Q1 2025 Smurfit WestRock PLC Earnings Call

May 1, 2025

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Operator: Good day, and thank you for standing by. Welcome to the Smurfit Westrock 2025 Q1 Results Webcast and Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Ciaran Potts, Smurfit Westrock Group VP, Investor Relations. Please go ahead.

Speaker Change: Good day, and thank you for standing by and welcome to the smart bit westward towards 25, Q1 results webcast and conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. It's ask a question. During the session you will need to press star one on your telephone he doesn't have an old plan.

Karen Potts: Did message advising hundreds Reyes please be advised that today's conference is being recorded I would now like to turn the conference over to Karen Potts Smurfit Westwater Group VP Investor Relations. Please go ahead.

Ciarán Potts: Thank you, Sharon. As a reminder, statements in today's earnings release and presentation and the comments made by management during this call may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our SEC filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release and in the appendix to the presentation, which are available at investors.smurfitwestrock.com.

Speaker Change: Thank you Sharon.

Speaker Change: As a reminder, statements in today's earnings release and presentation and the comments made by management during this call.

Speaker Change: May be considered forward looking statements.

Speaker Change: These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections.

Speaker Change: These risks and uncertainties include but are not limited to the factors identified in the earnings release and in our SEC filings.

Speaker Change: The company undertakes no obligation to revise any forward looking statements.

Speaker Change: Today's remarks also refer to certain non-GAAP financial measures reconciliations to the most comparable GAAP measures are included in today's earnings release and in the appendix to the presentation, which are available at investors thought smurfit restaurant Dot com.

Ciarán Potts: Before handing over to Tony, I would ask that you limit your questions to two, and, should you require any clarifications on what we are discussing today, myself and Frank will make ourselves available after the call. I will now hand you over to Tony Smurfit, CEO of Smurfit Westrock.

Speaker Change: Before handing over to Tony I would ask that you limit your questions to two and should you require any clarifications on what we are discussing today myself and Frank will make ourselves available. After the call I will now hand, you over to Tony for Murphy CEO of Mercury Glasscock, Thanks, Karen and good morning, good afternoon everybody.

Tony Smurfit: Thanks, Ciaran, and good morning, good afternoon, everybody. I'm joined here today by Ken Bowles, our CFO, and I'm delighted to again report a strong first quarter performance across all of our regions, in line with our stated guidance. I'm particularly happy at the structural improvement we have shown in our North American region, which you will all recall, is in the early days of our integration together. Our EMEA and APAC regions' performance was good, given the environment was somewhat challenging, while our Latin American region performed very well, driven by our value approach. I'm delighted to say that our synergy program also remains strongly on track, and is expected to deliver $400 million of promised synergies within the tight timeframe we have set.

I'm joined here today by Campbell, our CFO and I am delighted to again report a strong first quarter performance across all of our regions in line with our stated guidance.

Speaker Change: I am, particularly happy at the structural improvements we have shown in our North American region, which you will all recall is in the early days of our integration together.

Speaker Change: Our EMEA and APAC regions performance was good given the environment with somewhat challenging while our Latin American region performed very well driven by our value approach.

Speaker Change: I'm delighted to say that our synergy program also remains strongly on track and is expected to deliver the 400 million of promised synergies within the tight tight timeframe we have set.

Tony Smurfit: Moreover, having put the two businesses together, we now see very significant operational improvements that will garner at least the same again in additional benefits. This is something the team is working on day in and day out, to ensure that Smurfit Westrock continues with the objective of becoming the highest performing company in our sector. As you're all aware, we in the management team are all stakeholders in the company, and through the lens of being owner-operators and treating capital as our own, we continue to review our asset base at all times, both through investment and return on capital, optimizing our system to ensure that our assets are, and will be, in the future, best in class. We are relentless in our pursuit of excellence, and will continue to adjust and develop our asset base as we go forward.

Speaker Change: Moreover, having put the two businesses together, we now see very significant operational improvements that will garner at least the same again in additional benefits.

Speaker Change: This is something the team is working on day in day out to ensure that smurfit West rock continues with the objective of becoming the highest performing company in our sector.

Speaker Change: As you are all aware, we and the management team are all stakeholders in the company and through the lens of being owner operators and treating capital as our own we continue to review our asset base at all times, both through investments and return on capital optimizing our system to ensure that our assets are and will be in the future best in class.

Speaker Change: We are relentless in our pursuit of excellence and we will continue to adjust and develop our asset base as we go forward.

Tony Smurfit: We have proven over the years that we are effective stewards of capital, having successfully navigated many different challenges over the decades. The key to the development of Smurfit Westrock will be ensuring that we have a well-invested asset base that can be developed for the benefit of our customers, to ensure the best quality, the best service, the best innovation, and the highest standards to give our customers and our business leaders the chance to win in their marketplaces. As such, we'll continue to invest in our asset base to ensure these objectives are met. Across our regions, we're reducing our cost base in our paper mill systems, investing to improve reliability and output, and ensuring we have the best converting machines available to meet the needs of our modern customers.

Speaker Change: We have proven over the years that we are an effective stewards of capital having successfully navigated many different challenges over the decades.

Speaker Change: The key to the development of Smurfit West rock will be ensuring that we have a well invested asset base that can be developed for the benefit of our customers to ensure the best quality. The best service the best innovation and the highest standards to give our customers and our business leaders the chance to win in their marketplaces.

Speaker Change: As such we will continue to invest in our asset base to ensure these objectives are met.

Speaker Change: Across our regions, we're reducing our cost base in a paper mill systems investing to improve reliability and output and ensuring we have the best converting machines available to meet the needs of our modern customers.

Tony Smurfit: We have recently authorized an initial investment of around 25 converting machines across our system to begin implementation in 2026, which will also help to lower our operating costs so that our shareholders can be rewarded for these investments. We remain excited about the number of opportunities we see to continually optimize our system for growth, but also for cost takeout. In line with all of that, and as and when appropriate, we continue to look at rationalization opportunities within our system. While these are very difficult decisions to make, it is entirely in line with our philosophy of ensuring that our stronger assets get stronger, while at the same time increasing operating efficiency.

Speaker Change: We have recently authorized an initial investment of around 25 converting machines across our system to begin implementation in 2026.

Speaker Change: Which will also help to lower our operating costs, so that our shareholders can be rewarded for these investments.

Speaker Change: We remain excited about the number of opportunities we see to continually optimize our system for growth, but also for cost takeout.

Speaker Change: In line with all of that and as and when appropriate we continue to look at rationalization opportunities within our system.

Speaker Change: And while these are very difficult decisions to make it is entirely in line with our philosophy of ensuring that our stronger assets gets stronger while at the same time, increasing operating efficiency.

Tony Smurfit: In the last 48 hours, we've announced the closure of over 500,000 tons in paper capacity in the US, which, coupled with the recent actions in Mexico and the Netherlands, totals nearly 600,000 tons. These actions will make the company stronger as we invest to ensure better, longer-term returns across our business units. I remain very excited about the combination we created some 10 months ago. We have an unrivaled geographic scale, operating in 40 countries and many different product areas where we have strong leadership positions. What has been heartening in such a short period of time is to see the improvement in our North American business, where our commercial approach and the focus on plant-level autonomy has been embraced and is contributing to improved margins.

Speaker Change: In the last 48 hours, we've announced the closure of over 500000 tons and paper capacity in the U S, which coupled with the recent actions in Mexico, and the Netherlands totaled nearly 600000 tonnes.

Speaker Change: These actions will make the company stronger as we invest to ensure better longer term returns across our business units.

Speaker Change: I remain very excited about the combination we created some 10 months ago.

We have an unrivaled geographic scale operating in 40 countries and many different product areas, where we have strong leadership positions.

Speaker Change: What has been heartening in such a short period of time is to see the improvements in our North American business, where our commercial approach and the focus on platts level autonomy has been embraced and is contributing to improved margins.

Tony Smurfit: At the same time, in North America, we have streamlined our operations and have significantly reduced SG&A costs by a reduction of over 1,800 people, and this being prior to the recent announcements. In our European market, which is currently on an improving trend, we continue to have industry-leading returns with our innovative and sustainable packaging offering. With a very well-invested asset base and highly motivated people, we have many exciting growth projects in certain regions and certain business areas, while at the same time continuing to tackle our cost base. With regard to our LatAm business, you will see that we continue to execute as a result of our leadership positions and our market-facing approach. We continue in Smurfit Westrock to see obvious cost takeout opportunities.

Speaker Change: At the same time in North America, we have streamlined our operations and have significantly reduced SG&A costs by a reduction of over 1800 people and this being prior to the recent announcements.

Speaker Change: In our European market, which is currently on an improving trend we continue to have industry, leading returns with our innovative and sustainable packaging offering.

Speaker Change: With a very well invested asset base and highly motivated people, we have many exciting growth projects in certain regions and certain business areas. While at the same time continuing to tackle our cost base.

Speaker Change: With regard to our Latam business, you will see that we continue to execute as a result of our leadership positions and our market facing approach.

Speaker Change: We continue smurfit west rock to see obvious cost takeout opportunities.

Tony Smurfit: I have authorized us to implement close to 140 quick win projects, as we call them, that will deliver around $50 million of extra EBITDA in the North America region, and over 60 projects in the European and Asia Pacific region, which will deliver $20 million in 2026 and beyond. These projects give guaranteed cost takeouts, with IRRs ranging from 25% to 150%. In Latin America, we remain focused on expansion, where we see an opportunity, especially in our Brazil market, to grow rapidly with new facilities in different parts of the country. I'll now hand you over to Ken, who will take you through our financials.

Speaker Change: I have authorized us to implement close to 140 quick wind projects as we call them that will deliver around $50 million of extra EBITDA in the North American region.

Speaker Change: And over 60 projects in the European and APAC region, which will deliver $20 million in 2006, and 2026 and beyond.

Speaker Change: These projects get guaranteed cost takeouts with IRR, ranging from 25% to 150%.

Speaker Change: In Latin America, we remain focused on expansion, where we see an opportunity, especially in our Brazilian market to grow rapidly with new facilities in different parts of the country.

Speaker Change: I'll now hand, you over to Ken who will take you through our financials.

Ken Bowles: Thank you, Tony. Good morning and good afternoon, everyone, and thank you again for taking the time to join us. As you can see from the highlights here on slide 9, the business delivered a strong Q1 performance with net sales of over $7.6 billion. Adjusted EBITDA in line with our guidance of $1.252 billion, and an adjusted EBITDA margin of 16.4%. This is a significant improvement compared to the combined performance of the business for the same period last year, showing double-digit growth in adjusted EBITDA for the group and an improvement in our adjusted EBITDA margin. The performance reflects not only our relentless focus on cost, quality, and efficiency, but the incremental benefits of our synergy program and some early-stage benefits of our operational changes...

Ken: Thank you Tony Good morning, and good afternoon, everyone and thank you again for taking the time to join us.

Speaker Change: As you can see from the highlights here on slide nine the business delivered a strong first quarter performance with net sales of over seven 6 billion.

Speaker Change: Adjusted EBITDA in line with our guidance of one to $2 2 billion.

Speaker Change: And adjusted EBITDA margin of 16, 4%.

Speaker Change: This is a significant improvement compared to the combined performance of the business for the same period last year, showing double digit growth in adjusted EBITDA for the group and an improvement in our adjusted EBITDA margin.

Speaker Change: The performance reflects not only our relentless focus on cost quality and efficiency, but the incremental benefits of our synergy program and some early stage benefits of our operational changes.

Ken Bowles: including our operating model, and all underpinned by our strategy of value over volume. As Tony has outlined, we are well on our way now as a combined business, and while the geopolitical outlook is uncertain at this moment in time, we are confident in the future success of Smurfit Westrock, thanks to the unrivaled geographic footprint and product portfolio, our experienced management team, and the dedication and commitment of our people to our customers. Packaging, at the end of the day, is a local business, and with the vast majority of our business operating in the FMCG sector, we are, and have proved to be in the past, a highly resilient business.

Speaker Change: Including our operating model and all underpinned by our strategy of value over volume.

Speaker Change: As Tony has outlined we are well underway now as a combined business and while the geopolitical outlook is uncertain at the moment at this moment in time, we are confident in the future success of Smithfield West Loch. Thanks, the unrivaled geographic geographic footprint and product portfolio, our experienced management team and the dedication and commitment of our people to our customers.

Speaker Change: Packaging at the end of the day is a local business and with the vast majority of our business operating in the FMC G sector. We are an approved to be in the past a highly resilient business.

Ken Bowles: Turning now to the reported performance of our three segments in the quarter, and starting with North America, where our operations delivered net sales of $4.7 billion, with Adjusted EBITDA of $785 million, and an Adjusted EBITDA margin of 16.8%, an excellent outcome. Compared to the combined results in Q1 of last year, we saw a significant margin improvement due to higher selling prices, which more than offset cost headwinds on energy, labor, and higher mill downtime, coupled with lower corrugated volumes year-on-year. Corrugated box pricing was higher compared to the prior year, while box volumes were down 4.7% on the same-day basis and 4.3% on an absolute basis.

Turning now to the reported performance of our three segments in the quarter and starting with North America, where our operations delivered net sales of $4 7 billion with adjusted EBITDA of $785 million and adjusted EBITDA margin of 16, 8% an excellent outcome.

Speaker Change: Compared to the combined results in the first quarter of last year, we saw a significant margin improvement due to higher selling prices, which more than offset cost headwinds on energy and labor and higher mill downtime.

Speaker Change: Coupled with lower corrugated volumes year on year.

Speaker Change: Corrugated box pricing was higher compared to the prior year, while box volumes were down four 7% on a same day basis and four 3% on an absolute basis.

Ken Bowles: Our third-party paper sales saw a low single-digit decline in the quarter, while consumer packaging shipments were 1% higher when compared to the prior year, as growth in food and beverage products more than offset a decline in our smaller home, beauty, and healthcare product lines. We have taken significant actions to streamline the central functions of the segment and to continue to optimize and invest in the asset base. Ultimately, we are changing the business model to drive profit responsibility at the mill and the box plant, while retaining strong central capital controls, where we see significant opportunity to drive profitable growth and higher cash generation through the cycle. Looking now at our EMEA and APAC segment, where we delivered net sales of $2.6 billion, with Adjusted EBITDA of $389 million, and an Adjusted EBITDA margin of 15.1%.

Speaker Change: Our third party paper sales, a low single digit decline in the quarter, while consumer packaging shipments were 1% higher when compared to the prior year as growth in food and beverage products more than offset a decline in our smaller home beauty and health care product lines.

Speaker Change: We have taken significant actions to streamline the central functions of the segment and to continue to optimize and invest in the asset base.

Speaker Change: Similarly, we are changing the business model to drive profit responsibility at the mill and box plant, while retaining strong central capital controls, where we see significant opportunity to drive profitable growth and higher cash generation through the cycle.

Speaker Change: Yes.

Speaker Change: Looking now at our EMEA and APAC segments, where we delivered net sales of $2 6 billion.

Speaker Change: With adjusted EBITDA of $389 million.

Speaker Change: And an adjusted EBITDA margin of 15, 1%.

Ken Bowles: Exiting what was a challenging year for the industry in this region, our operations continued to demonstrate resilience as sales remained stable and our Adjusted EBITDA outcome was only moderately lower compared to the prior year on a combined basis, leaving an EBITDA margin of over 15%, a testament to the skill and dedication of teams locally, and continued to deliver for our customers and manage a volatile cost environment. Higher corrugated box prices year-on-year were more than offset by headwinds, predominantly on energy, recovered fiber, and labor. Corrugated box volumes were broadly flat on an absolute basis, but 1.5% higher on a same-day basis. To consolidate our leadership position in this region, we've continued to make significant investments through new converting machines, upgrades to corrugators and safety systems, and substantial investments in our bag and box business.

Speaker Change: Exiting what was a challenging year for the industry in this region. Our operations continued to demonstrate resilience that sales as sales remain stable and are adjusted EBITDA outcome was only moderately lower compared to the prior year on a combined basis.

Speaker Change: Leaving an EBITDA margin over 15% a testament to the skill and dedication of teams locally and continue to deliver for our customers.

Speaker Change: And advantage of volatile cost environment.

Speaker Change: Higher targeted box prices year on year, Onboarding offset by headwinds predominantly on energy recovered fiber and labor.

Speaker Change: Corrugated box volumes were broadly flat on an absolute basis, but one 5% higher on a same day basis.

Speaker Change: To consolidate our leadership position in this region, we've continued to make significant investments to new converting machines upgrades the corrugator in safety systems and substantial investments in our bag in box business.

Ken Bowles: All ensuring we meet the evolving needs of our customers with market-leading quality, innovation, and service. Our LATAM segment, again, remained very strong in Q1. As you can see here, with net sales of $500 million, Adjusted EBITDA of $115 million, and an Adjusted EBITDA margin of over 22%. Again, when looking at the comparative performance year-on-year, Adjusted EBITDA and Adjusted EBITDA margin were significantly higher in Q1 2025. Corrugated box volumes were 6.3% lower on a same-day basis, with Argentina remaining an outsized drag on the region's demand picture, along with our value over volume strategy playing out as expected in Brazil, as we continue to roll through a sizable portion of uneconomical legacy contracts.

Speaker Change: All ensuring we meet the evolving needs of our customers with market, leading quality innovation and service.

Speaker Change: Our Latam segment again remained very strong in the first quarter as you can see here with net sales of 5 billion adjusted EBITDA of $115 million and an adjusted EBITDA margin over 22%.

Speaker Change: Again, we're looking at the comparative performance year on year, adjusted EBITDA and adjusted EBITDA margin were significantly higher in the first quarter of 2025.

Speaker Change: Corrugated box items were $6, 3% lower on a same day basis, but Argentina remaining an outsized drag on the region's demand picture.

Speaker Change: Along with our value over volume strategy, playing out as expected in Brazil, as we continue to relatively sizable portion of uneconomical legacy contracts.

Ken Bowles: Nonetheless, by leveraging our strong track record in quality and service, we successfully implemented pricing initiatives that more than offset a negative currency translation impact and lower box volumes to deliver this strong result. Latin America is a region we are proud to have operated in since the 1950s and benefits from growing economies and a diverse customer base. By leveraging our deep understanding of each local market, Smurfit Westrock is well positioned to continue to drive long-term success in this region. Turning now to slide 11, I'm pleased to confirm that our synergy program is progressing well as planned, and we are on track to deliver $400 million of full runway synergies exiting 2025.

Speaker Change: Nonetheless by leveraging our strong track record in quality and service, we successfully implemented pricing initiatives that more than offset a negative currency currency translation impact and lower box volume to deliver these strong results.

Speaker Change: Latin America as a region. We are proud to have operated in since the 19 fifties and benefit from growing economies and a diverse customer base.

Speaker Change: By leveraging our deep understanding of each local market sorry for West rock is well positioned to continue to drive long term long term success in this region.

Speaker Change: Turning now to slide 11, and I am pleased to confirm that our synergy program is progressing well as planned and we are on track to deliver $400 million of full run rate synergies exiting 2025.

Ken Bowles: We expect to realize approximately $350 million in Adjusted EBITDA this financial year, with $80 million being recognized in their Q1, reported earnings of $1.252 billion. Moreover, we see at least $400 million of additional opportunities following from a sharper operating and commercial focus. The drivers of this medium-term target are multifaceted and involve our long-standing value over volume philosophy, the rationalization of high-cost capacity, and consolidation of production to more efficient plants, and through the rollout of our operational best practice and our suite of unique innovation tools. And finally, as we noted in the release, consistent with our disciplined approach in running a balanced system, and before we see the impact of the announced capacity closures, we expect to incur additional downtime in Q2, costing approximately $100 million over Q1.

Speaker Change: We expect to realize approximately $350 million and adjusted EBITDA This financial year.

Speaker Change: With $80 million being recognized in their first quarter reported earnings of one to $5 2 billion.

Speaker Change: Moreover, we see at least $400 billion of additional opportunities following from a sharper operating and commercial focus.

Speaker Change: The drivers of this medium term target are multi faceted and involve our longstanding value over volume philosophy, the rationalization of high cost capacity and consolidation consolidation of production to more efficient plants.

Speaker Change: And through the rollout of our operational best practice, and our suite of unique innovation tools.

Speaker Change: And finally as we noted in the release consistent with our disciplined approach in running a balanced system and before we see the impact of the announced capacity closures, we expect to incur additional downtime in the second quarter costing approximately $100 million over the first quarter.

Ken Bowles: And while the demand outlook is uncertain, we expect Q2 Adjusted EBITDA to be approximately $1.2 billion, and our current estimate for a full-year Adjusted EBITDA is between $5 and 5.2 billion. And with that, I'll pass it back to Tony for some closing remarks.

Speaker Change: And while the demand outlook is uncertain, we expect second quarter EBITDA adjusted EBITDA to be approximately $1 2 billion and our current estimate for our full year adjusted EBITDA is between five and $5 2 billion.

Tony Murphy: And with that I'll pass it back to Tony for some closing remarks.

Tony Smurfit: Yes, thanks, Ken. While we're just a little over nine months into our transformation journey, we have delivered and will continue to deliver meaningful progress. I'm very happy how Smurfit Kappa and WestRock have come together to create Smurfit Westrock, with operational and cultural integration progressing very well. As Ken has said, our synergy program and operational and commercial focus are delivering a meaningful improvement in our business. We continue to see significant opportunities to develop the business across all our regions and product lines. Equally, as we've demonstrated by our recent actions on capacity rationalizations and cost takeout, there are continual opportunities to reduce our operating costs, underpinned by our disciplined approach to capital allocation.

Tony Murphy: Yes, Thanks, Ken while we're just a little over nine months into our transformation journey, we have delivered and will continue to deliver meaningful progress.

