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SW

Smurfit Westrock plc (SW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a mixed print: revenue beat and EBITDA broadly in-line, but EPS missed consensus and full-year EBITDA guidance was trimmed. Net Sales were $8.00B (+4.3% YoY), Adjusted EBITDA was $1.30B (16.3% margin), GAAP Basic EPS was $0.47 and Adjusted Basic EPS was $0.58 . Versus S&P Global consensus, revenue beat by ~$0.11B*, Adjusted EPS missed by ~$0.14*, and EBITDA was modestly below*.
  • Management lowered FY25 Adjusted EBITDA guidance to $4.9–$5.1B (from $5.0–$5.2B), citing a challenging demand backdrop and additional economic downtime in Q4 to optimize the system .
  • Segment performance: North America continued margin expansion (17.2%), EMEA & APAC remained resilient (14.8%), and LATAM delivered strong profitability (21.3%), though LATAM margins dipped slightly due to a one-off operational issue now resolved .
  • Potential stock reaction catalysts: near-term caution from guidance trim and Q4 downtime; medium-term support from synergy program ($400M run-rate exiting 2025), footprint optimization, and capital allocation discipline including 2026 CapEx $2.4–$2.5B .

What Went Well and What Went Wrong

What Went Well

  • North America margin expansion to 17.2% driven by higher pricing, synergy benefits, and value-over-volume discipline; Adjusted EBITDA of $810M for the quarter .
  • Strong operating cash generation ($1.13B) and Adjusted Free Cash Flow ($579M) underscoring cash conversion while investing ahead of depreciation .
  • CEO emphasis on operational improvements and commercial focus: “we delivered in-line with our Adjusted EBITDA guidance... continued operational and commercial improvements in our North American business” .

What Went Wrong

  • Guidance cut and expected Q4 economic downtime (incremental ~$60–$70M EBITDA impact) reflect softer demand and system optimization needs .
  • EPS miss versus consensus as restructuring and integration activities weighed; GAAP Basic EPS $0.47 vs S&P Global Primary EPS consensus ~$0.72* .
  • LATAM margin dipped sequentially due to a one-off operational issue (~$10M impact) before resolution, highlighting operational sensitivities .

Financial Results

Consolidated Results vs Prior Periods and Estimates

MetricQ3 2024 (YoY base)Q2 2025 (Seq base)Q3 2025 ActualQ3 2025 Consensus*Delta vs Consensus*
Net Sales ($USD Billions)$7.67 $7.94 $8.00 $7.89*+$0.11*
Adjusted EBITDA ($USD Billions)$1.27 $1.21 $1.30 $1.32*-$0.02*
Adjusted EBITDA Margin (%)16.5% 15.3% 16.3% ——
Net Income (Loss) ($USD Millions)-$150 -$26 $245 ——
Net Income Margin (%)-2.0% -0.3% 3.1% ——
GAAP Basic EPS ($USD)($0.30) ($0.05) $0.47 ——
Adjusted Basic EPS ($USD)$0.53 —$0.58 $0.72*-$0.14*

Notes: Q3 2025 consensus values and deltas marked with * are Values retrieved from S&P Global.

Segment Performance (Q3)

SegmentNet Sales (Aggregate) ($USD Billions)Adjusted EBITDA ($USD Millions)Adjusted EBITDA Margin (%)Corrugated Volume Δ
North America$4.72 $810 17.2% (8.7%)
EMEA & APAC$2.83 $419 14.8% 0.2%
LATAM$0.55 $116 21.3% 1.1%
Total$8.10 $1,345 ——

Reference YoY: Q3 2024 Adjusted EBITDA by segment: NA $780, EMEA & APAC $411, LATAM $116 .

KPIs

KPIQ3 2024Q2 2025Q3 2025
Net Cash Provided by Operating Activities ($USD Millions)$320 $829 $1,133
Adjusted Free Cash Flow ($USD Millions)$118 $387 $579
Capital Expenditure ($USD Millions)$(512) $(522) $(610)
Dividend per ordinary share ($USD)—$0.4308 $0.4308

