Request for quantification or more color on the strength of order books for both paper and corrugated products relative to historical norms.

Paper markets are 'as strong as I've ever seen,' with brown paper grades and SBS systems sold out for the foreseeable future across North America, Europe, and Latin America. Corrugated order books are more nuanced by region, with Latin America generally positive, Europe positive (except for 1-2 markets), and North America flat to slightly positive, driven by internal initiatives. “Our paper markets, Mike, are as strong as I've ever seen. We are in a -- basically, with the exception of 1 small grade that we produce a little bit of with CRB, we're basically sold out in all paper grades.”

Update on the progress of improving returns and margins on the converting side in North America, specifically regarding the reduction of loss-making plants and customer mix.

The company is 'somewhere between first and second base' in its turnaround efforts. The number of loss-making corrugated box plants in North America has been reduced from 80 to around 20, with plans to resolve 10 more. The North American box system is now EBITDA positive, operating at approximately a 3-4% margin. “I'd say we're somewhere between first and second base. I think we're not -- we're off first base, and we're heading towards second and we'll get the second and then will be safe on second and then we'll move on to third and then fourth in the next couple of years.”

Clarification on the current margin of the North American box system and whether the recently announced $100 per tonne price increase is assumed in the 2026 guidance.

The North American box system margin is currently around 3-4% EBITDA positive. The $100 per tonne price increase is not assumed in the 2026 guidance, as its full effect is expected to be realized in 2027. “No, none of that 100 is assumed none that is assumed in the '26 number because by the time it gets implemented, works through the indices and everything else, you're does not a lot last to '26, very much, very much kind of sets a platform foundation for 2027.”

Smurfit Westrock (SW) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Jul 29, 2026

Source: earnings call transcript

Executive summary

Smurfit Westrock Q2 FY26 — Strong EBITDA and Pricing Initiatives Amidst Cost Headwinds

Smurfit Westrock delivered a strong Q2 FY26 performance, marked by resilient adjusted EBITDA and operational improvements across all regions, despite facing substantial and unexpected freight cost inflation. The company is actively implementing pricing initiatives to recover these costs, with full realization expected in 2027, while maintaining a focus on disciplined capital allocation and self-improvement programs.

Highlights

Adjusted EBITDA reached $1.14 billion with a 14.2% margin, demonstrating resilient performance against significant cost increases.
North American paper mill system is fully booked with no commercial downtime anticipated for the remainder of the year.
EMEA and APAC region continues to outperform, with corrugated volumes up 1.9% and mills operating at full capacity.
Latin America delivered another excellent quarter with healthy demand and growing corrugated volumes.
Quality metric in North American corrugated box operations improved by over 25% year-to-date.

Concerns

Significant freight cost headwind of approximately $300 million more than anticipated, primarily due to higher fuel and shipping rates.
Selling price remained a headwind in North America due to pass-through impact of weaker containerboard index pricing and lag in realizing higher index pricing.
Near-term margin compression in EMEA and APAC due to ongoing freight and energy cost inflation.
Full-year adjusted EBITDA guidance revised to $4.9 billion to $5.1 billion, down from previous expectations due to higher freight costs.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Adjusted EBITDA	$4.9 billion to $5.1 billion high materiality	FY26	High
Annual Capital Expenditure (CapEx)	approximately $2.5 billion medium materiality	Annual	High
Capital Expenditure (CapEx)	$2.4 billion and $2.5 billion medium materiality	FY26	High
Quarterly Dividend	$0.4523 per ordinary share medium materiality	Quarterly	High
Containerboard Price Recovery	Full effect felt high materiality	Q3 FY26, Q4 FY26, Q1 FY27	High
EMEA Recycled Board Price Increase	EUR 80 a ton increase medium materiality	September 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
North America Significant operational and commercial progress, mill system generally full, healthy order books, and strengthening commercial momentum. Selling price was a headwind due to weaker containerboard index pricing. North American box system margin is around 3-4% EBITDA positive. Corrugated volumes: down 4.8% (same-day basis)Corrugated volumes: down 4.5% (absolute basis)Quality metric: improved by over 25% (year-to-date)	—	—	—	14.8% (Q2 FY26 Adjusted EBITDA margin), up from 13.3% (Q1 FY26)
EMEA and APAC Outperforming through disciplined commercial execution, strong cost management, and focus on customer service. The integrated nature of the business is a significant competitive advantage. Absorbed ongoing freight and energy cost inflation. Corrugated volumes: up 1.9% (absolute basis)Corrugated volumes: up 1.5% (same-day basis)Mill system: operated at full capacity	—	—	—	Near-term margin compression
Latin America Delivered an excellent quarter with healthy demand across key markets. Benefits from strong market positions and operational improvements delivered through recent investment programs. Presents significant opportunities for future growth. Corrugated volumes: continue to grow	—	—	—	Attractive margins and strong returns

SW operating KPIs by quarter

SW operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Innovation centers	34 With our network of 34 innovation centers across the globe, that innovation offering and sharing of best practice is something our entire global customer base is now benefiting from. Source: earnings call transcript	30+ Smurfit Westrock is converting operations, are network to and connected with our over 30 innovation hubs across the continents and regions. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Significant freight cost inflation 2026

Approximately $300 million more than anticipated (year-on-year)

Mitigation:Pricing initiatives, operational execution, disciplined cost management.