Speaker Change: I am very happy how smurfit Kappa and West rock have come together to create smurfit west rock with operational and cultural integration progressing very well.

Speaker Change: As Ken said, our synergy program and operational and commercial focus are delivering meaningful improvements in our business.

Speaker Change: We continue to see significant opportunities to develop the business across all our regions and product lines.

Speaker Change: Equally as we've demonstrated by our recent actions on capacity rationalizations and cost takeout, there are continual opportunities to reduce our operating costs underpinned by our disciplined approach to capital allocation.

Tony Smurfit: While we are still at the early stages of our journey at Smurfit Westrock, with the innovation, the quality, and service that we can give to our customers, we are confident that we will deliver for all stakeholders. While there's no doubt that we are in uncertain times, we believe the actions we're taking today, and will continue to take, will translate to superior operating and financial performance in the months and years ahead. With that, operator, we will go over to questions, and thank you all for listening.

Speaker Change: While we are still at the early stages of our journey as Smurfit restaurant with the innovation the quality and service that we can give to our customers. We are confident that we will deliver for all stakeholders.

Speaker Change: While there is no doubt that we are in uncertain times, we believe the actions we're taking today and we will continue to take will translate to superior operating and financial performance in the months and years ahead.

Speaker Change: And with that operator, we will go over to questions.

Speaker Change: Thank you all for listening.

Operator: Thank you. To ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. We will now go to your first question. Your first question comes from the line of Charlie Muir-Sands from BNP Paribas. Please go ahead.

Speaker Change: Thank you to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: We will now go to your first question.

And your first question comes from the line of Charlie Muir Sands from BNP Paribas. Please go ahead.

Charlie Muir-Sands: Good morning and afternoon. Thank you for taking my questions. I'll stick to two, as requested. Firstly, just on your 2025 guidance, I just wondered if you could elaborate a little bit around what are the assumptions that go into that? Are you, for example, assuming similar kind of box volumes in the North American business, for the remainder of the year that you saw in Q1? Or maybe a bit lower, given the run rate seems to be sort of deteriorating, at least at the moment. And, you know, are you, for example, in Europe, assuming that a second board price hike, which many have mooted but has not yet been recognized, is successful? And have you factored in OCC? Yeah, just digging into some of the assumptions there.

Speaker Change: Good morning, good afternoon, and thank you for taking my questions I'll stick to two as requested firstly just on your 2025 guidance.

Speaker Change: Wondered if you could elaborate a little bit around more of the assumptions that carried into that are you for.

Speaker Change: For example, assuming similar kind of box volumes in the North American business for.

Speaker Change: For the remainder of the year that you saw.

Speaker Change: And in Q1.

Speaker Change:

Speaker Change: Or maybe a bit lower given the run rate seems to be deteriorating.

Speaker Change: Amen.

Speaker Change: Are you for company in Europe, assuming.

Speaker Change: Second price hike, which many of muted, but it is not yet being recognized.

Speaker Change: A successful and have you factored in OCC.

Speaker Change: Yes <unk>.

Speaker Change: Some of the assumptions that and then the second question is just your comments about the plan for 'twenty five new machines.

Charlie Muir-Sands: And then the second question is just your comment about the plan for 25 new machines next year, I think it was. You know, early days, I appreciate, but does that mean that CapEx in 2026 could be much higher than 2025, or within the kind of envelope that you've previously been indicating? Thanks.

Next year I think it was alright.

Speaker Change: Alrighty. Thanks, I appreciate but does that mean that the capex in 2026 could be.

Speaker Change: It's higher than 2025 within the kind of envelope that you've previously been indicating.

Tony Smurfit: Let me take a bit of it, and I'll ask Ken to jump in when I miss something. On the second part, CapEx, we, we haven't really even thought through yet what, what our CapEx number is going to be in 2026. You know, we're, we're obviously front running a lot of the, the programs that we have in place for our strap plan to ensure that we get the benefit of these growth opportunities, primarily growth opportunities and cost reduction opportunities, some of them are to, to be able to implement during 2026 and, and get the benefit of the, of the earlier, as, as early as possible. You know, obviously, our, our CapEx plans are gonna depend on what the environment is and, and what we see the future environment is.

Speaker Change: Let me take a bit of it and I'll ask Ken to jump in when I missed something on the second part of Capex, but we haven't really even thought through yet what our capex number is going to be in 2026.

Speaker Change: We're obviously running a lot of the programs that we have in place for our Strat plan to ensure that we get the benefit of these growth opportunities primarily growth opportunities and cost reduction opportunities some of them are.

Speaker Change: To be able to implement during 2026 and <unk>.

Speaker Change: Get the benefit of earlier as early as possible.

Speaker Change: Obviously, our capex plans are going to depend on what the environment is and what we see the future environment is.

Tony Smurfit: And we feel very comfortable with the assets that we bought. We feel very comfortable with the positioning of the company. And the question is, what growth is going to be there, and what opportunities do we have for cost takeout, is gonna really reflect on how much we spend. But it's very early days, Charlie, but it is. I think, you know, I think we're just getting a jump on a relatively small amount of capital for 2026. And, you know, the good news is, for anyone who's listening, is that we don't have a huge pipeline of big projects going forward into 2026 or 2027. So we can adjust pretty easily the organization as to how the environment is.

Speaker Change: We we feel very comfortable with the assets that we bought we feel very comfortable with the <unk>.

Speaker Change: Positioning of the company.

Speaker Change: And the question is what growth is going to be there and what the opportunities that we have for cost take out is going to really.

Speaker Change: Reflect on how much we spend but it's very early days Charlie but.

Speaker Change: I think.

Speaker Change: I think we're just getting a jump on a relatively small amount of capital for 2026 and the good news is for anyone who's listening is that we don't have a huge pipeline of big projects go.

Speaker Change: Going forward into 2026 or 2027.

Speaker Change: So we can adjust pretty easily the organization as to how the environment is and Thats always been a.

Tony Smurfit: That's, it's always been a key tenet of this company is to make sure that we have the agility to be agile. And that's what we will continue to be. And obviously, as I mentioned in my notes, you know, we are all owner-operators, and we wanna make sure that, you know, whatever we do is in the best interest of the shareholders for the short, medium, and long term. And so that will decide what we spend in 2026 and beyond. But you know, no decisions yet, and we're not, you know, to use the euphemism, we're not at all ahead of our skis here. With regard to the box volumes, you know, what we're saying is, you know, we don't anticipate very significant box volume improvement.

Speaker Change: Key tenants of this company is to make sure that we have the agility to be agile.

Speaker Change: And Thats, what we will continue to be and obviously as I mentioned in my in my notes.

Speaker Change: We are all owner operators and we want to make sure that whatever we do is in the best interest of the shareholders for the short medium and long term and so that will decide what we spend in 2026 and beyond.

Speaker Change: No decisions yet.

Speaker Change: We're not to use a euphemism we're not at all ahead of our skis here.

Speaker Change: With regard to that.

Speaker Change: The box volumes, what were saying is.

Speaker Change: We don't anticipate.

Speaker Change: Very significant.

Speaker Change: <unk> volume improvement in fact, probably because of our value strategy, we'll probably continue to improve our earnings, but probably lose some volumes but.

Tony Smurfit: In fact, probably because of our value strategy, we'll probably continue to improve our earnings, but probably lose some volumes. But you know, at the same time, you know, we are seeing very, very significant adoption by our people about the way that we're managing the business. And I think that's gonna be extremely beneficial for the company as we move forward, both in regard to profitability, because at the end of the day, that's what I believe it's about, profitability, but equally about winning business through the innovation approach that we've had in Europe. And you can see our margins in Europe have, you know, very significantly outperformed our peers. And we expect the same to happen going forward.

Speaker Change: At the same time, we are seeing very very significant.

Speaker Change: Adoption by our people about.

Speaker Change: About the way that we're managing the business and I think that's going to be extremely beneficial for the company as we move forward both in regard to profitability because at the end of the day, that's what I believe it's about profitability, but equally about about winning business through the innovation.

Speaker Change: Approach that we've had in Europe, and you can see our margins in Europe.

Speaker Change: Very significantly outperformed our peers.

Speaker Change: And we expect the same to happen going forward. It will take some time Rome isn't built in a day and making sure that everybody understands.

Tony Smurfit: It'll take some time, you know, Rome isn't built in a day, and making sure that everybody understands the innovations that we have, the applications that we have. We just hired a brand-new innovation officer for the United States. He's in it with us two years. He's learning the ropes. He's an excellent guy, apparently. So, you know, we're going to bring that forward. And then finally, to your last point about the hike, you know, there are so many moving parts at the moment. You know, waste paper has gone up a lot, or recovered fiber's gone up a lot, but energy's come down a bit. So you know, we just have to wait and see over the next week or so to see what's gonna happen with the second increase.

Speaker Change: The innovations that we have the applications that we have we just hired a brand new innovation officer for the United States is with US two years he's learning the ropes.

Speaker Change: Excellent Guy apparently so we're going to we're going to bring that forward and then finally to your last point about.

The hike.

Speaker Change: There are so many moving parts at the moment.

Speaker Change: Waste paper has gone up a lot or a recovered fiber has gone up a lot, but energy has come down a bit so.

Speaker Change: We just have to wait and see over the next week.

Speaker Change: A week or so to see what's going to happen with the second second increase but the first increase of solidly in both in North America and in Europe.

Tony Smurfit: But, you know, the first increase is solidly in, both in North America and in Europe. And I think that's gonna benefit us going forward into the rest of the year, especially if volumes come back.

Speaker Change: And.

Speaker Change: And I think that's going to benefit us going forward into the into the rest of the year, especially if volumes come back.

Ken Bowles: Yeah, I think, I think there are probably two small things out there, Charlie. I think, you know, on the CapEx question, I sort of go back to the comment Tony made in his script, which is around disciplined capital allocation, and irrespective of how we see the outlook. Our capital allocation always kind of fits into that. So we phase in time as we see fit, depending on the environment that's ahead of us. But equally, as Tony said, you know, we're not carrying a lot of CapEx into 2026, so lots of flexibility and agility. On the other side of our kind of guidance, a lot of the assumptions haven't really changed from where we were.

Speaker Change: I think I think it's probably too small things either Charlie I think on the Capex question I sort of go back to the common Tony made in his script, which was around disciplined capital allocation and irrespective of how we see the outlook our capital allocation I was kind of fit into that so we phase in time as we see fit depending on the environment. That's ahead of us, but equally as Tony said, you know, we're not carrying a lot of capex into 'twenty.

Speaker Change: So lots of flexibility and agility.

Speaker Change: On the other side of our kind of guidance.

Speaker Change: Lots of assumptions haven't really changed and where we were if you think about where we are now I think the big impacting factor. There is the $100 million incremental downtime Q1 to Q2 I think if we went back to the year end, we probably saw that Q1 to Q2 incremental cost year on year was probably in the order of 10% to $15 million.

Ken Bowles: If you think about, you know, where we are now, I think the big impacting factor there is the $100 million of incremental downtime, Q1 to Q2. I think if we went back to the year-end, we probably saw that Q1 to Q2 incremental cost year-over-year was probably in the order of $10 to 15 million. So that's really the big impact between where we see Q2 now versus where we might have seen it back in February, and indeed, the full year versus where we see it now.

Speaker Change: So that's really the big impact between where we see Q2 now versus where we might have seen us back in February and indeed, the full year versus where we see it now.

Operator: Great, thanks.

Speaker Change: Great. Thanks.

Tony Smurfit: Thanks, Charlie.

Charlie: Thanks, Charlie.

Operator: Thank you. Your next question comes from the line of Phil Eng from Jefferies. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Phil <unk> from Jefferies. Please go ahead.

Philip Ng: Hey, guys.

Speaker Change: Hey, guys congrats on a solid quarter in a tough environment and then Tony Ken.

Tony Smurfit: Hey, Phil.

Philip Ng: Congrats on the solid quarter in a tough environment. And then Tony, Ken, much appreciated in terms of the increased transparency in the deck and providing us 25 guidance. It's just helpful for all of us to kind of think through, just given all the volatility. So I guess first question, you guys announced sizable mill and box footprint optimization. Any color on how to kind of size up the cost savings associated with this? And Tony, when you kind of look at your footprint holistically, whether it's the US, perhaps Europe as well, are there still any noticeable opportunities to take out more capacity? I'm particularly curious in Europe, and on the SBS side for the US.

Speaker Change: Much appreciate it in terms of the increased transparency in the deck and providing US 225 guidance. It's just helpful for all of us to kind of think through just given all the volatility.

Speaker Change: So I guess first question you guys announce some.

Speaker Change: <unk> mill and box footprint optimization any color on how that kind of size up the cost savings associated with this and Tony when you kind of look at your footprint Holistically, whether it's the U S.

Speaker Change: Perhaps Europe as well are there still any notice ball opportunities take out more capacity I am, particularly curious in Europe and on the SBS side for the U S.

Ken Bowles: Hey, Phil, and listen, thanks for your feedback. It's good to see we're kind of progressing in that sense. In terms of the benefits of the two mill closures, if you take them in two buckets, if you like, so the full year impact of those two mill closures from just an EBITDA perspective, is probably in the order of $50 to 60 million of incremental EBITDA through the system of those closures. And from a CapEx perspective, if you take a kind of a five-year general cycle of maintenance capital, there's probably a capital saving of somewhere in the order of $100 million from those two closures, in terms of maintenance capital avoided.

Speaker Change: Hey, Phil and thanks for your thanks for your feedback is good good to see we're kind of progressing in that sense.

Speaker Change: In terms of the benefits of the tumor closures. If you take them in two buckets. If you like so that the full year impact of.

Speaker Change: Those two mill closures from an adjusted EBITDA perspective, it is probably in the order of 50% to $60 million of incremental EBITDA through the system of those closures.

Speaker Change: And from a Capex perspective, if you take a kind of a five year general cycle of maintenance capital Theres, probably a capital saving us somewhere in the order of $100 million.

Speaker Change: From those two closures in terms of maintenance capital avoided.

Tony Smurfit: Yeah, on the second question, Phil, you know, we continue to look at our system and, you know, I'm a little bit blue in the face at the moment by saying that, you know, we've been very impressed with what we've seen in the legacy WestRock mill system. Primarily, we've been very happy with what we've seen. And, you know, unfortunately, we don't like to close things, but we'll continue to optimize our system going forward. But, you know, obviously, as and when necessary, and, you know, as you will have seen, that we've taken 2 machines out from in Mexico, and they're really small and in Holland.

Speaker Change: Yes.

Phil: On the second question Phil.

Phil: We continue to look at our system.

I'm, a little bit blue in the face at the moment by saying that we've been very impressed with what we've seen.

Phil: In the legacy West Rock mill system.

Phil: Primarily we've been very.

Phil: Happy with what we've seen.

Phil: And.

Phil: Unfortunately, we don't like the closings, but we will continue to optimize our system going forward, but obviously as Adam when necessary.

Speaker Change: As you will have seen that we've taken a two two machines out from in Mexico.

Really small in Holland.

Tony Smurfit: You know, without their legacy Smurfit Kappa machines that have, you know, done well for us for many years and just come... It's come their time. And we've taken out a legacy Smurfit Kappa mill, which in the bigger scheme of the Smurfit Westrock system, you know, it was fine in the Smurfit Kappa system, but as part of the Smurfit Westrock system, is obviously one of the weaker mills. And that's why we figured that's the right one to move on. With regard to... and so, in answer to your question, we will continue to look at all issues in all grades across all the world, just depending on how the situation evolves. And that's what we've always done in our company.

Phil: Their legacy Smurfit Kappa machines that have.

Phil: We've done well for us for many years and just.

Phil: It's come their time.

Phil: And we've taken out of legacy Smurfit Kappa mail, which in the bigger scheme of the Smurfit West rock system.

Phil: It was fine and the Smurfit Kappa system, but as part of these smart for West Rock system is obviously, one of the weaker mills and Thats why we figure that that's the right one to move on.

Phil: With regard to and so in answer to your question, we will continue to look at.

Phil: All issues in all grades across all the world.

Just depending on how the situation evolves and that's what we've always done.

Phil: In our company.

Tony Smurfit: With regard to specifically SBS, what I would say to you is we are continuing to look at all of our system, and we have a strategic plan and process that we're continuing to develop. When we're ready, we'll let the market know about what our thinking is in the various different grades. You'll have seen, we've taken out a CRB mill today, but obviously we're looking at the market and seeing where things go. When we're ready, we'll address that issue.

Phil: With regard to.

Phil: Specifically SBS, but I would say to you is we are continuing to look at.

Phil: All of our system.

Phil: Have a strategic plan in process that we're continuing to develop and when we're ready we'll.

Phil: Let the market know about what our thinking is and the various different grades and you'll have seen we've taken out of CRB mill today, but obviously, we're looking at the.

Phil: The market and see where things go but when we're ready we'll address that issue.

Philip Ng: Super.

Tony Smurfit: Yeah.

Philip Ng: From a demand standpoint, you guys are taking some economic downtime, it sounds like economic downtime ahead of your closure in North America. Tony, just would love to get your thoughts on what you're seeing out there. Certainly, a lot of choppiness with the tariffs in the US and whatnot, consumer weakening. Any color on how interquarter trends progress, April trends? And then it was pretty encouraging to see your consumer business, if I heard you correctly, up 1. I think your biggest competitor is seeing a more muted outlook on demand. So any color on what you're seeing interquarter and how you kind of think about the balance of the year on the demand side, whether it's containerboard or your consumer packaging business?

Phil: Super.

Speaker Change: From a demand standpoint, you guys are taking some economic downtime it sounds like economic downtime ahead of you.

Youre closure in North America, So I'll make just would love to get your thoughts on what Youre seeing out there is certainly a lot of choppiness with.

Speaker Change: With the tariffs in the U S and whatnot consumer weakening any color on how intra quarter trends progressed April trends and then it was pretty encouraging to see your consumer business. If I heard you correctly up what I think your biggest competitor is seeing a more muted outlook on demand. So any color on what you're seeing intra quarter and how you kind of think about.

Speaker Change: The balance of the year on the demand side, whether it's containerboard or your consumer packaging business.

Tony Smurfit: Yeah. It's a long question. Let me try and address it. I think that we did see a lot of weakness in March and the first two weeks of April. It seems to be steadying itself. Our order books are getting better in the second half of April than they were in, let's say, the six weeks prior to that. So, you know, that gives us some encouragement. So it's a bit difficult to say. I know our competitors are talking about second half recovery. You know, we're not banking on that, frankly. You know, we'll wait and see what happens. If it comes, then we'll be very happy because, you know, a lot of our costs are under control.

Speaker Change: Yes, it's a long question, let me try and address that I think that we did see a lot of weakness in.

March and the first two weeks of April it seems to be steadying itself. Our order books are getting better in the second half of April.

Speaker Change: Then they were in lets say the six weeks prior to that so that gives us some encouragement.

Speaker Change: Sure.

Speaker Change: So it's.

Speaker Change: It's a bit difficult to say I know our competitors are talking about second half recovery, we're not banking on that frankly, we see.

Speaker Change: We'll wait and see what happens if it comes then then we will be very happy.

Speaker Change: A lot of our costs are under control. So we will be very happy if demand comes back in the corrugated container sector.

Tony Smurfit: So we'll be very happy if demand comes back in the corrugated and container sector. But, you know, we're not, as I say, banking on a very strong recovery. We're banking on some recovery, but not a significant one from where we are. With regard to the consumer business, yeah, we had a reasonable first quarter. That market has got choppy. There's no question that there's competitive threats out there that we continue to monitor, and, you know, that's something that it has got more choppy in the consumer side of things for sure.

Speaker Change: But we're not we're.

Speaker Change: We're not as I say banking on a very strong recovery were banking on some recovery, but not.

Speaker Change: Is it significantly from where we are.

Speaker Change: With regard to.

Speaker Change: The consumer business, Yes, we had a reasonable first quarter that market has got choppy. There's no question that there is competitive threats out there that we continue to monitor.

Speaker Change: And that's something that it has got to it has got more choppy in the consumer side of things for sure until you did hear that right and keep in mind that 75% of our consumer business is food and beverage so Jeremy in times like this presents slightly more resilient I would say that the home health and beauty pieces.

Ken Bowles: Yeah, and Phil, you did hear that right. Keep in mind that, you know, 75% of our consumer business is food and beverage, so generally, in times like this, presents slight more resilience than, say, the home, health, and beauty pieces. Appreciate all the great color and the good work.

Speaker Change: Okay I appreciate all the great color and good work.

Tony Smurfit: Thanks, Phil.

Speaker Change: Thanks, Phil.

Operator: Thank you. Your next question comes from the line of Mike Waxman from Truist Securities. Please go ahead.

Operator: Thank you. Your next question comes from the line of Mike Roxland from Truist Securities. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Mike Matson from tourist Securities. Please go ahead.

Speaker Change: Okay.

Mike Roxland: Yes, thank you, Tony and Ken, for taking my questions, and congrats on all the progress.

Mike Matson: Yes. Thank you Tony you cannot be taking my questions and congrats on all the progress.

Tony Smurfit: Thanks, Mike.

Tony: Thanks, Mike.

Mike Roxland: First question, I just want to follow up on what you just mentioned, Tony, in terms of not banking on a second half recovery. Can you, can you give us a sense, just in terms of how you're thinking about the demand trajectory into H2 and how that corresponds with your guide for the year?

Speaker Change: First question I just wanted to follow up on what you just mentioned Tony in terms of not banking on a second half recovery.

Tony: Can you give us a sense just in terms of.

Tony: How are you thinking about the.

Tony: Good man trajectory into wage and how they correspond with your guide for the year.