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (FY) ($USD Billions)FY 2025$5.0 – $5.2 $4.9 – $5.1 Lowered
Economic Downtime (Q4 impact) ($USD Millions)Q4 2025—~$60 – $70 incremental vs prior plan New/Incremental
Capital Expenditure ($USD Billions)FY 2026—$2.4 – $2.5 New
Capital Expenditure ($USD Billions)FY 2025$2.2 – $2.4 Unchanged commentary; investing ahead of depreciation Maintained
Cash Interest ($USD Billions)FY 2025~$0.7 ~$0.7 Maintained
Cash Tax ($USD Billions)FY 2025~$0.6 ~$0.6 Maintained
Effective Tax Rate (%)FY 2025~26% ~26% Maintained
Dividend per share ($USD)Q3/Q4 2025$0.4308 $0.4308 Maintained
Synergy Run-rate ($USD Millions)Exit 2025$400 (plan) On track for $400 Affirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Owner-operator model, value-over-volumeEmphasis on sharper operating/commercial focus; pipeline of “Quick Wins” Loss-making units cut ~50%; ~70% of corrugated operations now solidly profitable; continued exit of uneconomic volume Strengthening execution
Demand/macro & downtimeQ2 guided Q3 EBITDA ~$1.3B; noted uncertain demand; Q2 downtime costs Additional Q4 economic downtime; guidance trimmed; exit-quarter demand softer than expected Cautious near-term
Pricing & cost bucketsFiber tailwind and energy/labor headwinds discussed Fiber tailwind ~$130–$140M; energy headwind ~$180M; labor headwind ~$180M; downtime headwind $180–$200M Cost relief improving; downtime higher
Segment strategy (NA/EMEA/LATAM)NA margins improving; EMEA resilience; LATAM strong NA margin 17.2%; EMEA operating rates mid-90s, price retention; LATAM margin >21% despite one-off Consistent outperformance
Product mix shift (SBS/CRB/CUK)Footprint optimization, closures incl. CRB capacity ~$100M moved from CRB to SBS/CUK; benefits in brightness/caliper/printability; tariff context acknowledged Accelerating mix upgrade
Capital allocationFY25 CapEx $2.2–$2.4B plan FY26 CapEx $2.4–$2.5B; disciplined, returns-focused; IRR portfolio targeting ~20%+ Stable/investing ahead
Energy/sustainabilityBiomass projects in LATAM in pipeline Covington coal-to-gas conversion approved (IRR 20%+), group CO2 -1.2%; biomass boiler in Colombia near completion Progressing decarbonization

Management Commentary

  • CEO: “we delivered in-line with our Adjusted EBITDA guidance... operational and commercial improvements in our North American business... Adjusted EBITDA of $1,302 million with an Adjusted EBITDA margin of 16.3%” .
  • CFO: “on track to deliver $400 million of full run-rate savings exiting this year... CapEx target for 2026 will be between $2.4 and $2.5 billion, broadly in line with the current year” .
  • Strategy on product mix: “we’ve $100 million or so already transferred [from CRB]... advantages to SBS in brightness, caliper, printability; CUK for freezer strength” .
  • Demand and downtime: “we were expecting to see an uptick in October, and we did not see it... we expect to take additional economic downtime in the fourth quarter” .

Q&A Highlights

  • Q4 downtime impact quantified at ~$60–$70M EBITDA; primarily in North America; inventories and working capital optimization ongoing (target working capital ~mid-teens % of sales over time) .
  • LATAM one-off issue (Colombia digester) cost ~$10M, now resolved .
  • Cost buckets updated: fiber tailwind ~$130–$140M; energy headwind ~$180M; labor headwind ~$180M; downtime headwind $180–$200M .
  • Pricing/demand: Europe containerboard pricing held through Q3 (another ~0.5% up) with operating rates mid-90s; demand trajectory dictates 2026 price path .
  • Capital allocation philosophy: agile, portfolio-based; IRR around ~20% on average across projects; avoid overinvestment to preserve flexibility .

Estimates Context

  • Revenue: Actual $8.00B vs consensus $7.89B → beat of ~$0.11B*.
  • Primary EPS (Adjusted): Actual $0.58 vs consensus $0.72 → miss of ~$0.14*.
  • EBITDA: Company Adjusted EBITDA $1.30B vs S&P Global EBITDA consensus $1.32B*; SPGI’s actual EBITDA tracked at ~$1.27B*, suggesting definitional differences versus company’s Adjusted EBITDA .
  • Estimate breadth: EPS estimates (n=6), revenue estimates (n=9) in Q3; estimates for Q4 and Q1’26 narrower (EPS n=3/2; revenue n=8/4)*.

Notes: All consensus values marked with * are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term: Expect a muted Q4 given additional downtime and softer demand; the guidance trim suggests cautious positioning into year-end despite operational progress .
  • Medium-term: Margin quality improving via value-over-volume execution in NA and resilient integrated model in Europe; synergy program ($400M run-rate exiting 2025) provides structural tailwind .
  • Mix upgrade: Strategic conversion from CRB to SBS/CUK should support profitability and customer value propositions across consumer grades .
  • Cash generation resilience: Strong operating cash flow ($1.13B) and Adjusted FCF ($579M) in Q3 provide ballast amid macro uncertainty .
  • Capital discipline: 2026 CapEx $2.4–$2.5B remains returns-focused; energy projects (Covington coal-to-gas, biomass in Colombia) enhance cost position and reduce CO2 .
  • Regional lens: Watch Germany and broader Europe for demand inflection; LATAM continues to offer growth with strong margin profile post one-off .
  • Catalyst calendar: February 2026 long-term targets and capital allocation details; continued footprint optimization and synergy delivery may reset expectations .