Lag in price recovery for cost pass-through Full recovery into 2027

Cost impact felt immediately, recovery comes through over time.

Mitigation:Ongoing pricing initiatives.

Ongoing energy cost inflation 2026

$220 million to $250 million headwind (year-on-year)

Mitigation:Hedging policy, pricing initiatives.

Logistics issues (availability of transportation) Current

Creates some disruption, contributes to $300 million cost impact.

Mitigation:Managing through it.

What to watch in Q3 FY26

North American Corrugated Volumes

Q3 or Q4 FY26

Current Down 4.8% (same-day basis) in Q2 FY26

Target Positive growth

Why it matters

Indicates success of value-over-volume strategy and new business acquisition.

Our expectation, Gabe, is that either in the third or fourth quarter, we will be better in volumes than last year. And certainly, in talking to the folks in North America, we would expect to see positive months coming up in August and maybe even September.

Find out whether SW delivers this. Inve re-checks your case every morning.

Q&A highlights

Clarification on North America gross price realization given the bridge, and expectations for corrugated volume inflection in the second half of the year, including specific strong markets.

Pricing in Q2 was offset by weaker paperboard index pricing (SBS), but corrugated pricing initiatives are gaining momentum for Q3/Q4. The company expects positive corrugated volumes in Q3 or Q4 due to new business wins and easier comparisons, with August and September looking positive. Overall, Latin America is positive, Europe is positive (except 1-2 markets), and North America is flat to slightly positive.

“Our expectation, Gabe, is that either in the third or fourth quarter, we will be better in volumes than last year. And certainly, in talking to the folks in North America, we would expect to see positive months coming up in August and maybe even September.”

asked by Gabe Hajde · answered by Anthony P. J. Smurfit

2 min read 6 chapters

Detailed narrative

Operational Excellence and Cost Management

Smurfit Westrock continues its focus on cost takeout through asset optimization, including closures in North America and EMEA/APAC, such as a long-standing asset in the U.K. The owner-operator model is showing considerable progress, driving cultural and operational change. The company is also leveraging its global knowledge and innovation, with experience centers and over 2,000 designers worldwide, to enhance customer offerings.

Regional Performance Highlights

North America demonstrated progress across all areas, with the paper mill system fully booked and pricing initiatives implemented. The EMEA and APAC region continues to outperform through disciplined commercial execution, strong cost management, and full mill capacity. Latin America delivered an excellent quarter, benefiting from healthy demand, strong market positions, and operational improvements from recent investments, presenting significant opportunities for future growth.

Market Conditions and Pricing Strategy

Market conditions for practically all paper grades are described as 'as tight as I can remember' and a 'significantly stronger and better operating environment,' providing a strong fundamental backdrop. The company has implemented pricing initiatives to recover significant input costs, particularly freight, acknowledging a natural lag before these actions are fully reflected in earnings.

The current price increases are seen as price recovery rather than new increases, especially in the SBS market.

Capital Allocation and Balance Sheet Strength

Smurfit Westrock maintains a disciplined, return-focused capital allocation approach, prioritizing internal investment as the lowest risk and highest quality use of capital. The company expects strong free cash flow generation over the coming years and is committed to maintaining a strong investment-grade credit rating, currently holding Baa2 from Moody's (positive outlook), BBB from S&P (stable outlook), and BBB+ from Fitch (stable outlook).

Corrugated Box Operations Improvement

Significant progress has been made in improving the North American corrugated box operations, reducing the number of loss-making plants from an initial 80 to approximately 20. The focus on innovation and customer service is attracting new business, and quality metrics have improved by over 25% year-to-date. The North American box system is now EBITDA positive, operating at around a 3-4% margin.

Integration and Future Outlook

The integration of Smurfit and WestRock is progressing well, with teams in place and best practice knowledge transfer accelerating across regions. The company is confident in its ability to execute its strategic plan, setting a strong platform for cost recovery and enhanced returns in the second half of 2026 and into 2027, aiming to build a stronger, better, and more resilient company.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.