Tony Smurfit: Yeah, I mean-

Tony: Yes.

Mike Roxland: Especially like the containerboard.

Tony: Like containerboard.

Tony Smurfit: We're sort of saying it'll be somewhat similar with a little bit of upside, 'cause the comparators are a little bit better in the second half. So a little bit better than it is in the first half. You know, honestly, if you look at it, Mike, you'll see the containerboard side of things. If there's any demand recovery, it will look very strong indeed. So we remain still optimistic... Sorry, not still. Still very optimistic on the sector. It's a question of when demand comes back. But, you know, I do think there needs to be some sort of level of consumer confidence coming back into the market to see that happening.

Tony: We're sort of saying that it will be somewhat similar with a little bit of upside because the competitors are a little bit better in the second half so a little bit better than it is in the first half.

Tony: No.

Speaker Change: Honestly, if you look at it Mike Youll see the containerboard side of things if theres any demand recovery will look very strong. Indeed, so we remain still optimistic sorry, not still still very optimistic on the sector. It's a question of when demand comes back but.

Speaker Change: I do think there needs to be some sort of level of consumer confidence coming back into the market to see that happening.

Tony Smurfit: You know, as we sit here, as of, I think it was this week or late last week, the consumer confidence index in the United States market was, you know, not very strong. So we do need to see consumer confidence coming back, and I think that comes back to the whole question of tariffs and uncertainty, and getting some certainty in those, in that area for the consumer to feel good in the North American market. Conversely, in the European market, I think things are actually a bit better. I mean, there's... While demand isn't strong, it's reasonable, and, you know, most of our markets are doing, you know, well, or reasonably well, with one or two exceptions.

Speaker Change: As we sit here as of I think it was this week or early late last week, the consumer confidence index in the United States market was not very not very.

Speaker Change: Strong so we do need to see consumer confidence coming back and I think that comes back to the whole question of tariffs and uncertainty.

Speaker Change: Getting some certainty in those in that area for the consumer to feel good in the North American market. Conversely in the European market I think things are actually a bit better I mean, there is while demand is strong it's it's reasonable and.

Speaker Change: Of our markets are doing well or reasonably well with one or two exceptions.

Tony Smurfit: So we feel good about the European market and our positioning and the pass-through of the first price increase, that's gone in, and we'll wait and see whether the second one goes in or not. So we feel good about the European market. Latin America, you see the results is very strong for us. We, you know, we've taken some decisions that we believe in trying to make money, and we believe in trying to give our customers excellent service. And, you know, in doing that, you know, when you find out the business that you're losing tremendous money on you, you tend to let it go, because I don't want to run bad business across expensive machines. And that's a message we're putting into our organization all over the place.

Speaker Change: So we feel good about the European market and our positioning in the pass through of the first price increase.

Speaker Change: That's gone in and wait and see whether the second one goes in or not so we feel good about the European market. Latin America, you will see the results is very strong for us.

Speaker Change: We took some we've taken some decisions that we don't.

Speaker Change: We believe in trying to make money for and we believe in trying to give our customers excellent service.

Speaker Change: And doing that when you find out the business that youre, losing tremendous money on you tend to let it go because I don't want to run that business across expensive machines and that's the message we're putting into our organization all over the place.

Tony Smurfit: And, you know, there is obviously a consequence to that. If you've got some bad business that you're gonna have to let it go. And there's an adjustment period of time. So, you know, when we look at the second half, there'll be a lot of moving parts, but we still feel very comfortable and happy with our value over volume concept. And as I say, I think it's been well embraced by our people.

Speaker Change: There is obviously there is a consequence to that if you have got some bad business that youre going to have to let it go and visit.

Speaker Change: <unk> period of time, so when we look at the second half to be a lot of moving parts, but we still feel very comfortable and happy with our with our value over volume concept and as I say I think it's been well well.

Speaker Change: Embraced by our people.

Mike Roxland: Got it, and appreciate all the color, Tony. And then just a quick follow-up. Just, Ken, you mentioned additional downtime of $100 million in Q2. You had been originally thinking maybe $10 to 15 million back in February. Where are you taking this downtime? Is that mostly in containerboard? Is there some in boxboard? And can you give us a sense of the tons that you're taking out? And then lastly, just on the synergy, it sounds like now you're aiming for $350 million in synergies in 2025, with an exit rate of $400 million. Why the shift there in the synergies? Thanks very much.

Mike Matson: Got it and I appreciate all the color Tony.

Speaker Change: A quick follow up.

Speaker Change: Ken you mentioned additional downtime on a $100 million in.

Speaker Change: And <unk>.

Speaker Change: It originally thinking maybe $10 million to $15 million back in February where are you. Taking this downtime is that mostly in containerboard is there something box board and can you give us a sense of it.

Speaker Change: Youre taking.

Speaker Change: And then lastly, just on the synergy.

Speaker Change: It sounds like Youre equaled 350 million in synergies in 2020.

Speaker Change: Exit rate of $400 million.

Speaker Change: Why does shift there and the synergies thanks.

Ken Bowles: If you remember... Yeah, take the second one first, Mike. We would've got a little bit back in 2024, so really it's, it's a bit of 2024 to $350 in 2025, and then you're exiting. And in terms of phasing, I think, you know, $80 in Q1, if you wanted to kind of keep it really simple, the balance across the three quarters and for the rest of the year will kind of get you there. And, and, again, when we get to the end of Q2, I can look back and tell you what we achieved. But no real change or phase, it's probably more we've picked up a bit in late 2024. When you add them to the 2025, you exit 2025 at $400.

Speaker Change: If you remember, yes take the second one first Mike we would've got a little bit back in 24, so really it's a bit of 24 to $3 50, and 25% and you're exiting at in terms of phasing I think 80 in quarter. One if you wanted to kind of keep it really simple the balance across the three quarters for the rest of the year upon to get you there and again when we get the end of quarter. Two I can look back and tell you what we have.

Speaker Change: But no real change your phase is probably more we picked up a bit in late 'twenty four when you add into the 25, you exit 2025 at 400.

Ken Bowles: In terms of where we're taking it, I can't really get into specifics, but it's across the system generally, where we kind of need to take it, Mike, is the simplest way to put it. So where we feel it's most applicable. And remember, a lot of the mills anyway will be taking downtime for maintenance or some CapEx projects, so but not really a split specifically on containerboard versus paperboard, but across the system.

Speaker Change: <unk>.

Speaker Change: And in terms of where we are taking us.

Speaker Change: Can't really get into specifics, but it's across the system generally where we kind of need to take it Mike is the simplest way to put it so where we feel is most applicable and remember a lot of the mills anyway will be taken downtime for maintenance capex projects, so, but not really a spit specifically on containerboard versus paperboard, but across the system.

Mike Roxland: Got it. Thank you, and good luck in 2025.

Speaker Change: Got it thank you and good luck in 'twenty one.

Tony Smurfit: Thanks, Mike.

Speaker Change: Thanks, Mike Thanks, Mike.

Ken Bowles: Thanks, Mike.

Operator: Thank you. Your next question comes from the line of Gabe Haade from Wells Fargo. Please go ahead.

Operator: Thank you. Your next question comes from the line of Gabe Hajde from Wells Fargo. Please go ahead.

Speaker Change: Thank you. Your next question comes from the line of Gabe <unk> from Wells Fargo. Please go ahead.

Gabe Hajde: Gentlemen, I'll echo everyone else's nice work on the Q1 here. Thanks for all the detail.

Speaker Change: Gentlemen, I'll echo everyone else's nice work in the first quarter here. Thanks.

Speaker Change: Thanks for all the detail.

Tony Smurfit: Thanks, Gabe.

Gabe Hajde: Wanted to ask, we're a little less familiar, as you guys all know, about the European market. Q1, again, margins really good. Just curious, kind of from a timing phasing standpoint, I'm assuming second half kind of stronger than first half, taking into account the pricing that's flowing through. And Tony, I think in the last call, you mentioned that the competitive landscape being a little bit different over there. I think there are 3 machines kind of starting up as we speak. Just any, any feedback from that early days, in terms of, of the market?

Speaker Change: I wanted to ask we're a little less familiar as you guys all know about the European market.

Speaker Change: First quarter again margins really good.

Speaker Change: Just curious kind of from a timing phasing standpoint, I'm, assuming second half stronger than first half taking into account the pricing that's flowing through and Tony I think in the last call.

Speaker Change: You mentioned the competitive landscape in a little bit different over there I think there are three machines kind of starting up as we speak just any any feedback from that early days in terms of the market.

Tony Smurfit: Yeah, I mean, clearly the outlook for the European containerboard market, if you take it over the next year or so, or 18 months, is not as robust as the United States outlook. You know, there are new machines starting up. They're not really in the market just yet, Gabe. They're about to start in the next 3, 4 months and start ramping up then. And, you know, frankly speaking, as I've said before, I have no idea if I was running one of those machines where I'd be selling my product, because a lot of the market is integrated and, you know, going overseas isn't a gift. So, you know, I don't, and all of the people that are coming into the market have existing capacity, so it's not in their benefit to reduce pricing.

Speaker Change: Yes.

Speaker Change: The outlook for the European Containerboard market, if you take it over the next.

Speaker Change: A year or so or 18 months is is not as robust as the United States outlook.

Speaker Change: There are new machine, starting up Theyre not really in the market just yet gave there or about to start in the next three four months and start ramping up then.

Speaker Change: Frankly speaking as I've said before I have no idea if I was running one of those machines, where it'd be selling my product.

Speaker Change: A lot of the market is integrated.

Speaker Change: Going overseas isn't a gift so.

Speaker Change: Yes.

Speaker Change: And all of the people that are coming into the market do you have existing capacity. So it's not in their benefit to reduce pricing. So therefore, we will see what happens in the European market.

Tony Smurfit: So therefore, we'll see what happens in the European market. But you know, the outlook is, you know, we've got a very well-integrated system, and you know our model, and it's, it produced, you know, 15% returns in probably when you see other people in, you know, single digit returns and even lower than that. So you know, when the market does recover, I think you can see, you know, we're building off a very strong and powerful base with our system. With regard to the first question was?

Speaker Change: But but.

Speaker Change: The outlook is we've got a very well integrated system and you know our model and it produced 15% returns in probably when you see other people in sync.

Speaker Change: Single digit returns and even lower than that so.

Speaker Change: When the market does recover I think you can see we are building off a very strong and powerful base with our system.

Speaker Change: With regard to the first question was I think the first question with the market dynamics on price in that in the second half and how it works, it's not not that dissimilar necessarily to North America gave in the sense that you know as paper prices contributed the market. It does take about three to six months before we began to see them in the box price. So.

Ken Bowles: Oh, I think the first question was the market dynamics on price, and that is the second half and how it works. It's not that dissimilar necessarily to North America, Gabe, in the sense that, you know, as paper prices come through to the market, it does take about 3 to 6 months before we begin to see them in the box price. So, you know, any incremental paper price, for example, that you might get in the second half of this year or early second half, really won't begin to make a meaningful appearance until Q4 at the beginning of next year. So not necessarily that different in terms of dynamics.

Speaker Change: Any incremental paper Vice for example that you might get in the second half of this year a priority second half really wont begin to make a meaningful appearing for quarter four at the beginning of next year, so not necessarily that different in terms of dynamics.

Ken Bowles: Probably slightly more, you know, as a group now, probably slightly more weighted on index than non-index than we might have been before, as Smurfit Kappa was broadly 50/50, probably closer more to 60/40 now. So, but in terms of the dynamics of pushing, you know, box prices through from a paper price, broadly similar. I suppose the backdrop for the paper side, to follow on from Tony's comment, is just to keep in your head that things like energy, you know, in the European context remain, you could argue, elevated and supportive to broadly where paper is. Because, you know, we still have, albeit, say, this morning, EUR 31/MWh, that's a long way away from the norms of EUR 15/MWh we might have seen years ago.

Probably slightly more as a group now probably slightly more weighted on index non index that we might have been before as Smurfit Kappa is broadly 50 50.

Speaker Change: Some more 60 40 now so but in terms of the dynamics are pushing box prices through from a paper price broadly similar I suppose.

Tony Murphy: The backdrop for the paper side to follow on from Tony's comments, just to keep in your head that things like energy.

Tony Murphy: In the European context remain you could argue elevate and supportive to broadly where paper is because we still have albeit this morning.

Tony Murphy: When you are a megawatt hour thats, a long way away from the norms of 15, we might've seen years ago. So the cost that to Tony's point, the cost input backdrop around energy or OCC is quite different than when those mills and machines were initially started up our targeted go back four or five years. So the return dynamic is quite quite different from now than it was then which is also useful in terms of.

Ken Bowles: So the cost, to Tony's point, the cost input backdrop around, be it energy or OCC, is quite different than when those mills and machines were initially started up or towered, go back 4 or 5 years. So the return dynamic is quite different from now than it was then, which is also useful in terms of when they might come on and how they might come on.

Tony Murphy: When they might come on and how they might come on.

Gabe Hajde: Understood. I'll try to be brief. The closure that you—the closures that you announced yesterday, I don't recall if I saw a timeline associated with it. Ken, you rattled off a lot of numbers. I feel like I heard an incremental $450 million of, I'll call it synergy or performance improvements, I think is what you said. And then the number you gave us, the $60 million of kind of income statement savings, that was on a per mill basis, or that was an aggregate for what you just announced? Thank you.

Speaker Change: Understood I'll try to be brief the closure that you closures that you announced yesterday I don't recall, if I saw the timeline associated with it and can you rattle off a lot of numbers I feel like I heard an incremental $450 million of.

Speaker Change: I'll call it synergy or performance improvements I think is what you said.

Speaker Change: And then the <unk>.

Speaker Change: Number you gave us the $60 million of kind of income statement savings that was on a per mile basis or that was an aggregate for what you just announced thank you aggregates to the system gave so the impact across the entire system from shutting those two mills because your full year full year benefit of adjusted EBITDA plus $60 million.

Ken Bowles: Aggregate to the system, Gabe. So the impact across the entire system from shutting those two mills gives you a full year, full year benefit of adjusted EBITDA + $60 million. In terms of the and a saving on the CapEx line of broadly $100 million over five years. In terms of the 400, that's back to the commercial opportunities we kind of talk about, at least equal to the synergy target we put out. So the 400 is broadly banked at this point, as you can imagine. But we've always talked about, go back to Q3, I think, is when we first talked about it, still see significant value to be driven out, and that falls into that second bucket of more, at least 400.

Speaker Change: In terms of the on a saving on the Capex line of broadly 100 million over five years in terms of the 400 <unk> that's back to the commercial opportunities, we kind of talk about it.

Speaker Change: At least equal to the synergy target we put out the 400 broadly bank at this point as you can imagine.

Speaker Change: But we've always talked about is you can go back to quarter three I think because when we first talked about it we still see significant value to be driven out and that falls into that second bucket of more at least 400.

Ken Bowles: But in terms of the mills, think about it as full year run rate, $50 to 60, and CapEx avoided over a five-year cycle of about $100. We can circle back, Gabe, to kind of-

Speaker Change: But in terms of the mills think about as full year run rate 50 to 60 and Capex avoided over a five year cycle of about 100.

Speaker Change: We can circle back to kind of.

Gabe Hajde: Yep.

Ken Bowles: to button those down if there's any confusion.

Speaker Change: Both of those that would give us any confusion.

Tony Smurfit: Just to finish off the point on the two mills, there is asset value underneath those that will be released over time. That will be, you know-

Speaker Change: Just to finish off the point on the two mills there is asset value underneath those that will be released over over time that will be.

Ken Bowles: Yeah

Tony Smurfit: ... at least 50% of the cash cost back.

Speaker Change: At least 50% of the cash cost back.

Operator: Thank you. Your next question comes from the line of Lars Sjölberg from SEB. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes.

Speaker Change: From the line of Las <unk> from Stifel. Please go ahead.

Lars Sjölberg: Thank you for taking my questions. I just wanna come back a bit to what you're seeing in your customer business with regards to tariffs. And think in particular, you know, the cross-border trade from Mexico, but also from the European side. Are you starting to see any directional changes on your customers' business due to those tariffs? That's the first question. The second one, of course, in your earlier pro-investment programs, you've had this agility that you spoke to, to deploy capital when the timing is right. But can you give us a sense of how you should think about incremental sell-through benefits into, you know, 2026, 2027, as the synergies literally will be on the books already exiting 2025?

Lars Sjöberg: Thank you for taking my questions. I just wanna come back a bit to what you're seeing in your customer business with regards to tariffs. And think in particular, you know, the cross-border trade from Mexico, but also from the European side. Are you starting to see any directional changes on your customers' business due to those tariffs? That's the first question. The second one, of course, in your earlier pro-investment programs, you've had this agility that you spoke to, to deploy capital when the timing is right. But can you give us a sense of how you should think about incremental sell-through benefits into, you know, 2026, 2027, as the synergies literally will be on the books already exiting 2025?

Speaker Change: Thank you for taking my questions.

Speaker Change: When it come back a bit too.

Speaker Change: What youre seeing in your customer business with regards to tariffs and things in particular.

Speaker Change: The cross border trade from Mexico, but also from the European side.

Speaker Change: Are you starting to see any.

Speaker Change: Directional changes.

Speaker Change: Customers business due to those tariffs that's the first question the second one.

Speaker Change: Yes.

Speaker Change: Causing you earlier investment programs you have this agility that you spoke to deploy capital.

Speaker Change: When the timing is right.

Speaker Change: Can you give us a sense of how we should think about incremental sales.

Speaker Change: Benefits into 'twenty six 'twenty seven <unk>.

Speaker Change: The synergies.

Speaker Change: Naturally it will be on the books already exiting 'twenty.

Tony Smurfit: Lars, I'll give that very difficult question to the second one to Ken. I'll take the easy one on tariffs. You know, like the USMCA, which is the main trade between Canada, Mexico, and the United States, is in force until 90 days. And you know, we obviously, because we did a lot of cross-border trade with customers, mainly on the consumer side, we have been adjusting our supply chains over the last three months to ensure that what is produced in Canada and sold in America is now produced in America. And then equally the other way around.

Speaker Change: Lars I'll give that very difficult question to second one to Ken.

Speaker Change: I'll take the easy one on tariffs.

Speaker Change: Yeah.

Speaker Change: Like the U S MTA, which is the main trade between.

Speaker Change: Canada and <unk>.

Speaker Change: Mexico and the United States is in force until for 90 days.

Speaker Change: No.

Speaker Change: We obviously, because we did a lot of cross border trade with customers mainly in the consumer side.

Speaker Change: We have been adjusting our <unk>.

Speaker Change: Fly changed over the last three months to mature.

Speaker Change: What is produced in Canada.

Speaker Change: And sold in America now.

Speaker Change: <unk>.

Speaker Change: <unk> produced in America.

Speaker Change: Sure.

Speaker Change: And then equally the other way around.

Tony Smurfit: The less so for Mexico, because most of the stuff that's produced in Mexico is for consumption in United States. So what we're seeing is very little at the moment. You know, we've tried to model what tariffs would cost us if they were implemented as pure cost to us, if they were implemented as originally portrayed by the US, and we're sort of seeing a number of an annualized number of around $100 million without any offset to that. If in pure trade for ourselves, if we're not able to get that back, and you know, obviously, that's not what our intention and workaround would be. Obviously, the big effect of tariffs is completely unknown to us.

Speaker Change: Less so for Mexico, because most of the stuff that's produced in Mexico.

Speaker Change: As for consumption in.

Speaker Change: In.

Speaker Change: United States. So so what we're seeing is very little at the moment.

Speaker Change: We've tried to model what tariffs will cost us if they were implemented.

Speaker Change: Pure cost to us if they were implemented as originally.

Speaker Change: Portrayed by by the U S and we're sort of seeing a number of an annualized number of around $100 million without any offset to that.

Speaker Change: In pure trade for ourselves if we're not able to if we're not able to get that back and obviously, that's not what our intention and work around would be.

Speaker Change: Obviously, the big effect of tariffs is completely unknown to us if the tariffs come in and cause demand destruction.

Tony Smurfit: If the tariffs come in, and it causes demand destruction, that is where we would be affected considerably more than any direct effects. But, you know, that's an issue of consumer confidence. That's an issue of, you know, general consumer demand. And, you know, we are definitely seeing a lot of nervousness out there with customers, but not yet any material issue, other than the uncertainty that we're all seeing.

Speaker Change: That is where we would be affected the considerably more than any direct effects, but.

Speaker Change: That's that's that's an issue of consumer confidence that's an issue of of general consumer demand.

Speaker Change: We are definitely seeing a lot of nervousness out there with customers, but not yet any material issue.

Speaker Change: Other than the uncertainty that we're all seeing.

Ken Bowles: Hey, Lars, on the soft question, a quick win program. So you, you'll know as well, and we've done a number of these over the years. So generally, you know, these are projects that will deliver the returns within an 18 to 24 month timeline. It's the only reason they get approved in the first place, and particularly work well in inflation environments and high-cost environments like we are now, because they allow you to take costs out fairly quickly. And, you know, there's a lot of projects here that add up to the numbers, but no, not a necessarily kind of big impact in any one particular part of the business system. It's small projects in each individual location, all adding to, in a system of our size, all adding up to a decent benefit.

Laurence: Hey, Laurence.

Laurence: On the soft question a quick one program. So you will know as well and we've done a number of these over the years. So generally these are projects that will deliver the returns within an 18 to 24 month timeline. It's the only reason they get approved in the first patient.

Laurence: Particularly worked well in inflationary environments and high cost environments. Like we are now because they allow you to take us out fairly quickly.

Laurence: And there's a lot of projects here that add up.

Laurence: Because the numbers, but.

Laurence: No not a necessarily a big impact in any one particular part of the business system, it's small projects and each individual location.

