEx towards legacy WestRock assets to improve quality, service, and corrugators, aligning with past Smurfit Kappa strategies, but noted the European business is already well-invested. CFO Ken Bowles provided updates on cost buckets: OCC pricing relief (tailwind) increased to $130-$140 million, energy headwind reduced to $180 million, labor headwind reduced to $180 million, while downtime impact (headwind) increased to $180-$200 million for the year.

Lewis Roxburgh of Goodbody asked about the potential Q3 impact of tariffs on consumer confidence and demand, and whether Smurfit WestRock sees scope for further capacity closures in its own European operations.

Answer

EVP & Group CFO Ken Bowles noted that the incremental tariff impact is limited and that consumer demand remains the key factor, with no significant changes baked into forecasts. CEO Tony Smurfit added that Smurfit WestRock's European mills are profitable and integrated, so no short-term closures are planned for their own assets, but he expects more closures from non-integrated competitors if current market conditions persist.

Lewis Roxburgh of Goodbody asked about the potential Q3 impact of tariffs on consumer confidence and demand, and whether Smurfit WestRock sees scope for further capacity rationalization in Europe, similar to its recent actions in the U.S.

Answer

EVP & Group CFO Ken Bowles noted that while tariffs may have some impact, the real driver will be overall consumer demand, which remains soft. He doesn't expect major shifts in trade flows. CEO Tony Smurfit added that while the company continuously reviews its portfolio, its European mills are profitable and integrated, making immediate closures unlikely. However, he expects non-integrated competitors to face pressure and potentially shut down capacity.