Smurfit Westrock Reports 3Q 2024 Financial Results

Smurfit Westrock plc announced the financial results for the third quarter ended Sept. 30, 2024.

Key Points:
• Net sales of approximately $7.7 billion
• Net loss of $150 million, with a net income margin of negative 2.0% 
• Adjusted EBITDA of $1,265 million, with an adjusted EBITDA margin of 16.5%.
• Continuing focus on asset optimization
• Previously announced quarterly dividend of $0.3025 per ordinary share

“I am pleased to report an excellent performance for the third quarter, the first for Smurfit Westrock,” said Tony Smurfit, president and CEO. “The net loss for the quarter of $150 million was primarily due to transaction related expenses and purchase accounting adjustments totaling approximately $500 million. With adjusted EBITDA of $1,265 million and an adjusted EBITDA margin of 16.5%, these results are a strong foundation to build upon.

“Our established track record of delivering value to our customers through service, quality and innovation is already beginning to yield results. Equally, we believe our focus on plant level autonomy, operational improvement and profitability will deliver in time, benefits at least equal to the stated synergy target of $400 million,” he noted.

“Our third quarter performance, combined with our deeper knowledge of the combination and continuing asset optimization, clearly points to the opportunities ahead for Smurfit Westrock,” Smurfit added. “We are at the start of our journey to build the ‘go-to’ sustainable packaging partner of choice, a global leader with an unrivalled scale, geographic reach and product portfolio. Having spent the last number of months visiting our plants, it is also clear that our people are excited and motivated to be a part of this journey. We expect 2024 full year combined adjusted EBITDA of approximately $4.7 billion and we are increasingly excited by our immediate and longer-term prospects.”

Smurfit Westrock’s net sales increased by $4,756 million, to $7,671 million in the third quarter of 2024 from $2,915 million in the third quarter of 2023. This increase was primarily due to the positive impact from acquisitions of $4,693 million, of which $4,684 million related to the acquisition of WestRock, and a net positive volume impact of $98 million (excluding the impact of acquisitions), primarily driven by an increase in corrugated volumes.

Net income decreased by $379 million, to a net loss of $150 million, with a net income margin of negative 2.0% in the third quarter of 2024, from net income of $229 million, with a net income margin of 7.8% in the third quarter of 2023.

This decrease was primarily due to a $4,148 million increase in cost of goods sold (including an expense of $227 million for the amortization of the fair value step up on inventory recognized on WestRock’s inventory acquired) and a $657 million increase in selling, general and administrative (SG&A) expenses, both driven by additional costs related to the acquisition of WestRock. Additionally, transaction and integration-related expenses associated with the combination increased by $250 million. These increased costs were partially offset by the increase in net sales.

Adjusted EBITDA for the company was $1,265 million, with an adjusted EBITDA margin of 16.5% in the third quarter of 2024, compared to adjusted EBITDA of $525 million, with an adjusted EBITDA margin of 18.0% in the third quarter of 2023.

Including capital expenditure of $512 million in the third quarter of 2024, and $202 million in the same period last year, free cash flow was an outflow of $192 million in the third quarter of 2024 and an inflow of $176 million in the third quarter of 2023.

Adjusted EBITDA for the Europe, MEA and APAC segment remained at $411 million in the third quarter of 2024, consistent with the same period in 2023. This was primarily due to a $37 million positive impact from the acquisition of WestRock offset by a reduction in adjusted EBITDA (excluding the impact of acquisitions) primarily due to an increase in raw material, payroll and distribution costs, partially offset by an increase in net sales and a decrease in energy costs.

Adjusted EBITDA for the North America segment increased by $714 million, to $780 million in the third quarter of 2024, from $66 million for the third quarter of 2023. This increase was primarily due to a $724 million positive impact from the acquisition of WestRock partially offset by a $10 million decrease in adjusted EBITDA (excluding the impact of acquisitions) primarily due to an increase in raw material costs.

Adjusted EBITDA5 for the LATAM segment increased by $42 million, to $116 million in the third quarter of 2024, from $74 million for the third quarter of 2023. This increase was primarily due to a positive impact of $56 million from the acquisition of WestRock partially offset by a reduction in adjusted EBITDA (excluding the impact of acquisitions) primarily due to an increase in payroll and other costs.