Laurence: In our system of our size, all adding up to a decent benefit but you should think about these if they start this year logically fully implement between 18 to 24 months at the outset with some incremental benefits for the shorter term projects as we go through it so but.

Ken Bowles: But you should, you should think about these, if they start this year, you know, logically, fully implemented between 18, 24 months at the outset, with some incremental benefits for the shorter-term projects as we go through it. So, but, you know, 2 years max.

Laurence: Two years, Max and I think Laurie just to make the point that these are just some we've selected if I were to go to the three regional managers that I haven't said you have free reign to go ahead, we find a lot lot lot more to reduce costs, but it's just a question of management and fitting them in.

Tony Smurfit: I think, Lars, just to make the point that these are just some we've selected. If I were to go to the three regional managers that I have and said, "You have free rein to go ahead," we'd find a lot, lot, lot more to reduce cost, but it's just a question of management and fitting them in the envelope that we want to do. And as I said earlier, to fail not to make sure that we don't get too far ahead of our skis in the whole issue of CapEx deployment. So, you know, we're... we did...

Laurence: In the envelope that we want to do and as I said earlier.

Laurence: Who failed not to make sure that we don't get too far ahead of our skis and the whole issue of Capex deployment. So.

Tony Smurfit: You know, we're very, very religious in making sure that we keep, stick to our knitting of what made the, the company, Smurfit Kappa, great, and to make sure that we, we make the new Smurfit Westrock the kind of company we believe it's going to be.

Laurence: We are very.

Laurence: We're very very religious and making sure that we keep stick to our netting of what made the company Smurfit Kappa grade and to make sure that we make.

Laurence: The new square foot West rock.

Laurence: The kind of company, we believe it's going to be.

Lars Sjölberg: Just one clarification point. When you talked about the cost benefits or EBITDA positives from the closures, what is the timing of getting that benefit through?

Lars Sjöberg: Just one clarification point. When you talked about the cost benefits or EBITDA positives from the closures, what is the timing of getting that benefit through?

Speaker Change: And just one clarification point when you talked about the cost benefits are eager to have positives from the closures what is the timing of <unk>.

Laurence: Getting that benefit.

Tony Smurfit: It'll be second half.

Speaker Change: It will be second half essentially when they close.

Lars Sjölberg: Essentially, when are they closing the door?

Lars Sjöberg: Essentially, when are they closing the door?

Tony Smurfit: Second half, we have to go through a process called the WARN Act, which is the United States requirement of 60 days. And so sometime, certainly by the end of July, we'll have completed that process, in all likelihood. And then with regard to the other closures and potential closures that we've asked to speak to the works council about in Germany, that will be somewhere between six months and a year, depending on the plant and depending on the movement of the volume.

Speaker Change: Second half do we have to go through a process called the <unk>, which is the United States.

Speaker Change: The requirement of 60 days.

Speaker Change: And so sometime sometime.

Speaker Change: Certainly by the end of July we will have completed that.

Speaker Change: Process in all likelihood and then with regard to the other closures.

Potential closures that we've asked to speak to the works Council about in Germany.

Speaker Change: That will be somewhere between six months and a year depending on.

Speaker Change: The plant and depending on the movement of the volume.

Lars Sjölberg: Understood. Thank you, and good luck.

Lars Sjöberg: Understood. Thank you, and good luck.

Speaker Change: Understood. Thank you and good luck.

Tony Smurfit: Thanks.

Speaker Change: Thanks, guys.

Ken Bowles: Thanks.

Operator: Thank you. Your next question comes from the line of Detlef Winckelman from JP Morgan. Please go ahead.

Operator: Thank you. Your next question comes from the line of Detlef Winckelmann from JP Morgan. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of <unk>.

Speaker Change: <unk> from Jpmorgan. Please go ahead.

Detlef Winckelmann: Hi, guys. Thanks for the call. Just a quick one on your $100 million of downtime, economic downtime in Q2. I just want to kind of get a sense of how that plays into the full year number. Are we assuming that tonnage stays down in Q2, Q3, Q4, or is there some sort of assumption that tonnage is like, downtime is maintained or contained just to Q2? Thanks very much.

Speaker Change: Hi, guys. Thanks for the call just a quick one on your $100 million of downtime economic downtime in Q2, I just wanted to kind of get a sense of how that plays into the full year number are you assuming that the tonnage stays down in Q2, Q3, Q4 or is there some sort of assumption to that tonnage is.

Speaker Change: Downtime is maintained at all contained just to Q2, thanks very much.

Tony Smurfit: It's just, it's just, just for Q2, and obviously in Q3 and Q4, we won't have the output of the, of the other containerboard mill. So, so, you know, in a sense, and we'll have got the bene- we'll be getting the benefit of that, that tonnage onto the, the existing mill. You know, so, so, so it's just, it's a, it's a one-off.

Speaker Change: It's just what are you looking for Q2, and obviously in Q3 and Q4, we won't have the output of the of the other containerboard mill. So so.

Speaker Change: In a sense and we've got the better it will be getting the benefit of that that tonnage onto the existing mill.

Speaker Change: So it's just it's a one off yes.

Ken Bowles: Yeah.

Tony Smurfit: There'll always be maintenance downtime, Detlef, and there'll be other bits and pieces of downtime and, you know, probably some machines not working the way we want them to work. But basically, you know, the downtime that we're planning because of this situation in Q2 is a Q2 issue.

Speaker Change: There'll always be maintenance downtime that leif and there'll be.

Speaker Change: Other.

Speaker Change: Bits and pieces of downtime and probably some machines not working the way we want them to work, but basically.

Speaker Change: Downtime the downtime that were planning because of this situation in Q2 is a Q2 issue.

Ken Bowles: Yeah. Exactly.

Speaker Change: Exactly.

Detlef Winckelmann: Cool. Thanks very much. That's all from me. Thanks.

Speaker Change: Thanks very much that's all for me. Thank you.

Tony Smurfit: Thank you.

Operator: Thank you. Your next question comes from the line of Patrick Mann, Bank of America.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Patrick <unk> with Bank of America.

Speaker Change: Ed.

Patrick Mann: So good day, thanks for taking my question. Oh, I've got two. The rationalization of the mills, and the 600,000 tons you've taken out, but you've also spoken a bit about, you know, optimizing the packaging and the downstream operations. Does it change your net paper position at all, and and does that, and or how does that factor into the these optimization decisions? And then the second question is: the quick win projects, does that form part of the operational and commercial improvement, sort of at least the same $400 million synergies, or is it a sort of different bucket of capital allocation? How should we think about it? Thanks very much.

Speaker Change: Good day and thanks for taking my question.

Speaker Change: I've got two.

Speaker Change: The rationalization of the molds.

Speaker Change: Under 600000 tonnes, you've taken out, but you've also spoken a bit about opt.

Speaker Change: Optimizing the packaging and the downstream operations.

Speaker Change: Does it change.

Speaker Change: That position at all and does that or how does that factor into these optimization decisions.

Speaker Change: And then the second question is.

Speaker Change: One projects.

Speaker Change: Does that form part of the operational and commercial improvements sort of at least the same 400 million.

Speaker Change: Synergies or is it a sort of different buckets of capital allocation, how should we think about it thanks very much.

Ken Bowles: Hey, Patrick, it's Ken here. Yeah, so the quick win project program will form part of that second 400, and that's why it's on the same timelines we would have talked about achieving that 400 over 2018 to 2024. So it fits into that kind of bucket. I suppose, you know, what we're trying to do here is, as we kind of progress through the quarters, give you more kind of building blocks to have that 400 built, and this is now we're in a place to kind of, you know, get on with those quick win projects, that gives you some level of kind of certainty around where that's gonna come from in terms of is it, you know, through the income statement, through the capital line, and the returns of it? So no foremost part to 400.

Speaker Change: Hey, Patrick it's Ken here, Yes, so quickly and project program will form part of that second for 100 and Thats why its on the same timeline, we would have talked about achieving that 400 over 18 to 24, so fit into that kind of book it I suppose what we're trying to do here is as we kind of progress through the quarters give you more kind of building blocks at a 400 is built and this has narrowed at <unk>.

Speaker Change: Nice to kind of get on with those quicker and programs projects.

Speaker Change: It gives you some level of kind of starting here and where that's going to come from in terms of visits through the income statement through the capital line and the returns out of it. So no forms part of the 400 on the on the other one yet for the two actually for both mills for Paul on <unk>. It does improve our integration levels, a little bit I think for on the containerboard side. It goes in about 86% to 89% integrated on container.

Ken Bowles: On the other one, yeah, for the two—actually, for both mills, for St. Paul and Forney, it does improve our integration levels a little bit. I think for on the container board side, it goes from about 86 to 89% integrated on container board and from about 67 before to about 71% on paperboard.

Speaker Change: <unk>.

Speaker Change: From about 67 before at about 71% on paperboard.

Tony Smurfit: Yeah, and just to add to that, Patrick, just on the quick wins, I mean, that forms part of it, and that's why we said at least $400 million, because we do see many opportunities, both commercial and through CapEx, to develop this business in a much more material way, than before. And so that's why it gives us a lot of optimism for the future.

Speaker Change: Yes, and just to add to that Patrick just on the quick wins I mean that forms part of it and that's why we said at least.

Speaker Change: 400 million, because we do see many opportunities both commercial and through Capex to develop this business in a much more material way.

Speaker Change: Then before and so that's why it gives us a lot of optimism for the future.

Operator: Thank you. Thank you. Thank you. Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Please go ahead.

Mark Weintraub: Thanks very much, and thanks for all the, the color so far. Wanted just to come back to the first half to second half bridge, if I could. You're essentially assuming about $100 to 300 million pickup in EBITDA. And if I caught you right, you are looking for volumes to be, you know, flat to up modestly. So hopefully that's a positive. We've got less downtime, assumed. You've got pricing in Europe that should, in particular, but also in the US, that should be flowing through. Presumably, you get synergies and some additional net productivity in the second half, and you've got the cost takeout. And so on - kind of on the flip side, what are some of the negatives that you might be assuming?

Mark Weintraub: Okay. Thanks, very much and thanks for all the color so far.

Mark Weintraub: Just to come back to the first half to second half rich if I could.

Mark Weintraub: Are you essentially assuming about $100 million to $300 million pickup in EBIT dah.

Mark Weintraub: And if I caught you right.

You are looking for volumes to be flat to up modestly. So hopefully that's a positive we've got less downtime assumed you've got pricing in Europe that should in particular, but also in the U S that should be flowing through presumably you get synergies and some additional net productivity in the second half and you've got the cost takeout.

Mark Weintraub: And so kind of on the flip side.

Mark Weintraub: What are what are some of the negatives that you might be assuming and one which I have a specific question too is wastepaper in Europe is a bunch higher right now which is kind of confusing to me that the demand environment has been.

Mark Weintraub: You know, one which I have a specific question to is wastepaper in Europe, which is a bunch higher right now, which is kind of confusing to me in that the demand environment has been not that great. So I was hoping to get some color on what, why that you think is happening, and if we don't get a more sustained pickup in demand in Europe, does that just come back, roll back over? Thanks so much.

Mark Weintraub: Not that great and so I was hoping to get some color on what.

Mark Weintraub: Why that you think is happening and if it if we don't get a more sustained pickup in demand in Europe does that just come back.

Mark Weintraub: Back over thanks, so much.

Tony Smurfit: I'll take the second one and let Ken take the first part of your question. I mean, on wastepaper, you know, it was a very big surprise to us, Mark, to be honest. You know, we had expected. We've been modeling somewhere around €120, €130 for the year, and all of a sudden, it goes to €170, €180, you know, in the space of literally 6 weeks. And it happened because there was an auction in Italy and one major player who was bringing on new capacity panicked, and then all the other people who were bringing on new capacity panicked, and they bid up the price. So the question of the sustainability of it is a very good question. We'll wait and see.

Mark Weintraub: I'll take the second one.

Mark Weintraub: I will take the first part of your question.

Speaker Change: On waste paper.

It was a very big surprise to us mark to be honest.

Speaker Change: We had expected we've been modeling somewhere around $121 30 for the year and all of a sudden it goes to 170 180.

Speaker Change: In the space of a literally six weeks.

Speaker Change: It happened because there was an option.

Speaker Change: Italy and won one major player who is bringing on new capacity panicked and then all the other people that were bringing on new capacity panicked.

Speaker Change: <unk>.

Speaker Change: Bid up the price. So the question of the sustainability of it as a very good question, we wait and see.

Tony Smurfit: But, you know, it is while demand is not fantastic, it's not bad. It's certainly better than last year. And, you know, they're not making that much more wastepaper, so, you know, it doesn't take a whole lot to flip it and move it. And, you know, I think the reason, you know, when one guy panicked in southern Italy or in Italy, at a particular auction, it made a ripple effect throughout Europe, and that's what happens, because everybody needs the stuff. As you know, Europe is a fundamentally waste-based market. And so, that's what happens. And what... We'll see about the sustainability of it as we go through the summer.

Speaker Change: But it is it is while demand is.

Speaker Change: <unk> is.

Speaker Change: Not fantastic its not bad its certainly better than last year, and they are not making that much more wastepaper. So.

Speaker Change: It doesn't take a whole lot to flip as movers.

Speaker Change: I think.

Speaker Change: The reason.

Speaker Change: When one guy panicked and southern Italy, or in Italy at a particular option. It made a ripple effect through throughout Europe, and Thats, what thats, what happens because everybody needs and stuff as you know Europe is a fundamentally its a waste based markets.

Speaker Change: And so so that's that's what happens.

Speaker Change: Well, we'll see about the sustainability of it as we go through the summer.

Tony Smurfit: But, you know, there is new capacity and demand's not bad in Europe. You know, stocks are low in paper. They're about 100,000 tons less than last year. And, as I say, demand is reasonably good. So, you know, that's what caused it.

Speaker Change: But there is new capacity and demand is not bad in Europe.

Speaker Change: Docs are low and paper than they are about 100000 tons less than last year.

Speaker Change: And as I say demand is reasonably good so so.

Speaker Change: That's what causes.

Ken Bowles: Yeah. Hey, Mark. In terms of just broad building blocks and probably less half one to half two, probably more just to kind of revisit the year to year, but probably more kind of relevant in terms of what we just spoken about before. I don't think much has necessarily changed now we're thinking about it. I think if you think about some of those bigger cost buckets, as we would have talked about maybe at the year end, in terms of where we go full year to full year. In reality, energy is still quite a significant headwind year, year on year, about $350 million. Labor and inflation around that in the order of about $200 million.

Mark Weintraub: Hey, Mark.

Mark Weintraub: In terms of just broad building blocks and probably less half one to half two probably more just to kind of revisit the year to year, because it'd be probably more kind of relevance in terms of what we just spoke about before I don't think much has necessarily changed in how we're thinking about it I think if you think about some of those bigger cost buckets.

Mark Weintraub: As you would have talked about maybe at the year end in terms of where we go full year to full year and reality energy still quite a significant headwind to here year on year about $350 million labor inflation around that in the order of about 200 million other raw materials generally probably a headwind of about 100 and that downtime piece year on year is probably costing somewhere in the order of about one.

Ken Bowles: Other raw materials, generally, you know, probably a headwind of about $100 million, and that downtime piece year-over-year is probably costing somewhere in the order of about $150 million year-over-year. They're the big kind of negatives against that. You can see, though, you know, if you look at the pricing environment and the backdrop to that, which we would have talked about already today, you know, sequentially, year-over-year, box pricing in North America is up broadly 8%, quarter-over-quarter, probably 3%. So you can see that begin to come through to the second half. Clearly, the paper impact is coming through there as well.

Mark Weintraub: <unk> hundred $50 million year on year. They are the big kind of a negative against that you can see though if you look at the pricing environment and the backdrop to that.

Mark Weintraub: <unk> talked about.

Mark Weintraub: Today sequentially year on year box pricing in North America broadly, 8% quarter on quarter, probably three so you can see that begin to come through the second half period. The paper impact is coming through there as well.

Ken Bowles: The biggest piece there, back to OCC, but not necessarily seeing it in Europe, but in North America, certainly relief on OCC, probably year-over-year, giving you the benefit of somewhere between $100 to 150. But so those big cost buckets haven't really moved around a lot since we would have spoken. Clearly, as we've spoken a lot today, the demand backdrop and volumes, clearly the biggest variable that we kind of have to pin down as we kind of go through the second half.

Mark Weintraub: And the biggest piece there back to OCC, but not necessarily seeing it in Europe, but in North America, certainly relief on OCC, probably year on year, giving you the benefit of somewhere between 100 to 150, but to those big cost buckets haven't really moved around a lot since it would've spoken clearly as we've spoken about today the demand backdrop and volumes clearly the biggest variable that we kind of have to pin down is it.

Mark Weintraub: Kind of go through the second half.

Mark Weintraub: Super helpful, Ken. Just one last thought. How about FX? I mean, we've had some big moves in dollar/euro. I would have thought just on a translation basis, that might have some implications. Can you kind of walk us through how that works for you guys?

Speaker Change: Super helpful. Ken just one last follow up how about FX I mean, we've had some big moves in dollar euro.

Speaker Change: I would've thought just on a translation basis that might have.

Speaker Change: Some implications can you kind of walk us through how that do you guys think the first time, yes, it will be negative so far but it's kind of it's not necessarily material as you sit here today given that the data has come back a bit.

Tony Smurfit: Negative first,

Ken Bowles: Yeah, we've been negative so far, but it's kind of, it's not necessarily material as we sit here today, given that the US dollar's come back a bit. But we can help you model some of that, Mark, depending on where we go. We can give you some stats on, you know, taking a euro/dollar pair in terms of where you see it. But not at the moment. Slightly negative, but not material, is probably the best way to think about it for Q1, particularly in Latin America.

Speaker Change: But we can we can help you model some of that Mark depending on where we go we can give you some stats on.

Speaker Change: Taken a euro dollar per in terms of where you see it but not at the moment slightly negative but not material is probably the best way to think about it for the first quarter.

Speaker Change: Particularly in Latin America. Thanks.

Mark Weintraub: Thanks, guys.

Speaker Change: Thanks, guys.

Tony Smurfit: Thanks, Mark.

Speaker Change: Thanks Mark.

Operator: Thank you. Your next question comes to the line of Kevin Fogarty from Deutsche Numis. Please go ahead.

Thank you.

Speaker Change: Your next question will come from the line of Kevin Fogarty from Deutsche and UBS. Please go ahead.

Kevin Fogarty: Thanks very much, and hey, everyone. Thanks for taking my question. So a number of them have been answered, but it's just more on exceptionals that we might see this year. Obviously, you've got them associated with the capacity closures and adjustments you've announced today. Could you just sort of step us through what else we should be thinking about? I know you've kind of previously flagged the sort of 235 relating to synergies delivery. Is there anything else we should be thinking about, sort of accelerated depreciation, or anything associated with the closures, or any kind of more widely sort of restructuring charges that might hit this year?

Speaker Change: Thanks very much.

Speaker Change: If you want.

Speaker Change: Thanks for taking my question.

Speaker Change: Number of them.

Speaker Change: So that's just one on the Exceptionals.

Speaker Change: But we might see this year obviously.

Speaker Change: Associated with <unk>.

Speaker Change: She is not just on chicken now today.

Speaker Change: Could you just step us through what else we should be thinking.

Speaker Change: I mean, you've kind of previously flagged based on our Q3 filing.

Speaker Change: Synergy delivery.

Speaker Change: Anything else, we should be thinking about accelerated depreciation or anything yourself.

Speaker Change: As yours or any kind of employee restructuring charges this year.

Tony Smurfit: Essentially, no, Kevin. It's kind of as guided. The only new, the new information will be around those closures last night. The cash piece, you would have seen about $99 million, and then the impairment of the fixed assets, accelerated depreciation, if you want, about $188 million. So, we'll take, we'll take the impairment, you know, now, essentially for the second quarter, and then the cash costs will go out over the remainder of the year. So, nothing beyond what, either what we guided already or indeed those impairments from last night.

Speaker Change: So essentially no Kevin.

Speaker Change: It's kind of as guided.

Speaker Change: The new innovation will be around those closures last night and the cash piece you would have seen about $99 million.

Speaker Change: The impairments of fixed assets et cetera, depreciation if you want about $188 million. So.

Speaker Change: With the will take will take the impairment now essentially for the second quarter and then the cash cost will go out over the remainder of the year. So.

Speaker Change: Nothing beyond what either what we guided already R&D those impairments from last night.

Kevin Fogarty: Would you guide related synergies? Is kind of as expected, sort of 235?

Speaker Change: Could you guys relates to synergies you just kind of as expected Q3.

Tony Smurfit: That's exactly, yeah. As expected, Kevin.

Speaker Change: Yes as expected Kevin.

Kevin Fogarty: Great. All right, thanks very much. Thanks.

Roger: Alright, alright, thanks Roger.

Tony Smurfit: Thanks, Kevin.

Operator: Thank you. Your next question comes from the line of Gaurav Jain from Barclays. Please go ahead.

Speaker Change: Thank you John.

Speaker Change: Your next question comes from the line of Gaurav Jain from Barclays. Please go ahead.

Gaurav Jain: Hi, good morning or good afternoon, thank you so much. So two questions from me. One is, you know, you know, recently we have read that, you know, the Chinese container board importers, who are no longer importing from US, they are shifting some of their demand to LATAM. So is this something that you are noticing, and do these changing trade flows somehow position you in a better context versus your other peers who are more sort of geographically, you know, fixed? So that was question number one. And, the second question was on, you know, future potential M&As. So you have done acquisitions in prior cycles, in prior down cycles, and yes, you just did this acquisition eight months ago, and, you know, the balance sheet is leveled up to, like, two and a half times.

Speaker Change: Hi.

Speaker Change: Good morning, and good afternoon. Thank you so much so two questions from me.

Speaker Change: One is the.

Speaker Change: Recently, we have read that.

Speaker Change: The Chinese containerboard importers, who are no longer important interim U S shifting some of their demand to Latam.

Speaker Change: Is that something that you are noticing on Moody's changing trade flows somehow position you're in a better context.

Speaker Change: The PFS was more sort of geographically.

Speaker Change: Thanks.

Speaker Change: So that was question number one.

Speaker Change: And the second question was on future potential on Monday, So you have done acquisitions and prior cycles in prior down cycles.

Speaker Change: Yes, Justin this acquisition eight months ago, and the balance sheet has leveled up to make when the half times, but.

Gaurav Jain: But if, you know, if we indeed get into weaker macro cycle and there is some opportunity which is too good to pass, would you consider it?

Speaker Change: Indeed, we are going to be good macro cycle.

Speaker Change: There is some opportunity images.

Speaker Change: POS will do come to debit.

Tony Smurfit: Well, I'll take the second one. Well, I'll take them both, actually.

Speaker Change: Well I'll take the second one I'll take them both.

Gaurav Jain: Yeah, please.

Speaker Change: Yeah.

Tony Smurfit: Listen, our objective is to get our balance sheet down towards 2.0 times. That's where we're solely focused on that. We will be making some smaller bolt-on acquisitions, as and when, if they make sense, for the overall company. But you know, we're not going to do anything that's off the pitch, so to speak. We're very focused on making sure that we bed the organization down. We're very focused on making sure that we bed every part of the business down.

Speaker Change: Our objective is to get our our balance sheet down to towards the 2.0 times. That's what we're solely focused on that we will be making some we will be making some smaller bolt on acquisitions as and when if they make sense for the overall company, but but.

Speaker Change: We're not going to.

Speaker Change: Do anything that's off the pitch so to speak where we're very focused.

Speaker Change: Making sure that we bet the organization down we're very focused on making sure that we get every every part of the business down there is still a lot of work to do John about may.

Tony Smurfit: There's still a lot of work to do, Jain, about, you know, making sure the accounting function works well, making sure that everything, you know, the reporting is great, that the operations are improving, that the integration continues on its path. So there's a lot to do before we would even think about a larger acquisition and do anything off the pitch, so to speak. With regard to the Chinese flows, you know, we are hearing that there are people who are having to adjust. We saw public quotes from some of our competitors taking downtime, and we believe that that's continuing to happen.

Speaker Change: Making sure the accounting function works, well, making sure that everything that <unk>.

Speaker Change: <unk> is great that the operations are improving that the integration continues on its path. So theres a lot to do before we would even think about it.

Speaker Change: Larger acquisition and do anything after off the pitch so to speak with regard to the Chinese flows.

Speaker Change: We are hearing that.

Speaker Change: There are there are.

Speaker Change: People, who are having to adjust we said we saw public of quotes for some of our competitors, taking downtime and we believe that thats continuing to happen.

Tony Smurfit: Because of the lack of exports, there are many mills with regard to that that have specifically their focus on exporting to China out of the US, and that would obviously be problematic for them right now. We don't do any significant amount of exports to China. We do a lot of exports to Latin America, where we have long-standing good relationships with, you know, excellent customers, and we continue to keep those and develop those because, you know, we believe in long-term relationships in Smurfit Westrock. And, you know, I don't think the Chinese thing is going to influence us negatively and can only be positive for us.

Speaker Change: Because of the lack of exports there are many mills with regard to.

Speaker Change: That have specifically their focus on export into China.

Speaker Change: Out of the U S and that would obviously be problematic for them right. Now we don't do any significant amount of exports to China, we do a lot of export to Latin America, where we have.

Speaker Change: Long standing good relationships with.

Speaker Change: Excellent customers and we continue to keep those and develop those because we believe in long term relationships and smurfit West rock.

Speaker Change: I don't think the Chinese thing is going to influence influences negatively and can only be positive for us.

Gaurav Jain: Thank you very much.

Speaker Change: Thank you very much.

Tony Smurfit: Thank you.

Speaker Change: Thank you.

Operator: Thank you. We will now take our final question for today, and your final question comes from the line of George Stathas from Bank of America. Please go ahead.

Operator: Thank you. We will now take our final question for today, and your final question comes from the line of George Staphos from Bank of America. Please go ahead.

Speaker Change: Thank you we will now take our final question for today and Youll final question comes from the line of George Staphos from Bank of America. Please go ahead.

Kevin Fogarty: Hi, everyone. Good morning. Good afternoon. Thanks for all the details, Tony and Ken. There's been a lot of discussion on containerboard today, so I'm gonna focus a little bit more on consumer board. You know, you're nine months into the acquisition. What have been the learnings that you can share on kind of an open mic discussion about the, the, the value addness of being able to sell both consumer and secondary packaging? Well, we shouldn't call it that necessarily, but corrugated packaging across all of your customers. You know, what's changed, perhaps, again, to what degree you can share, versus what your perceptions might have been in July.

George Staphos: Hi, everyone. Good morning. Good afternoon. Thanks for all the details, Tony and Ken. There's been a lot of discussion on containerboard today, so I'm gonna focus a little bit more on consumer board. You know, you're nine months into the acquisition. What have been the learnings that you can share on kind of an open mic discussion about the, the, the value addness of being able to sell both consumer and secondary packaging? Well, we shouldn't call it that necessarily, but corrugated packaging across all of your customers. You know, what's changed, perhaps, again, to what degree you can share, versus what your perceptions might have been in July.

George Staphos: Hi, everyone. Good morning, good afternoon, Thanks for all the details Tony and Ken.

Speaker Change: There's been a lot of discussion on containerboard today, so I'm going to.

George Staphos: Focus a little bit more on.

Speaker Change: Consumer board.

George Staphos: You are.

George Staphos: Nine months into the acquisition.

George Staphos: What have been the learnings that you can share.

George Staphos: On kind of an open mic discussion about the value add in this of being able to sell both consumer and secondary packaging well, we shouldnt call that initially but corrugated packaging.

George Staphos: <unk> all of your customers and whats changed perhaps again to what degree you can share what your perceptions might've been in July.

Kevin Fogarty: Relatedly, within consumer, are there any differences that you can share in terms of how you're allocating capital, looking at the footprint and so on, relative to how you might go about your business in, in corrugated? And what should we take away, if anything, other than just your aligned footprint with the adjustment in CRB? The fact that you're taking some capacity out of CRB would suggest that, you know, there's a long-term plan. You're viewing it as a, you know, a ongoing business within Smurfit. Any thoughts that you can share would be great, and good luck in the quarter. Thank you, guys.

George Staphos: Relatedly, within consumer, are there any differences that you can share in terms of how you're allocating capital, looking at the footprint and so on, relative to how you might go about your business in, in corrugated? And what should we take away, if anything, other than just your aligned footprint with the adjustment in CRB? The fact that you're taking some capacity out of CRB would suggest that, you know, there's a long-term plan. You're viewing it as a, you know, a ongoing business within Smurfit. Any thoughts that you can share would be great, and good luck in the quarter. Thank you, guys.

George Staphos: Relatedly.

George Staphos: Within consumer are there any differences that you can share in terms of how you're allocating capital.

George Staphos: Looking at the footprint and so on relative to how you might go about your business in corrugated and what should we take away if anything other than just your lying footprint with the adjustment in CRB. The fact that you're taking some capacity out of CRB, which suggests that there is a long term plan you're viewing it as a.

George Staphos: Ongoing bids within smart, but any thoughts that you can share would be great and good luck on the quarter. Thank you guys.

Tony Smurfit: Thanks, George, and good to hear you. I think that there is a very good business here in consumer packaging. We've got some great people, we've got some great assets, and we've got some great opportunities. And so we will view this business the same way we've used our corrugated business, our bag and box business, and our sack business, you know, and decide where the best returns are gonna come from, as we look at each individual capital request. So, you know, we think we've got a superior offering or potentially have a superior offering. Let me put it like that. We need to work on some strategic elements of it, George, and that's something that we'll work through, and we'll communicate to the market when we're able.

George Staphos: Thanks, George and good to hear you.

George Staphos: Let me be.

George Staphos: That there is a very good business here in consumer packaging and we've got some great people. We've got some great assets and we got some great opportunities and so we will view this business the same way we views our corrugated business our bag in box business, our sock business.

George Staphos: And decide where the best returns are going to come from.

George Staphos: As we look at each each individual.

George Staphos: Capital request so.

George Staphos: We think we've got a superior offering.

Speaker Change: Or potentially have a superior offering let me put it like that we need to work on some strategic elements of it George.

Speaker Change: And that's something that we'll work through and we will communicate to the market when we are able to.

Tony Smurfit: You know, we're literally nine months into this, and you know, we are discovering a lot. You've asked what our findings are. I think it's probably a little bit tougher of a marketplace than we would have anticipated, but when I see the positives, I see we've got some incredibly good people and incredibly potentially incredibly good assets, and incredibly good market positions to develop. So, you know, that's the work in progress, is to figure out, you know, where do we apply the capital and when, and what markets can give the shareholders the best returns.

Speaker Change: We are literally nine months into this.

Speaker Change: And.

Speaker Change: We are discovering a lot you've you've asked what's what's what's.

Speaker Change: What our findings are as I think it's probably a little bit tougher of a marketplace than we would have anticipated, but when I see the positives I see we've got some incredibly good people and incredibly potentially incredibly good assets an incredibly good market positions two to develop so.

Speaker Change: That's the work in progress is to figure out.

Speaker Change: How do we where do we apply the capital and win.

Speaker Change: And what markets can give you the share or give the shareholders the best returns and.

Tony Smurfit: And that's still work in progress, but you know, I would say this is a you know, potentially very strong market for us because there is a cross-sell opportunity. There is a good foundation of business that we can really develop and grow. But you know, as I say, with regard to the specific grades, we... I mean, you know, you will know that, and I think I've been upfront on this, is that there we do need to have a CRB strategy, and we do need to have an SBS strategy, and a CUK strategy for all of our operations. And you know, we're in the process of developing that, and when we're ready, we'll come back to you and tell you what that is.

Speaker Change: It's still work in progress, but I.

Speaker Change: I would say this is a.

Speaker Change: <unk> potentially very strong market for us because there is a cross sell opportunity. There is there is a.

Speaker Change: A good foundation of business that we can really develop and grow but.

Speaker Change: As I say with regard to the specific grades I mean.

Speaker Change: You will know that.

Speaker Change: Pickup in upfront on this is that we do need to have a CRB strategy and we do need to have.

Speaker Change: On SBS strategy.

Speaker Change: C U K strategy for all of our operations and we're in the process of developing that and when we're ready we'll come back to you and tell you what that is.

Tony Smurfit: But we're not a million miles away from telling you.

Speaker Change: But we're not a million miles away from telling you.

Kevin Fogarty: That's good. Good to hear. Appreciate the thoughts. Good luck in the quarter. Thank you, guys.

George Staphos: That's good. Good to hear. Appreciate the thoughts. Good luck in the quarter. Thank you, guys.

Speaker Change: That's good to hear.

Speaker Change: Appreciate the thoughts good luck in the quarter. Thank you guys.

Tony Smurfit: Thanks, George. Appreciate it. So operator, I think that's our last question. With that, I would say to all participants and all those that asked the questions, many thanks for listening to us. You know, we are very proud of what this company has already become, but as I say, we are at the start of a long journey, a never-ending journey. But you know, my colleagues and myself are really excited about the future. And, you know, obviously, it'll be. We're living in uncertain times, as you all know, and, you know, when we get back to growth, this company is going to be extremely well positioned to take advantage of that, in every way.

George Staphos: Thanks, George appreciate it.

Speaker Change: So operator I think that's our last question.

Speaker Change: With that I would say to all participants and all those that ask the questions. Many thanks for listening to us.

Speaker Change: We are very proud of what this company has already become but as I say, we are at the start of a long journey, a never ending journey.

Speaker Change: But my colleagues and myself are really excited about the future.

Speaker Change: Obviously, it will be we are living in uncertain times as you all know and when we get back to growth. This company is going to be extremely well positioned to take advantage of that.

Speaker Change: In every way so thank you for your time and your attention and we look forward to seeing you in person.

Tony Smurfit: Thank you for your time and your attention, and we look forward to seeing you in person, or at the next quarter call. Thank you all.

Speaker Change: Or at the next quarter call. Thank you all.

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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Ciarán Potts: ... As a reminder, statements in today's earnings release and presentation, and the comments made by management during this call, may be considered forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in the earnings release and in our SEC filings. The company undertakes no obligation to revise any forward-looking statements. Today's remarks also refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are included in today's earnings release and in the appendix to the presentation, which are available at investors.smurfitwestrock.com. Before handing over to Tony, I would ask that you limit your questions to two, and, should you require any clarification from what we are discussing today, myself and Frank will make ourselves available after the call.

Speaker Change: As a reminder, statements in today's earnings release and presentation and the comments made by management during this call may.

Speaker Change: May be considered forward looking statements.

Speaker Change: These statements are subject to risks and uncertainties that could cause our actual results to differ materially from our expectations and projections.

Speaker Change: These risks and uncertainties include but are not limited to the factors identified in the earnings release and in our SEC filings.

Speaker Change: The company undertakes no obligation to revise any forward looking statements.

Speaker Change: Today's remarks also refer to certain non-GAAP financial measures reconciliations to the most comparable GAAP measures are included in today's earnings release and in the appendix of the presentation, which are available at investors thought smart restaurant Dot com.

Speaker Change: Before handing over to Tony I would ask that you limit your questions to two and should you require any clarifications on what we are discussing today myself and Frank will make ourselves available. After the call I will now hand, you over to Tony Some harvest CEO of Merkle desktop Thanks, Karen and good morning, good afternoon everybody.

Ciarán Potts: I will now hand you over to Tony Smurfit, CEO of Smurfit Westrock.

Tony Smurfit: Thanks, Kieran, and good morning, good afternoon, everybody. I'm joined here today by Ken Bowles, our CFO, and I'm delighted to again report a strong Q1 performance across all of our regions, in line with our stated guidance. I'm particularly happy at the structural improvement we have shown in our North American region, which you will all recall, is in the early days of our integration together. Our EMEA and APAC region's performance was good, given the environment was somewhat challenging, while our Latin American region performed very well, driven by our value approach. I'm delighted to say that our synergy program also remains strongly on track, and is expected to deliver the $400 million of promised synergies within the tight timeframe we have set.

Tony Smurfit: Thanks, Ciaran, and good morning, good afternoon, everybody. I'm joined here today by Ken Bowles, our CFO, and I'm delighted to again report a strong Q1 performance across all of our regions, in line with our stated guidance. I'm particularly happy at the structural improvement we have shown in our North American region, which you will all recall, is in the early days of our integration together. Our EMEA and APAC region's performance was good, given the environment was somewhat challenging, while our Latin American region performed very well, driven by our value approach. I'm delighted to say that our synergy program also remains strongly on track, and is expected to deliver the $400 million of promised synergies within the tight timeframe we have set.

Speaker Change: Joined here today by <unk>, our CFO and I am delighted to again report a strong first quarter performance across all of our regions in line with our stated guidance.

Speaker Change: I am, particularly happy at the structural improvements we have shown in our North American region, which you will all recall is in the early days of our integration together.

Speaker Change: Our EMEA and APAC regions performance was good given the environment was somewhat challenging.

Speaker Change: While our Latin American region performed very well driven by our value approach.

Speaker Change: I'm delighted to say that our synergy program also remains strongly on track and is expected to deliver the $400 million promised synergies within the tight tight timeframe we have set.

Speaker Change: Moreover, having put the two businesses together, we now see very significant operational improvements that will garner at least the same again in additional benefits.

Speaker Change: This is something the team is working on day in day out to ensure that smurfit West rock continues with the objective of becoming the highest performing company in our sector.

Speaker Change: As you are all aware, we and the management team are all stakeholders in the company and through the lens of being owner operators and trading capital is our own we continue to review our asset base at all times, both through investments and return on capital optimizing our system to ensure that our assets are and will be in the future best in class.

Speaker Change: We are relentless in our pursuit of excellence and we will continue to adjust and develop our asset base as we go forward.

Tony Smurfit: We have proven over the years that we are effective stewards of capital, having successfully navigated many different challenges over the decades. The key to the development of Smurfit Westrock will be ensuring that we have a well-invested asset base that can be developed for the benefit of our, of our customers, to ensure the best quality, the best service, the best innovation, and the highest standards to give our customers and our business leaders the chance to win in their marketplaces. As such, we'll continue to invest in our asset base to ensure these objectives are met. Across our regions, we're reducing our cost base in our paper mill systems, investing to improve reliability and output, and ensuring we have the best converting machines available to meet the needs of our modern customers.

Speaker Change: We have proven over the years that we are in an effective stewards of capital having successfully navigated many different challenges over the decades.

Speaker Change: As such we will continue to invest in our asset base to ensure these objectives are met.

Tony Smurfit: We have recently authorized an initial investment of around 25 converting machines across our system to begin implementation in 2026, which will also help to lower our operating costs so that our shareholders can be rewarded for these investments. We remain excited about the number of opportunities we see to continually optimize our system for growth, but also for cost takeout. In line with all of that, and as and when appropriate, we continue to look at rationalization opportunities within our system. And while these are very difficult decisions to make, it is entirely in line with our philosophy of ensuring that our stronger assets get stronger, but at the same time, increasing operating efficiency.

Speaker Change: We have recently authorized an initial investment of around 25 converting machines across our system to begin implementation in 2026.

Speaker Change: Which will also help to lower our operating costs, so that our shareholders can be rewarded for these investments.

We remain excited about the number of opportunities we see to continually optimize our system for growth, but also for cost takeout.

Speaker Change: In line with all of that and as and when appropriate we continue to look at rationalization opportunities within our system.

Tony Smurfit: In the last 48 hours, we've announced the closure of over 500,000 tons in paper capacity in the US, which, coupled with the recent actions in Mexico and the Netherlands, totals nearly 600,000 tons. These actions will make the company stronger as we invest to ensure better longer-term returns across our business units. I remain very excited about the combination we created some 10 months ago. We have an unrivaled geographic scale, operating in 40 countries and many different product areas where we have strong leadership positions. What has been heartening in such a short period of time is to see the improvement in our North American business, where our commercial approach and the focus on plant-level autonomy has been embraced and is contributing to improved margins.

Speaker Change: In the last 48 hours, we've announced the closure of over 500000 tons and paper capacity in the U S.

Speaker Change: Which coupled with the recent actions in Mexico, and the Netherlands totaled nearly 600000 tonnes.

Speaker Change: These actions will make the company stronger as we invest to ensure better longer term returns across our business units.

Speaker Change: I remain very excited about the combination we created some 10 months ago.

Speaker Change: We have an unrivaled geographic scale operating in 40 countries and many different product areas, where we have strong leadership positions.

Speaker Change: What has been heartening in such a short period of time is to see the improvement in our North American business, where our commercial approach and the focus on plas level autonomy has been embraced and is contributing to improved margins.

Speaker Change: At the same time in North America, we have streamlined their operations and have significantly reduced SG&A costs by a reduction of over 1800 people and this being prior to the recent announcements.

Speaker Change: In our European market, which is currently on an improving trend we continue to have industry, leading returns with our innovative and sustainable packaging offering.

Speaker Change: With regard to our Latam business, you will see that we continued to execute as a result of our leadership positions and our market facing approach.

Speaker Change: We continue smurfit west rock to see obvious cost takeout opportunities.

Tony Smurfit: I have authorized us to implement close to 140 quick win projects, as we call them, that will deliver around $50 million of extra EBITDA in the North American region, and over 60 projects in the European and APAC region, which will deliver $20 million in 2026, in 2026 and beyond. These projects give guaranteed cost takeouts with IRRs ranging from 25% to 150%. In Latin America, we remain focused on expansion, where we see an opportunity, especially in our Brazilian market, to grow rapidly with new facilities in different parts of the country. I'll now hand you over to Ken, who will take you through our financials.

Speaker Change: Authorized us to implement close to 140 quick wind projects as we call them that will deliver around $50 million of extra EBITDA in the North American region.

Speaker Change: And over 60 projects in the European and APAC region, which will deliver $20 million in 2006, and 2026 and beyond.

Speaker Change: These projects get guaranteed cost takeouts with IRR, ranging from 25% to 150%.

Ken: I'll now hand, you over to Ken who will take you through our financials.

Ken Bowles: Thank you, Tony. Good morning and good afternoon, everyone, and thank you again for taking the time to join us. As you can see from the highlights here on slide 9, the business delivered a strong Q1 performance, with net sales of over $7.6 billion, adjusted EBITDA in line with our guidance of $1.252 billion, and an adjusted EBITDA margin of 16.4%. This is a significant improvement compared to the combined performance of the business for the same period last year, showing double-digit growth in adjusted EBITDA for the group and an improvement in our adjusted EBITDA margin.

Speaker Change: Thank you Tony Good morning, and good afternoon, everyone and thank you again for taking the time to join us.

Ken: As you can see from the highlights here on slide nine the business delivered a strong first quarter performance with net sales of over $7 6 billion.

Ken: Adjusted EBITDA in line with our guidance of one $5 billion to $2 billion annually.

Ken: And adjusted EBITDA margin of 16, 4%.

Ken: This is a significant improvement compared to the combined performance of the business for the same period last year, showing double digit growth in adjusted EBITDA for the group and an improvement in our adjusted EBITDA margin.

Ken Bowles: The performance reflects not only our relentless focus on cost, quality, and efficiency, but the incremental benefits of our synergy program and some early-stage benefits of our operational changes, including our operating model, and all underpinned by our strategy of value over volume. As Tony has outlined, we are well on our way now as a combined business, and while the geopolitical outlook is uncertain at the moment, at this moment in time, we are confident in the future success of Smurfit Westrock, thanks to the unrivaled geographic footprint and product portfolio, our experienced management team, and the dedication and commitment of our people to our customers. Packaging, at the end of the day, is a local business, and with the vast majority of our business operating in the FMCG sector, we are, and have proved to be in the past, a highly resilient business.

Ken: The performance reflects not only our relentless focus on cost quality and efficiency, but the incremental benefits of our synergy program and some early stage benefits of our operational changes.

Ken: Including our operating model and all underpinned by our strategy of value over volume.

Tony: As Tony has outlined we are well underway now as a combined business and while the geopolitical outlook is uncertain at the moment at this moment in time, we are confident in the future success of <unk> West rock, Thanks to the unrivaled geographic geographic footprint and product portfolio, our experienced management team and the dedication and commitment of our people to our customers.

Tony: Packaging at the end of the day is a local business and with the vast majority of our business operating in the FMC G sector. We are an approved to be in the past a highly resilient business.

Ken Bowles: Turning now to the reported performance of our three segments in the quarter, and starting with North America, where our operations delivered net sales of $4.7 billion, with Adjusted EBITDA of $785 million, and an Adjusted EBITDA margin of 16.8%. An excellent outcome. Compared to the combined results in Q1 of last year, we saw a significant margin improvement due to higher selling prices, which more than offset cost headwinds on energy, labor, and higher mill downtime, coupled with lower corrugated volumes year-on-year. Corrugated box pricing was higher compared to the prior year, while box volumes were down 4.7% on the same-day basis and 4.3% on an absolute basis.

Tony: Turning now to the reported performance of our three segments in the quarter and starting with North America, where our operations delivered net sales of $4 7 billion with adjusted EBITDA of $785 million and adjusted EBITDA margin of 16, 8% an excellent outcome.

Tony: Compared to the combined results in the first quarter of last year, we saw a significant margin improvement due to higher selling prices, which more than offset cost headwinds in energy and labor and higher mill downtime.

Tony: Coupled with lower corrugated volumes year on year.

Tony: Corrugated box pricing was higher compared to the prior year, while box volumes were down four 7% on a same day basis and four 3% on an absolute basis.

Ken Bowles: Our third-party paper sales saw a low single-digit decline in the quarter, while consumer packaging shipments were 1% higher when compared to the prior year, as growth in food and beverage products more than offset a decline in our smaller home, beauty, and healthcare product lines. We have taken significant actions to streamline the central functions of the segment and to continue to optimize and invest in the asset base. Ultimately, we are changing the business model to drive profit responsibility at the mill and the box plant, while retaining strong central capital controls, where we see significant opportunity to drive profitable growth and higher cash generation through the cycle. Looking now at our EMEA and APAC segment, where we delivered net sales of $2.6 billion with Adjusted EBITDA of $389 million, and an Adjusted EBITDA margin of 15.1%.

Tony: Our third party paper sales low single digit decline in the quarter, while consumer packaging shipments were 1% higher when compared to the prior year as growth in food and beverage products more than offset a decline in our smaller home beauty and health care product lines.

Tony: We have taken significant actions to streamline the central functions of the segment and to continue to optimize and invest in the asset base.

Tony: Similarly, we are changing the business model to drive profit responsibility at the mill and box plant, while retaining strong central capital controls, where we see significant opportunity to drive profitable growth and higher cash generation through the cycle.

Tony: Yes.

Tony: Looking now at our EMEA and APAC segments, where we delivered net sales of $2 6 billion.

Tony: With adjusted EBITDA of $389 million and an adjusted EBITDA margin of 15, 1%.

Ken Bowles: Exiting what was a challenging year for the industry in this region, our operations continue to demonstrate resilience as sales remain stable and our adjusted EBITDA outcome was only moderately lower compared to the prior year on a combined basis, leaving an EBITDA margin of over 15%, a testament to the skill and dedication of teams locally, and continue to deliver for our customers and manage a volatile cost environment. Higher corrugated box prices year-on-year were more than offset by headwinds, predominantly on energy, recovered fiber, and labor. Corrugated box volumes were broadly flat on an absolute basis, but 1.5% higher on a same-day basis. To consolidate our leadership position in this region, we've continued to make significant investments through new converting machines, upgrades to corrugators, safety systems, and substantial investments in our bag and box business.

Tony: Exiting what was a challenging year for the industry in this region. Our operations continued to demonstrate resilience that sales as sales remain stable and our adjusted EBITDA outcome was only moderately lower compared to the prior year on a combined basis.

Tony: Leaving an EBITDA margin of over 15% a testament to the skill and dedication of teams locally and continue to deliver for our customers and manage a volatile cost environment.

Tony: Higher cargo box prices year on year, Onboarding offset by headwinds predominantly on energy recovered fiber and labor.

Tony: Corrugated box volumes were broadly flat on an absolute basis, but one 5% higher on a same day basis.

Tony: To consolidate our leadership position in this region, we've continued to make significant investments to new converting machines upgrades the corrugator in safety systems and substantial investments in our bag in box business.

Ken Bowles: All ensuring we meet the evolving needs of our customers with market-leading quality, innovation, and service. Our LATAM segment again remained very strong in the first quarter, as you can see here, with net sales of $500 million, adjusted EBITDA of $115 million, and an adjusted EBITDA margin of over 22%. Again, when looking at the comparative performance year-on-year, adjusted EBITDA and adjusted EBITDA margin were significantly higher in the first quarter of 2025. Corrugated box volumes were at 6.3% lower on a same-day basis, with Argentina remaining an outsized drag on the region's demand picture, along with our value over volume strategy playing out as expected in Brazil, as we continue to roll through a sizable portion of uneconomical legacy contracts.

Tony: All ensuring we meet the evolving needs of our customers with market, leading quality innovation and service.

Tony: Our Latam segment again remained very strong in the first quarter as you can see here with net sales of 5 billion adjusted EBITDA of $115 million and an adjusted EBITDA margin of over 22%.

Tony: Again, we're looking at the comparative performance year on year, adjusted EBITDA and adjusted EBITDA margin were significantly higher in the first quarter of 2025.

Tony: Corrugated box volumes, whereas six 3% lower on a same day basis with Argentina remaining an outsized drag on regions demand picture, along with our value over volume strategy, playing out as expected in Brazil, as we continue to roll to a sizeable portion of uneconomical legacy contracts.

Ken Bowles: Nonetheless, by leveraging our strong track record in quality and service, we successfully implemented pricing initiatives that more than offset a negative currency translation impact and lower box volumes to deliver this strong result. Latin America is a region we are proud to have operated in since the 1950s and benefits from growing economies and a diverse customer base. By leveraging our deep understanding of each local market, Smurfit Westrock is well positioned to continue to drive long-term, long-term success in this region. Turning now to slide 11, and I'm pleased to confirm that our synergy program is progressing well as planned, and we are on track to deliver $400 million of full runway synergies exiting 2025.

Tony: Nonetheless by leveraging our strong track record in quality and service, we successfully implemented pricing initiatives that more than offset a negative currency currency translation impact and lower box volume to deliver these strong results.

Tony: Latin America as a region. We are proud to have operated in since the 19 fifties and benefit from growing economies and a diverse customer base.

Tony: By leveraging our deep understanding of each local market sorry for West rock is well positioned to continue to drive long term long term success in this region.

Tony: Turning now to slide 11, and I am pleased to confirm that our synergy program is progressing well as planned and we are on track to deliver $400 million of full run rate synergies exiting 2025.

Ken Bowles: We expect to realize approximately $350 million in Adjusted EBITDA this financial year, with $80 million being recognized in Q1, reported earnings of $1.252 billion. Moreover, we see at least $400 million of additional opportunities following from a sharper operating and commercial focus. The drivers of this medium-term target are multifaceted and involve our long-standing value over volume philosophy, the rationalization of high-cost capacity, and consolidation of production to more efficient plants, and through the rollout of our operational best practice and our suite of unique innovation tools. And finally, as we noted in the release, consistent with our disciplined approach in running a balanced system, and before we see the impact of the announced capacity closures, we expect to incur additional downtime in Q2, costing approximately $100 million over Q1.

Tony: We expect to realize approximately $350 million and adjusted EBITDA. This financial year with $80 million being recognized in their first quarter reported earnings of one to $5 2 billion.

Tony: Moreover, we see at least $400 billion of additional opportunities following from a sharper operating and commercial focus.

Tony: The drivers of this medium term target are multi faceted and involve our long standing value over volume philosophy, the rationalization of high cost capacity and consolidation consolidation of production to more efficient plants.

Tony: And through the rollout of our operational best practice, and our suite of unique innovation tools.

Tony: And finally as we noted in the release consistent with our disciplined approach in running a balanced system and before we see the impact of the announced capacity closures, we expect to incur additional downtime in the second quarter costing approximately $100 million over the first quarter.

Ken Bowles: While the demand outlook is uncertain, we expect Q2 adjusted EBITDA to be approximately $1.2 billion, and our current estimate for a full-year adjusted EBITDA is between $5 and 5.2 billion. With that, I'll pass it back to Tony for some closing remarks.

Tony: And while the demand outlook is uncertain, we expect second quarter EBITDA adjusted EBITDA to be approximately $1 2 billion and our current estimate for our full year adjusted EBITDA is between 5% and $5 2 billion.

Tony: And with that I'll pass it back to Tony for some closing remarks.

Tony: Yes, Thanks, Ken while we're just a little over nine months into our transformation journey, we have delivered and we will continue to deliver meaningful progress.

Speaker Change: I am very happy how smurfit Kappa and West rock have come together to create smurfit west rock with operational and cultural integration progressing very well.

Speaker Change: As Ken said, our synergy program and operational and commercial focus are delivering meaningful improvements in our business.

Speaker Change: We continue to see significant opportunities to develop the business across all our regions and product lines.

Tony Smurfit: While we are still at the early stages of our journey at Smurfit Westrock, with the innovation, the quality, and service that we can give to our customers, we are confident that we will deliver for all stakeholders. While there's no doubt that we are in uncertain times, we believe the actions we're taking today and will continue to take, will translate to superior operating and financial performance in the months and years ahead. With that, operator, we will go over to questions. Thank you all for listening.

Speaker Change: While there is no doubt that we are in uncertain times, we believe the actions we're taking today and will continue to take will translate to superior operating and financial performance in the months and years ahead.

Speaker Change: And with that operator, we will go over to questions.

Speaker Change: Thank you all for listening.

Speaker Change: Thank you to ask a question press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: We will now go to your first question.

Speaker Change: And your first question comes from the line of Charlie Muir Sands from BNP Paribas. Please go ahead.

Charlie Muir-Sands: Good morning and afternoon. Thank you for taking my questions. I'll stick to two, as requested. Firstly, just on your, on your 2025 guidance, I just wondered if you could elaborate a little bit around what are the assumptions that, that go into that? Are you, for example, assuming the similar kind of box volumes in the North American business, for the remainder of the year that you saw in, in Q1? Or maybe a bit lower, given the, the run rate seems to be sort of deteriorating, at least at the moment. And, you know, are you, for example, in Europe, assuming that a second board price hike, which many have mooted but has not yet been recognized, is successful? And, and have you factored in OCC? Yeah, just digging into some of the assumptions there.

Speaker Change: Good morning, good afternoon, thanks for taking my questions.

Speaker Change: Teva has requested firstly just on your 2025 guidance.

Speaker Change: Wondered if you could elaborate a little bit around more of the assumptions that go into that are you for.

Speaker Change: For example, assuming similar kind of bulk volumes in the North American business.

Speaker Change: For the remainder of the year that you saw in Q1.

Speaker Change: Im.

Speaker Change: Or maybe a bit lower given the run rate seems to be deteriorating at least at the.

Speaker Change: Aiman.

Speaker Change: And are you for company in Europe, assuming a second price hike, which many of muted, but it has not yet been recognized.

Speaker Change: To be successful and have you factored in OCC.

Speaker Change: Yeah, just taking some of the assumptions that and then the second question is just your comments about the plan for 'twenty five new machines.

Charlie Muir-Sands: And then the second question is just your comment about the plan for 25 new machines next year. I think it was, you know, early days, I appreciate, but does that mean that CapEx in 2026 could be much higher than 2025, or within the kind of envelope that you've previously been indicating? Thanks.

Speaker Change: Next year I think it was.

Speaker Change: Alrighty. Thanks, I appreciate it but does that mean that the capex in 2026 could be.

Speaker Change: Much higher than 2025 within the kind of envelope that you've previously been indicating.

Tony Smurfit: Let me take a bit of it, and I'll ask Ken to jump in when I miss something. On the second part, CapEx, we haven't really even thought through yet what our CapEx number is going to be in 2026. You know, we're obviously front-running a lot of the programs that we have in place for our strap plan to ensure that we get the benefit of these growth opportunities, primarily growth opportunities and cost reduction opportunities, some of them are. To be able to implement during 2026 and to get the benefit of it as early as possible. You know, obviously, our CapEx plans are gonna depend on what the environment is and what we see the future environment is.

Speaker Change: We're obviously running a lot of the programs that we have in place for our strap plan to ensure that we get the benefit of these growth opportunities primarily growth opportunities and cost reduction opportunities some of them are.

Speaker Change: To be able to implement during 2026 and to get the benefit of earlier as early as possible.

Speaker Change: <unk>.

Speaker Change: Obviously, our capex plans are going to depend on what the environment is and what we see the future environment is.

Tony Smurfit: And we feel very comfortable with the assets that we bought. We feel very comfortable with the positioning of the company. And the question is, what growth is going to be there, and what opportunities do we have for cost takeout, is gonna really reflect on how much we spend. But it's very early days, Charlie, but it's -- I think, you know, I think we're just getting a jump on a relatively small amount of capital for 2026. And, you know, the good news is, for anyone who's listening, is that we don't have a huge pipeline of big projects, going forward into 2026 or 2027. So we can adjust pretty easily, the organization as to how the environment is.

Speaker Change: We feel very comfortable with the assets that we bought we feel very comfortable with the position.

Speaker Change: Positioning of the company and the question is what growth is going to be there and what the opportunities that we have for cost takeout is going to really.

Speaker Change: Reflect on how much we spend but it's very early days Charlie but.

Speaker Change: I think I.

Speaker Change: Going forward into 2026, or 2027, and so we can adjust pretty easily the organization as to how the environment is and that's always been a key.

Tony Smurfit: And that's always been a key tenet of this company is to make sure that we have the agility to be agile, and that's what we will continue to be. And obviously, as I mentioned in my notes, that you know, we are all owner-operators, and we want to make sure that, you know, whatever we do is in the best interest of the shareholders for the short, medium, and long term. And so that will decide what we spend in 2026 and beyond. But you know, no decisions yet, and we're not, you know, to use the euphemism, we're not at all ahead of our skis here. With regard to the box volumes, you know, what we're saying is, you know, we don't anticipate very significant box volume improvement.

Speaker Change: Key tenants of this company is to make sure that we have the agility to be agile.

Speaker Change: And Thats, what we will continue to be and obviously as I mentioned in my in my notes.

Speaker Change: No decisions yet.

We're not.

Speaker Change: To use the euphemism, we're not at all ahead of our skis here with regard to.

Speaker Change: The box volumes, what were saying is.

Speaker Change: We don't anticipate very significant box.

Tony Smurfit: In fact, probably because of our value strategy, we'll probably continue to improve our earnings, but probably lose some volumes. But you know, at the same time, you know, we are seeing very, very significant adoption by our people about the way that we're managing the business. And I think that's gonna be extremely beneficial for the company as we move forward, both in regard to profitability, because at the end of the day, that's what I believe it's about, profitability. But equally about winning business through the innovation approach that we've had in Europe. And you can see our margins in Europe have, you know, very significantly outperformed our peers. And we expect the same to happen going forward. It'll take some time.

Speaker Change: Box volume improvement in fact, probably because of our value strategy, we'll probably continue to improve our earnings but probably lose some volumes.

Speaker Change: But at the same time, we are seeing very very significant.

Speaker Change: Adoption by our people about.

Speaker Change: About the way that we're managing the business.

Speaker Change: I think thats going to be extremely beneficial for the company as we move forward both in regard to profitability because at the end of the day, that's what I believe it's about profitability, but equally about about winning business through the innovation approach that we've had in Europe and you can see our margins in Europe have very significantly.

Speaker Change: Armed our peers.

Speaker Change: And we expect the same to happen going forward. It will take some time Rome isn't built in a day and making sure that everybody understands.

Tony Smurfit: You know, Rome isn't built in a day, and making sure that everybody understands the innovations that we have, the applications that we have. We've just hired a brand-new innovation officer for the United States. He's in it with us two years. He's learning the ropes. He's an excellent guy, apparently. So, you know, we're going to bring that forward. And then finally, to your last point about the hike, you know, there are so many moving parts at the moment. You know, waste paper has gone up a lot, or recovered fiber's gone up a lot, but energy's come down a bit. So, you know, we just have to wait and see over the next week or so to see what's gonna happen with the second increase.

Speaker Change: The innovations that we have the applications that we have we just hired a brand new innovation officer for the United States is with US two years, he's learning the ropes as an excellent guy apparently so we're going to we're going to bring that forward and then finally to your last point about.

Speaker Change: The hike.

Speaker Change: There are so many moving parts at the moment.

Speaker Change: Waste paper has gone up a lot or a recovered fiber has gone up a lot, but energy has come down a bit so.

Speaker Change: We just have to wait and see over the next week.

Speaker Change: A week or so to see what's going to happen with the second second increase but the first increase of solidly in both in North America and in Europe.

Tony Smurfit: You know, the first increase is solidly in both in North America and in Europe. And I think that's gonna benefit us going forward into the rest of the year, especially if volumes come back.

Speaker Change: And.

Speaker Change: And I think thats going to benefit us going forward into the into the rest of the year, especially if volumes come back.

Ken Bowles: Yeah, I think the only probably two small things out there, Charlie. I think, you know, on the CapEx question, I sort of go back to the comment Tony made in his script, which is around disciplined capital allocation, and irrespective of how we see the outlook, our capital allocation always kind of fits into that. So we phase in time as we see fit, depending on the environment that's ahead of us. But equally, as Tony said, you know, we're not carrying a lot of CapEx into 2026, so lots of flexibility and agility. On the other side, our kind of guidance, a lot of the assumptions haven't really changed from where we were.

Speaker Change: I think probably two small things either Charlie I think on the Capex question I sort of go back to the common Tony made in his script, which was around disciplined capital allocation and irrespective of how we see the outlook our capital allocation I was kind of fit into that so we phase in time as we see fit depending on the environment. That's ahead of us, but equally as Tony said, you know, we're not carrying a lot of capex into 'twenty.

Speaker Change: Thanks, a lot of flexibility and agility.

Speaker Change: On the other side of our kind of guidance.

Speaker Change: Lot assumption haven't really changed where we were if you think about where we are now I think the big impacting factor. There is the $100 million incremental downtime in Q1 to Q2 I think if we went back to the year end, we probably saw that Q1 to Q2 incremental cost year on year was probably in the order of 10% to $15 million.

Ken Bowles: If you think about, you know, where we are now, I think the, the big impacting factor there is, is the $100 million of incremental downtime, Q1 to Q2. I think if we went back to the year-end, we probably saw that Q1 to Q2 incremental cost year-over-year was probably in the order of $10 to 15 million. So that's really the big impact between where we see Q2 now versus where we might have seen it back in February, and indeed, the full year versus where we see it now.

Speaker Change: So that's really the big impact between where we see Q2 now versus where we might have seen us back in February and indeed, the full year versus where we see it now.

Operator: Great, thanks.

Charlie Muir-Sands: Great, thanks.

Speaker Change: Great. Thanks.

Tony Smurfit: Thanks, Charlie.

Operator: Thank you. Your next question comes from the line of Phil Eng from Jefferies. Please go ahead.

Charlie: Thanks, Charlie.

Charlie: Thank you.

Speaker Change: Our next question comes from the line of Phil <unk> from Jefferies. Please go ahead.

Philip Ng: Hey, guys.

Tony Smurfit: Hey, Phil.

Philip Ng: Congrats on the solid quarter in a tough environment. And then Tony, Ken, much appreciated in terms of the increased transparency in the deck and providing us 2025 guidance. It's just helpful for all of us to kind of think through, just given all the volatility. So I guess first question, you guys announced sizable mill and box footprint optimization. Any color on how to kind of size up the cost savings associated with this? And Tony, when you kind of look at your footprint holistically, whether it's the US, perhaps Europe as well, are there still any noticeable opportunities to take out more capacity? I'm particularly curious in Europe, and on the SBS side for the US.

Speaker Change: Hey, guys congrats on a solid quarter in a tough environment and then Tony Ken.

Speaker Change: Much appreciate it in terms of the increased transparency in the deck and providing US 225 guidance. It's just helpful for all of us to kind of think through.

Speaker Change: Just given all the volatility.

Speaker Change: So I guess first question you guys announce sizable mill and box footprint optimization any color on how that kind of size up the cost savings associated with this.

Speaker Change: And Tony when you kind of look at your footprint Holistically, whether it's the U S.

Speaker Change: Perhaps Europe as well are there still any notice ball opportunities take out more capacity I am, particularly curious in Europe and on the SBS side for the U S.

Speaker Change: Hey, Phil and thanks for your thanks for your feedback is good good to see we're kind of progressing in that sense.

Speaker Change: In terms of the benefits of the tumor closures. If you take them in two buckets. If you like so that the full year impact of those two mill closures from an adjusted EBITDA perspective is probably in the order of $50 million to $60 million of incremental EBITDA through the system of those closures and from a capex perspective, if you take a kind of a five year general cycle of maintenance capital Theres, probably a capital.

Speaker Change: Saving us somewhere in the order of $100 million.

Speaker Change: From those who closures in terms of maintenance capital avoided.

Tony Smurfit: Yeah, on the second question, Phil, you know, we continue to look at our system and, you know, I'm a little bit blue in the face at the moment by saying that, you know, we've been very impressed with what we've seen in the legacy WestRock mill system. Primarily, we've been very happy with what we've seen. And, you know, unfortunately, we don't like to close things, but we'll continue to optimize our system going forward. But, you know, obviously, as and when necessary, and, you know, as you will have seen, that we've taken 2 machines out in Mexico, and they're really small and in Holland.

Speaker Change: Yes.

Phil: On the second question Phil.

Phil: We continue to look at our system.

Phil: Im a little bit blue in the face at the moment by saying that we've been very impressed with what we've seen.

Phil: In the legacy West Rock mill system, primarily.

Phil: Primarily we've been very.

Phil: Happy with what we've seen.

Phil: And.

Phil: Unfortunately, we don't like the closings, but we will continue to optimize our system going forward, but obviously as Adam when necessary.

Phil: As you will have seen that we've taken a two two machines out from in Mexico.

Phil: Really small in Holland.

Tony Smurfit: You know, but that they're legacy Smurfit Kappa machines that have, you know, done well for us for many years and just come... It's come their time. And we've taken out a legacy Smurfit Kappa mill, which in the bigger scheme of the Smurfit Westrock system, you know, it was fine in the Smurfit Kappa system, but as part of the Smurfit Westrock system, is obviously one of the weaker mills. And that's why we figured that's the right one to move on. With regard to... and so in answer to your question, we will continue to look at all issues in all grades across all the world, just depending on how the situation evolves. And that's what we've always done in our company.

Phil: Their legacy Smurfit Kappa machines that have.

Phil: We've done well for us for many years in <unk>.

Phil: It's come their time.

Phil: And we've taken out of legacy Smurfit Kappa mill, which in the bigger scheme of the Smurfit West rock system.

Phil: It was fine and the Smurfit Kappa system, but as part of these smart for West Rock system is obviously, one of the weaker mills and Thats why we figure that that's the right one to move on.

Phil: With regard to and so in answer to your question, we will continue to look at.

Phil: All issues in all grades across all the world.

Phil: Just depending on how the situation evolves and that's what we've always done.

Tony Smurfit: With regard to, specifically SBS, what I would say to you is we are continuing to look at all of our system, and we have a strategic plan and process that we're continuing to develop. And when we're ready, we'll let the market know about what our thinking is in the various different grades. You'll have seen, we've taken out a CRB mill today, but obviously, we're looking at the market and seeing where things go. But when we're ready, we'll address that issue.

Phil: Our company.

Phil: With regard to.

Phil: Specifically SBS, but I would say to you is we are continuing to look at.

Phil: All of our system and.

Phil: We have a strategic plan in process that we're continuing to develop and when we're ready we'll let the market know about what our thinking is and the various different grades and you'll have seen we've we've taken out of CRB mill today, but obviously, we're looking at.

Phil: The market and see where things go but when we're ready we'll address that issue.

Philip Ng: Super.

Tony Smurfit: Yeah.

Philip Ng: From a demand standpoint, you guys are taking some economic downtime - it sounds like economic downtime ahead of your closure in North America. Tony, just would love to get your thoughts on what you're seeing out there. Certainly a lot of choppiness with the tariffs in the US and whatnot, consumer weakening. Any color on how interquarter trends progress, April trends? And then it was pretty encouraging to see your consumer business, if I heard you correctly, up 1. I think your biggest competitor is seeing a more muted outlook on demand. So any color on what you're seeing interquarter and how you kind of think about the balance of the year on the demand side, whether it's container board or your consumer packaging business?

Phil: Super.

Speaker Change: Demand standpoint, you guys are taking some economic downtime it sounds like economic downtime ahead of.

Speaker Change: Youre closure in North America, So I'll make just would love to get your thoughts on what Youre seeing out there is certainly a lot of choppiness with.

Speaker Change: With the tariffs in the U S and whatnot consumer weakening any color on how inter quarter trends progressed April trends and then it was pretty encouraging to see your consumer business. If I heard you correctly up what I think your biggest competitor is seeing a more muted outlook on demand. So any color on what you're seeing intra quarter and how you kind of think about.

Speaker Change: The balance of the year on the demand side, whether it's containerboard or your consumer.

Speaker Change: Consumer packaging business.

Tony Smurfit: Yeah, it's a long question. Let me try and address it. I think that we did see a lot of weakness in March and the first two weeks of April. It seems to be steadying itself. Our order books are getting better in the second half of April than they were in, let's say, the six weeks prior to that. So, you know, that gives us some encouragement. So it's a bit difficult to say. I know our competitors are talking about second half recovery. You know, we're not banking on that, frankly. You know, we see... We'll wait and see what happens. If it comes, then we'll be very happy.

Speaker Change: Yes, it's a long question, let me try and address it I think that we did see a lot of weakness in.

Speaker Change: March and the <unk>.

Speaker Change: First two weeks of April it seems to be steadying itself. Our order books are getting better in the second half of April.

Speaker Change: Then they were in lets say the six weeks prior to that so that gives us some encouragement.

Speaker Change: Yes.

Speaker Change: So it's a bit difficult to say I know our competitors are talking about second half recovery, we're not banking on that frankly, we see.

Speaker Change: We'll wait and see what happens if it if it comes then then we will be very happy.

Tony Smurfit: Because, you know, a lot of our costs are under control, so we'll be very happy if demand comes back in the corrugated and container sector. But, you know, we're not, as I say, banking on a very strong recovery. We're banking on some recovery, but not a significant one from where we are. With regard to the consumer business, yeah, we had a reasonable Q1. That market has got choppy. There's no question that there's competitive threats out there that we continue to monitor, and, you know, and that's something that it has got more choppy in the consumer side of things, for sure.

Speaker Change: Because a lot of our costs are under control. So we will be very happy if demand comes back in the corrugated and container sector.

Speaker Change: But we're not we're not as I say banking on a very strong recovery were banking on some recovery, but not.

Speaker Change: Significantly from where we are.

Speaker Change: With regard to.

Ken Bowles: Yeah, and, and Phil, you did hear that right. And keep in mind that, you know, 75% of our consumer business is food and beverage. So generally, in times like this, it presents slight more resilience than, say, the home, health, and beauty pieces.

Kevin Fogarty: Okay. Appreciate all the great color and the good work.

Philip Ng: Okay. Appreciate all the great color and the good work.

Speaker Change: Okay I appreciate all the great color and good work.

Tony Smurfit: Thanks, Phil.

Speaker Change: Thanks, Phil.

Operator: Thank you. Your next question comes from the line of Mike Waxman from Truist Securities. Please go ahead.

Operator: Thank you. Your next question comes from the line of Mike Roxland from Truist Securities. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Mike <unk> from tourist Securities. Please go ahead.

Mike Roxland: Yes, thank you, Tony and Ken, for taking my questions, and congrats on all the progress.

Speaker Change: Yes.

Mike Matson: Yes. Thank you Tony you cannot be taking my questions and congrats on all the progress.

Tony Smurfit: Thanks, Mike.

Mike Matson: Thanks, Mike.

Speaker Change: First question I just wanted to follow up on what you just mentioned Tony in terms of not banking on a second half recovery.

Mike Matson: Can you give us a sense just in terms of.

Mike Matson: How are you thinking about the.

Mike Matson: Good man trajectory into Asia, and how they correspond with your guide for the year.

Tony Smurfit: Yeah, I mean-

Mike Roxland: Especially like the containerboard.

Mike Matson: Yes, I mean, it's looking like containerboard.

Tony Smurfit: We're sort of saying it'll be somewhat similar with a little bit of upside, because the comparators are a little bit better in the second half. So a little bit better than it is in the first half. You know, honestly, if you look at it, Mike, you'll see the containerboard side of things. If there's any demand recovery, it will look very strong indeed. So we remain still optimistic... Sorry, not still. Still very optimistic on the sector. It's a question of when demand comes back, but you know, I do think there needs to be some sort of level of consumer confidence coming back into the market to see that happening.

Mike Matson: We're sort of saying that it will be somewhat similar with a little bit of upside because the competitors are a little bit better in the second half so a little bit better than it is in the first half.

Mike Matson: Honestly, if you look at it Mike Youll see the containerboard side of things if theres any demand recovery looks very strong indeed.

Mike Matson: No.

Mike Matson: We remain still optimistic sorry, not still still very optimistic on the sector. It's a question of when demand comes back but.

Mike Matson: I do think there needs to be some sort of level of consumer confidence coming back into the market to see that happening.

Tony Smurfit: You know, as we sit here, as of, I think it was late this week or early last week, the consumer confidence index in the United States market was, you know, not very strong. So we do need to see consumer confidence coming back, and I think that comes back to the whole question of tariffs and uncertainty and getting some certainty in those, in that area for the consumer to feel good in the North American market. Conversely, in the European market, I think things are actually a bit better. I mean, there's... While demand isn't strong, it's reasonable. You know, most of our markets are doing, you know, well, or reasonably well, with one or two exceptions.

Mike Matson: As we sit here as of I think it was this week or early late last week, the consumer confidence index in the United States market was not very not very.

Mike Matson: Strong so we do need to see consumer confidence coming back and I think that comes back to the whole question of tariffs and uncertainty.

Mike Matson: Getting some certainty in those in that area for the consumer to feel good in the North American market. Conversely in the European market I think things are actually a bit better I mean, there is while demand is strong.

Mike Matson: It's reasonable and most of our markets are doing well or reasonably well with one or two exceptions.

Tony Smurfit: So we feel good about the European market and our positioning and the pass-through of the first price increase, that's gone in, and we'll wait and see whether the second one goes in or not. So we feel good about the European market. Latin America, you see the results, is very strong for us. You know, we've taken some decisions. We believe in trying to make money and we believe in trying to give our customers excellent service. And, you know, in doing that, you know, when you find out the business that you're losing tremendous money on, you tend to let it go, because I don't want to run bad business across expensive machines, and that's a message we're putting into our organization all over the place.

Mike Matson: So we feel good about the the European market and our positioning in the pass through of the first price increase.

Mike Matson: That's gone in and we will wait and see whether the second one goes in or not so we feel good about the European market. Latin America, you will see the results is very strong for us.

Mike Matson: We.

Mike Matson: We took some we've taken some decisions that we don't we believe in trying to make money.

Mike Matson: And we believe in trying to give our customers excellent service.

Mike Matson: In doing that when you find out the business that youre, losing tremendous money on you tend to let it go because I don't want to run that business across expensive machines and that's the message we're putting into our organization all over the place.

Tony Smurfit: You know, there is obviously, there's a consequence to that. If you've got some bad business that you're going to have to let it go. There's an adjustment period of time. So, you know, when we look at the second half, there'll be a lot of moving parts, but we still feel very comfortable and happy with our value over volume concept. And as I say, I think it's been well embraced by our people.

Mike Matson: Obviously theres a consequence to that if you have got some bad business that youre going to have to let it go.

Mike Matson: Adjusted period of time so.

Mike Matson: When we look at the second half to be a lot of moving parts, but we still feel very comfortable and happy with our with our value over volume concept and as I say I think it's been well well.

Mike Matson: Embraced by our people.

Mike Roxland: Got it, and I appreciate all the color, Tony. And then just, quick follow-up. Just, Ken, you mentioned additional downtime of $100 million in, in Q2. You had been originally thinking maybe $10 to 15 million back in February. Where are you taking this downtime? Is that mostly in containerboard? Is there some in boxboard? And can you give us a sense of the tons that you're taking out? And then lastly, just on the synergies, it sounds like now you're aiming for $350 million in synergies in 2024 to 2025, with an exit rate of $400 million. Why the shift there in the synergies? Thanks very much.

Mark Weintraub: Go ahead and I appreciate all the color Tony.

Mike Matson: Quick follow up.

Speaker Change: Ken you mentioned additional downtime on a $100 million in it.

Speaker Change: <unk> had been originally thinking maybe 10 to 15 million back in February where are you taking this downtime is that mostly in containerboard is there something box board.

Speaker Change: Can you give us a sense of where.

Speaker Change: Youre taking.

Speaker Change: And lastly, just on the synergy.

Speaker Change: It sounds like Youre aiming for three.

Speaker Change: 350 million in synergies in 2020.

Speaker Change: With the exit rate of $400 million.

Speaker Change: Why does shift there in the synergies.

Ken Bowles: If you remember, yeah, take the second one first, Mike. We would've got a little bit back in 2024, so really it's a bit of 2024, the $350 in 2025, and then you're exiting. In terms of phasing, I think, you know, $80 in Q1, if you wanted to kind of keep it really simple, the balance across the three quarters, and for the rest of the year will finally get you there. And, again, when we get to the end of Q2, I can look back and tell you what we achieved. But no real change or phase. It's probably more we picked up a bit in late 2024. When you add them to the 2025, you exit 2025 at $400.

Speaker Change: But no real change your phase is probably more we picked up a bit late 'twenty four when you add them to the 25, you exit 2025 at 400.

Ken Bowles: In terms of where we're taking it, I can't really get into specifics, but it's across the system generally, where we kind of need to take it, Mike, is the simplest way to put it. So where we feel it's most applicable. And remember, a lot of the mills anyway will be taking downtime for maintenance and some CapEx projects, so. But not really a split specifically on containerboard versus paperboard, but across the system.

Speaker Change: And in terms of where we are taking us.

Mike Roxland: Got it. Thank you, and good luck in 2025.

Speaker Change: Got it thank you and good luck in 2012.

Tony Smurfit: Thanks, Mike.

Ken Bowles: Thanks, Mike.

Thanks, Mike Thanks, Mike.

Operator: Thank you. Your next question comes from the line of Gabe Haade from Wells Fargo. Please go ahead.

Operator: Thank you. Your next question comes from the line of Gabe Hajde from Wells Fargo. Please go ahead.

Speaker Change: Thank you. Your next question comes from the line of Gabe <unk> from Wells Fargo. Please go ahead.

Gabe Hajde: Gentlemen, I'll echo everyone else's nice work in the first quarter here. Thanks for all the detail.

Speaker Change: Gentlemen, I'll echo everyone else's nice work in the first quarter here. Thanks.

Speaker Change: Thanks for all the detail.

Tony Smurfit: Thanks, Gabe.

Gabe Hajde: Wanted to ask, we're a little less familiar, as you guys all know, about the European market. Q1, again, margins really good. Just curious, kind of from a timing phasing standpoint... I, I'm assuming second half, kind of, stronger than first half, taking into account the pricing that's flowing through. And Tony, I think in the last call, you mentioned that the competitive landscape being a little bit different over there. I think there are 3 machines kind of starting up as we speak. Just any, any feedback from that early days, in terms of, of the market?

Speaker Change: Thanks, I wanted to ask we're a little less familiar as you guys all know about the European market.

Speaker Change: First quarter again margins really good.

Speaker Change: You mentioned the competitive landscape in a little bit different over there I think there are three machines.

Speaker Change: Starting up as we speak.

Speaker Change: Any any feedback from that early days in terms of the market.

Tony Smurfit: Yeah. I mean, clearly the outlook for the European containerboard market, if you take it over the next year or so or 18 months, is not as robust as the United States outlook. You know, there are new machines starting up. They're not really in the market just yet, Gabe. They're about to start in the next 3-4 months and start ramping up then. And, you know, frankly speaking, as I've said before, I have no idea if I was running one of those machines where I'd be selling my product, because a lot of the market is integrated and, you know, going overseas isn't a gift. So, you know, I don't. And all of the people that are coming into the market have existing capacity, so it's not in their benefit to reduce pricing.

Speaker Change: Yes, I mean, clearly the outlook for the European containerboard market, if you take it over the next year.

Speaker Change: Year, or so or 18 months is not as robust as the United States outlook.

Speaker Change: There are new machine, starting up Theyre not really in the market just yet gave there or about to start in the next three four months and start ramping up then and frankly speaking as I've said before I have no idea. If I was running one of those machines, where it'd be selling my product.

Speaker Change: Because a lot of the market is integrated.

Speaker Change: Going overseas isn't a gift.

Speaker Change: No.

Tony Smurfit: So therefore, we'll see what happens in the European market. But, you know, the outlook is, you know, we've got a very well integrated system, and you know our model, and it produced, you know, 15% returns in... Probably when you see other people in, you know, single digit returns and even lower than that. So, you know, when the market does recover, I think you can see, you know, we're building off a very strong and powerful base, with our system. With regard to the first question was?

Speaker Change: But but.

Speaker Change: The outlook is we've got a very well integrated system and you know our model and Thats It produced.

Speaker Change: 15% returns in probably when you see other people in a.

Speaker Change: Single digit returns and even lower than that so.

Speaker Change: When the market does recover I think you can see we are building off a very strong and powerful base with our system.

Speaker Change: With regard to the first question was I think the first question of the market dynamics on price in that in the second half and how it works, it's not not that dissimilar necessarily to North America gave in the sense that you know as paper prices contributed the market. It does take about three to six months before we began to see them in the box price so any any incremental pay per view.

Ken Bowles: Oh, I think the first question was the market dynamics on price, and that in the second half and how it works. It's not that dissimilar necessarily to North America, Gabe, in the sense that, you know, as paper prices come through to the market, it does take about 3 to 6 months before we begin to see them in the box price. So, you know, any incremental paper price, for example, that you might get in the second half of this year or early second half, really won't begin to make a meaningful appearance until Q4 at the beginning of next year. So not necessarily that different in terms of dynamics.

Speaker Change: For example that you might get in the second half of this year a priority second half really wont begin to make a meaningful appearing for quarter four at the beginning of next year, so not necessarily that different in terms of dynamics.

Ken Bowles: Probably slightly more, you know, as a group now, probably slightly more weighted on index than non-index than we might have been before, as Smurfit Kappa was broadly 50/50, probably closer more to 60/40 now. But in terms of the dynamics of pushing, you know, box prices through from a paper price, broadly similar. I suppose the backdrop for the paper side, to follow on from Tony's comment, is just to keep in your head that things like energy, you know, in the European context remain, you could argue, elevated and supportive to broadly where paper is. Because, you know, we still have, albeit say this morning, EUR 31 per megawatt hour, that's a long way away from the norms of 15 we might have seen years ago.

Speaker Change: Probably slightly more as a group now probably slightly more weighted on index non non index that we might have been before as Smurfit Kappa is broadly 50 50.

Speaker Change: More than 60 40, now so but in terms of the dynamics are pushing box prices through from a paper price broadly similar I suppose.

Tony Murphy: The backdrop for the paper side to follow on from Tony's comments, just to keep in your head that things like energy.

Tony Murphy: In the European context remain you could argue elevator and supportive to broadly where paper is because we still have albeit this morning.

Tony Murphy: When you are a megawatt hour thats, a long way away from the norms of 15, we might've seen years ago. So the cost that to Tony's point, the cost input backdrop brand be it energy or OCC is quite different than when those mills and machines were initially started up our targeted go back four or five years. So the return dynamic is quite quite different from now than it was then which is also useful in terms of.

Ken Bowles: So the cost, to Tony's point, the cost input backdrop around, be it energy or OCC, is quite different than when those mills and machines were initially started up or touted, go back four or five years. So the return dynamic is quite different from now than it was then, which is also useful in terms of when they might come on and how they might come on.

Tony Murphy: When they might come on and how they might come on.

Gabe Hajde: Understood. I'll try to be brief. The closure that you—the closures that you announced yesterday, I don't recall if I saw a timeline associated with it. And Ken, you rattled off a lot of numbers. I feel like I heard an incremental $450 million of, I'll call it synergy or performance improvements, I think is what you said. And then the number you gave us, the $60 million of kind of income statement savings, that was on a per mill basis, or that was an aggregate for what you just announced? Thank you.

Tony Murphy: Understood I'll try to be brief the closure that you closures that you announced yesterday I don't recall, if I saw it the timeline associated with it and can you rattle off a lot of numbers I feel like I heard an incremental $450 million of.

Tony Murphy: I'll call it synergy or performance improvements I think is what you said.

Tony Murphy: And then the <unk>.

Tony Murphy: Number you gave us the $60 million of kind of income statement savings that was on a per mile basis or that was an aggregate for what you just announced thank you aggregates for the system gave so the impact across the entire system from shutting those two mills because your full year full year benefit of adjusted EBITDA plus $60 million.

Ken Bowles: Aggregate for the system, Gabe. So the impact across the entire system from shutting those two mills gives you a full year, full year benefit of Adjusted EBITDA plus $60 million. In terms of the... and a saving on the CapEx line of broadly $100 million over 5 years. In terms of the $400, that's back to the commercial opportunities we kind of talk about, at least equal to the synergy target we put out. So the $400 is broadly banked at this point, as you can imagine. But we've always talked about, go back to Q3, I think, is when we first talked about it, still see significant value to be driven out, and that falls into that second bucket of more, at least $400.

Tony Murphy: In terms of the on a sale.

Tony Murphy: Saving on the Capex line of broadly 100 million over five years in terms of the 400 <unk> that's back to the commercial opportunities, we kind of talk about it.

Tony Murphy: At least equal to the synergy target we put out the 400 broadly bank at this point as you can imagine.

Tony Murphy: But we've always talked about is you can go back to quarter. Three I think is when we first talked about is still see significant value to be driven out and that falls into that second bucket of more at least 400.

Ken Bowles: But in terms of mills, think about as full year run rate, 50 to 60, and CapEx avoided over a five-year cycle of about 100. We can circle back, Gabe, to kind of-

Tony Murphy: But in terms of the mills think about as full year run rate 50 to 60 and Capex avoided over a five year cycle of about 100.

Tony Murphy: We can circle back to kind of.

Gabe Hajde: Yep.

Ken Bowles: To button those down if there's any confusion.

Tony Smurfit: Just to finish off the point on the two mills, there is asset value underneath those that will be released over time. That will be, you know-

Tony Murphy: Both of those down if there is any confusion.

Tony Smurfit: Just to finish off the point on the two mills, there is asset value underneath those that will be released over time. That will be, you know-

Tony Murphy: Just to finish off the point on the two mills there is asset value underneath those that will be released over over time that will be.

Ken Bowles: Yeah

Tony Smurfit: ... at least 50% of the cash cost back.

Tony Murphy: At least 50% of the cash cost back.

Operator: Thank you. Your next question comes from the line of Lars Sjölberg from SEB. Please go ahead.

Tony Murphy: Thank you.

Tony Murphy: Your next question.

Speaker Change: Comes from the line of Las <unk> from Stifel. Please go ahead.

Lars Sjölberg: Thank you for taking my questions. I just want to come back a bit to what you're seeing in your customer business with regards to tariffs, and think in particular, you know, the cross-border trade from Mexico, but also from the European side. Are you starting to see any directional changes on your customers' business due to those tariffs? That's the first question. The second one, you, of course, in your earlier pro-investment programs, you've had this agility that you spoke to, to deploy capital when the timing is right. But can you give us a sense of how you should think about incremental sell-through benefits, into, you know, 2026, 2027, as the synergies, literally will be on the books already exiting 2025?

Lars Sjöberg: Thank you for taking my questions. I just want to come back a bit to what you're seeing in your customer business with regards to tariffs, and think in particular, you know, the cross-border trade from Mexico, but also from the European side. Are you starting to see any directional changes on your customers' business due to those tariffs? That's the first question. The second one, you, of course, in your earlier pro-investment programs, you've had this agility that you spoke to, to deploy capital when the timing is right. But can you give us a sense of how you should think about incremental sell-through benefits, into, you know, 2026, 2027, as the synergies, literally will be on the books already exiting 2025?

Speaker Change: Thank you for taking my questions.

Speaker Change: Just wanted to come back a bit too.

Speaker Change: What youre seeing in your customer business with regards to tariffs and things in particular.

Speaker Change: The cross border trade from Mexico, but also from the European side.

Speaker Change: Are you starting to see in the.

Speaker Change: Directional changes.

Speaker Change: Customers business due to those tariffs that's the first question the second one.

Speaker Change: View of course in your earlier investment programs you have this agility that you spoke to deploy capital when the timing is right.

Speaker Change: Can you give us a sense of how you should think about incremental.

Speaker Change: Benefits into 'twenty six 'twenty seven <unk>.

Speaker Change: The synergies.

Speaker Change: It will be on the books already exiting 'twenty five.

Tony Smurfit: Lars, I'll give that very difficult question to the second one, to Ken. I'll take the easy one on tariffs. You know, like the USMCA, which is the main trade between Canada and Mexico and the United States, is in force until for 90 days. And you know, we obviously, because we did a lot of cross-border trade with customers, mainly on the consumer side, we have been adjusting our supply chains over the last 3 months to ensure that what is produced in Canada and sold in America is now produced in America.

Lars I'll give that very difficult question second one to Ken.

Speaker Change: I'll take the easy one on tariffs.

Speaker Change: Yes.

Speaker Change: Like the U S MTA, which is the main trade between.

Speaker Change: Canada and <unk>.

Speaker Change: Mexico and the United States is in force.

Speaker Change: Until for 90 days.

Speaker Change: No.

Speaker Change: We obviously, because we did a lot of cross border trade with customers mainly in the consumer side.

Speaker Change: We have been adjusting our supply chain over the last three months to mature that's what is produced in Canada.

Speaker Change: So old in America now.

Tony Smurfit: And then equally the other way around, and the less so for, for Mexico, because most of the stuff that's produced in Mexico is for consumption in, in United States. So, so what we're seeing is very little at the moment. You know, we've tried to model what tariffs would cost us if they were implemented as pure cost to us, if they were implemented as originally portrayed by, by the, the US. And we're sort of seeing a number of an annualized number of around $100 million without any offset to that. If in pure trade for ourselves, if we're not able to, if we're not able to get that back and, you know, obviously, that's not what our intention and workaround would be.

Speaker Change: <unk> produced in America.

Speaker Change: And then equally the other way around.

Speaker Change: Less so for Mexico, because most of the stuff Thats produced in Mexico.

Speaker Change: As for consumption in.

Speaker Change: And.

Speaker Change: United States so.

Speaker Change: What we're seeing is very little at the moment.

Speaker Change: We've tried to model what tariffs will cost as if they were implemented.

Speaker Change: Pure cost to us if they were implemented as originally.

Speaker Change: Portrayed by by the U S and we're sort of seeing a number of an annualized number of around $100 million without any offset to that.

Speaker Change: If they're in pure trade for ourselves if we're not able to if we're not able to get that back in.

Speaker Change: That's not what our intention and work around would be.

Tony Smurfit: Obviously, the big effect of tariffs is completely unknown to us. If the tariffs come in and it causes demand destruction, that is where we would be affected, considerably more than any direct effects. But, you know, that's an issue of consumer confidence. That's an issue of you know, general consumer demand. And, you know, we are definitely seeing a lot of nervousness out there with customers, but not yet any material issue, other than the uncertainty that we're all seeing.

Speaker Change: Obviously, the big effect of tariffs is completely unknown to us if the tariffs come in and that causes demand destruction that is where we would be affected considerably more than any direct effects, but.

Speaker Change: That's that.

Speaker Change: That's an issue of consumer confidence that's an issue of of general consumer demand.

Speaker Change: We are definitely seeing a lot of nervousness out there with customers, but not yet any material issue.

Speaker Change: Other than the uncertainty that we're all seeing.

Speaker Change: <unk>.

Speaker Change: On the soft question a quick one program. So you will know as well and we've done a number of these over the years. So generally these are projects that will deliver the returns within an 18 to 24 month timeline. It's the only reason they get approved in the first place and.

Speaker Change: Particularly worthwhile and inflationary environments and high cost environment like we are now because they allow you to take us out fairly quickly.

Speaker Change: And there's a lot of projects here that add up to the numbers, but no not a necessarily a big impact in any one particular part of the business system is small projects and each individual location all adding in a system of our size all adding up to a decent benefit but you should think about these if they start this year logically volumes.

Ken Bowles: But you should think about these, if they start this year, you know, logically, fully implemented between 18 and 24 months at the outset, with some incremental benefits for the shorter-term projects as we go through it. So, but, you know, 2 years max.

Speaker Change: 18 to 24 months at the outset with some incremental benefits for the shorter term projects as we go through it so but two years Max and I think Laurie just to make the point that these are just some we've selected if I were to go to the three regional managers that I haven't said you have free reign to go ahead, we would find a lot lot lot more.

Speaker Change: Or to reduce costs, but it's just a question of management and fitting them in.

Speaker Change: In the envelope that we want to do and as I said earlier.

Speaker Change: Two failed not to make sure that we don't get too far ahead of our skis and the whole issue of Capex deployment. So.

Tony Smurfit: You know, we're very, very religious in making sure that we keep, stick to our knitting of what made the, the company Smurfit Kappa great, and to make sure that we make the new Smurfit Westrock the kind of company we believe it's going to be.

Speaker Change: We did.

Speaker Change: Very.

Speaker Change: We're very very religious and making sure that we keep stick to our netting of what made the company Smurfit Kappa grade and to make sure that we make.

Speaker Change: The new square foot West rock.

Speaker Change: Kind of company, we believe it's going to be.

Lars Sjölberg: Just one clarification point. When you talked about the cost benefits or EBITDA positives from the closures, what is the timing of getting that benefit through?

Lars Sjöberg: Just one clarification point. When you talked about the cost benefits or EBITDA positives from the closures, what is the timing of getting that benefit through?

Speaker Change: And just one clarification when you talked about the cost benefits are eager to have positives from the closures what is the timing of getting that benefit.

Tony Smurfit: It'll be second half.

Lars Sjölberg: Essentially, when are they closing it out?

Lars Sjöberg: Essentially, when are they closing it out?

Speaker Change: It will be second half century, when they chosen.

Tony Smurfit: Second half, we have to go through a process called the WARN Act, which is the United States requirement of 60 days. And so sometime certainly by the end of July, we'll have completed that process in all likelihood. And then with regard to the other closures in potential closures that we've asked to speak to the works council about in Germany, that will be somewhere between 6 months and a year, depending on the plant and depending on the movement of the volume.

Speaker Change: Second half, but we have to go through a process called the <unk>, which is the United States.

Speaker Change: The requirement of 60 days.

Speaker Change: And so sometime sometime.

Speaker Change: Certainly by the end of July we will have completed.

Speaker Change: That process in all likelihood and then with regard to the other closures.

Speaker Change: Potential closures that we've asked to speak to the works Council about in Germany that will be somewhere between six months and a year depending on.

Speaker Change: The plant and depending on the movement of the volume.

Lars Sjölberg: Understood. Thank you, and good luck.

Lars Sjöberg: Understood. Thank you, and good luck.

Speaker Change: Understood. Thank you and good luck.

Tony Smurfit: Thanks.

Lars Sjölberg: All right.

Lars Sjöberg: All right.

Operator: Thank you. Your next question comes from the line of Detlef Winckelman from JP Morgan. Please go ahead.

Speaker Change: Thanks, guys.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of <unk> <unk> from JP Morgan. Please go ahead.

Detlef Winckelmann: Hi, guys. Thanks for the call. Just a quick one on your $100 million of downtime, economic downtime in Q2. I just want to kind of get a sense of how that plays into the full year number. Are you assuming that tonnage stays down in Q2, Q3, Q4, or is there some sort of assumption that tonnage is like, downtime is maintained or contained just to Q2? Thanks very much.

Speaker Change: Assuming that the tonnage stays down in Q2, Q3, Q4 or is there some sort of assumption to that tonnage is downtime.

Speaker Change: Downtime is maintained at all contained just to Q2, thanks very much.

Tony Smurfit: It's just for Q2, and obviously in Q3 and Q4, we won't have the output of the other containerboard mill. So, you know, in a sense, and we'll be getting the benefit of that tonnage onto the existing mill. You know, so it's just a one-off.

Speaker Change: It's just.

Speaker Change: Just for Q2, and obviously in Q3 and Q4, we won't have the output of the the other containerboard mill. So so.

Speaker Change: And we have got the benefit will be getting the benefit of that that tonnage onto the existing mills.

Speaker Change: So it's just it's a one off yes.

Ken Bowles: Yeah.

Speaker Change: There'll always be maintenance downtime that Leif and there will be.

Speaker Change: Other.

Speaker Change: Bits and pieces of downtime and probably some machines not working the way we want them to work, but basically.

Speaker Change: The downtime the downtime that were planning because of this situation in Q2 as a Q2 issue yes exactly.

Ken Bowles: Yeah. Exactly.

Detlef Winckelmann: Cool. Thanks very much. That's all from me. Thanks.

Speaker Change: Thanks very much that's all from me. Thank you.

Tony Smurfit: Thank you.

Operator: Thank you. Your next question comes from the line of Patrick Mann, Bank of America.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Patrick <unk> with Bank of America.

Patrick Mann: So good day, thanks for taking my question. Oh, I've got two. The rationalization of the mills, that's under 600,000 tons you've taken out, but you've also spoken a bit about, you know, optimizing the packaging and the downstream operations. Does it change your net paper position at all? And, and does that, and or how does that factor into the, these optimization decisions? And then the second question is, the quick win projects, does that form part of the operational and commercial improvement, sort of at least the same $400 million synergies? Or is it a, a sort of different bucket of, of capital allocation? How should we think about it? Thanks very much.

Speaker Change: Ed.

Patrick <unk>: Good day and thanks for taking my question.

Speaker Change: I've got two.

Speaker Change: The rationalization of the mills.

Speaker Change: And the 600000 tonnes, you've taken out but you've also spoken a bit about.

Speaker Change: <unk> in the packaging and the downstream operations.

Speaker Change #101: Does it change your paper position at all and does that or how does that factor into these optimization decisions.

Speaker Change: And then the second question is quick.

Speaker Change: Quick win projects.

Speaker Change: Does that form part of the operational and commercial improvements sort of at least the same 400 million.

Speaker Change: Synergies or is it a sort of different buckets of capital allocation, how should we think about it thanks very much.

Ken Bowles: Hey, Patrick, it's Ken here. Yeah, so the quick win project program will form part of that second 400, and that's why it's on the same timelines we would've talked about as achieving that 400 over 2018 to 2024. So it fits into that kind of bucket. I suppose, you know, what we're trying to do here is, as we kind of progress through the quarters, give you more kind of building blocks to how that 400 is built, and this is now we're in a place to kind of, you know, get on with those quick win programs, projects, that give you some level of kind of certainty around where that's gonna come from in terms of is it, you know, through the income statement, through the capital line and the returns of it. So it forms part of the 400.

Speaker Change: Hey, Patrick it's Ken here, Yes, so quickly and project program will form part of the second 400 and Thats why its on the same timeline, we would have talked about achieving that 400 over 18 to 24, so it fits into that kind of book it I suppose what we're trying to do here is as we kind of progress through the quarters give you more kind of building blocks added 400 is built and this is narrow and in place.

Speaker Change: To kind of get on with those quicker and programs projects that that gives you some level of certainty on where that's going to come from in terms of visits through the income statement through the capital line and the returns out of it. So no forms part of the 400 on the on the other one yes for the two actually for both mills and Paul on <unk>. It does improve our integration levels, a little bit of a thing for <unk>.

Ken Bowles: On the other one, yeah, for the two—actually, for both mills, for St. Paul and Forney, it does improve our integration levels a little bit. I think on the containerboard side, it goes from about 86 to 89% integrated on containerboard, and from about 67 before to about 71% on paperboard.

Speaker Change: On the containerboard side, it goes about 86% to 89% integrated on containerboard.

Speaker Change: From about 67 before at about 71% on paperboard.

Tony Smurfit: Yeah, and just to add to that, Patrick, just on the quick wins. I mean, that forms part of it, and that's why we said at least $400 million, because we do see many opportunities, both commercial and through CapEx, to develop this business in a much more material way, than before. And so that's why it gives us a lot of optimism for the future.

Speaker Change #102: Yes, and just to add to that Patrick just on the quick wins I mean that forms part of it and Thats why we said at least.

Speaker Change #102: 400 million, because we do see many opportunities both commercial and through Capex to develop this business in a much more material way.

Speaker Change #102: Then before and so that's why it gives us a lot of optimism for the future.

Patrick Mann: Thank you.

Speaker Change #102: Thank you.

Operator: Thank you.

Patrick Mann: Thank you.

Speaker Change #102: Thank you.

Operator: Your next question comes from the line of Mark Weintraub, from Seaport Research Partners. Please go ahead.

Speaker Change #103: Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Please go ahead.

Mark Weintraub: Thanks very much, and thanks for all the color so far. Wanted just to come back to the first half to second half bridge, if I could. You're essentially assuming about $100 to 300 million pickup in EBITDA. And if I caught you right, you are looking for volumes to be, you know, flat to up modestly. So, hopefully that's a positive. We've got less downtime, assumed. You've got pricing in Europe that should, in particular, but also in the US, that should be flowing through. Presumably, you get synergies and some additional net productivity in the second half, and you've got the cost takeout. And so on, kind of on the flip side, what are some of the negatives that you might be assuming?

Mark Weintraub: Okay. Thanks, very much and thanks for all the color so far.

Mark Weintraub: I wanted just to come back to the first half to second half rich if I could.

Mark Weintraub: You're essentially assuming about $100 million to $300 million pickup in EBIT dah.

Mark Weintraub: And if I caught you right.

Mark Weintraub: You are looking for volumes to be flat to up modestly. So hopefully that's a positive we've got less downtime assumed you've got pricing in Europe that should in particular, but also in the U S that should be flowing through presumably you get synergies and some additional net productivity in the second half and you've got the cost takeout.

Mark Weintraub: And so kind of on the flip side.

Mark Weintraub: What are what are some of the negatives that you might be assuming one which I have a specific question too is wastepaper in Europe is a.

Mark Weintraub: And, you know, one, which I have a specific question to, is wastepaper in Europe is a bunch higher right now, which is kind of confusing to me in that the demand environment has been not that great. And so I was hoping to get some color on what why that you think is happening, and if we don't get a more sustained pickup in demand in Europe, does that just come back, roll back over? Thanks so much.

Mark Weintraub: A bunch higher right now, which is kind of confusing to me that the demand environment has been not.

Mark Weintraub: Not that great and so I was hoping to get some color on what.

Mark Weintraub: Why that you think is happening and if it if we don't get a more sustained pickup in demand in Europe does that just come back.

Mark Weintraub: Back over thanks, so much.

Tony Smurfit: I'll take the second one and let Ken take the first part of your question. I mean, on wastepaper, you know, it was a very big surprise to us, Mark, to be honest. You know, we had expected... We've been modeling somewhere around EUR 120, EUR 130 for the year, and all of a sudden, it goes to EUR 170, EUR 180, you know, in the space of literally six weeks. It happened because there was an auction in Italy and one major player who was bringing on new capacity panicked, and then all the other people who were bringing on new capacity panicked, and they bid up the price. So, the question of the sustainability of it is a very good question. We'll wait and see.

Speaker Change #104: I'll take the second one.

Mark Weintraub: I will take the first part of your question.

Speaker Change #104: On waste paper.

Speaker Change #105: It was a very big surprise to us mark to be honest.

Speaker Change #105: We had expected we've been modeling somewhere around $121 30 for the year and all of a sudden it goes to 170 180.

Speaker Change #105: In the space of a literally six weeks.

Speaker Change #105: It happened because there was an auction.

Speaker Change #105: Italy and won one major player who is bringing on new capacity panicked and then all the other people that were bringing on new capacity panicked.

Speaker Change #105: <unk>.

Speaker Change #105: Bid up the price. So the question of the sustainability of it as a very good question, we will wait and see.

Tony Smurfit: But you know, it is. While demand is not fantastic, it's not bad. It's certainly better than last year, and you know, they're not making that much more wastepaper. So you know, it doesn't take a whole lot to flip it and move it. And you know, I think the reason you know, when one guy panicked in southern Italy or in Italy at a particular auction, it made a ripple effect throughout Europe, and that's what happens, because everybody needs the stuff. As you know, Europe is a fundamentally waste-based market, and so that's what happens. And we'll see about the sustainability of it as we go through the summer.

Speaker Change #105: But it is it is while demand is.

Speaker Change #105: It is.

Speaker Change #105: Not fantastic its not bad its certainly better than last year and they are not making that much more wastepaper. So it doesn't take a whole lot to flip as movers.

Speaker Change #105: I think.

Speaker Change #105: The reason.

Speaker Change #105: When one guy panicked and southern Italy, or in Italy at a particular option. It made a ripple effect through throughout Europe, and Thats, what thats, what happens because everybody needs and stuff as you know Europe is a fundamentally it's a weight based markets.

Speaker Change #105: And so so that's that's what happens.

Speaker Change #105: Well, we'll see about the sustainability of it as we go through the summer.

Tony Smurfit: But you know, there is new capacity and demand's not bad in Europe. You know, stocks are low in paper. They're about 100,000 tons less than last year. And, as I say, demand is reasonably good. So, you know, that's what caused it.

Speaker Change #105: But there is new capacity and demand is not bad in Europe.

Speaker Change #105: Docs are low and paper they are not they are about 100000 tons less than last year.

Speaker Change #105: And as I say demand is reasonably good so so.

That's what caused this.

Ken Bowles: Yeah. Hey, Mark. In, in terms of just broad building blocks and probably less half one to half two, probably more just to kind of revisit the year-over-year, but probably more kind of relevant in terms of what we just spoken about before. I don't think much has necessarily changed now we're thinking about it. I think if you think about some of those bigger cost buckets, as we would've talked about maybe at the year-end, in terms of where we go full year-over-year. In reality, energy is still quite a significant headwind year-over-year, about $350 million, call it. Labor and inflation around that in the order of about $200 million.

Mark Weintraub: Hey, Mark.

Mark Weintraub: In terms of just broad building blocks and probably less half one to half two probably more just to kind of revisit the year to year, but probably more kind of relevance in terms of what we've just spoken about before I don't think much has necessarily changed in how we're thinking about it I think if you think about some of those bigger cost buckets.

Mark Weintraub: As you would have talked about maybe at the year end in terms of where we go full year to full year and reality energy still quite a significant headwind to here year on year of about $350 million labor inflation around that in the order of about 200 million other raw materials generally probably a headwind of about 100 and that downtime piece year on year is probably costing somewhere in the order of about one.

Ken Bowles: Other raw materials, generally, you know, probably a headwind of about $100 million, and that downtime piece year-on-year is probably costing somewhere in the order of about $150 million year-on-year. They're the big kind of negatives against that. You can see though, you know, if you look at the pricing environment and the backdrop to that, which we would've talked about already today, you know, sequentially, year-on-year, box pricing in North America is up broadly 8%, quarter-on-quarter, probably 3%. So you can see that begin to come through to the second half. Clearly, the paper impact is coming through there as well. And the biggest piece there, back to OCC, but not necessarily seeing it in Europe-

Mark Weintraub: <unk> hundred $50 million year on year. They are the big kind of a negative against that you can see though if you look at the pricing environment and the backdrop to that which we would have talked about already today sequentially year on year box pricing in North America, So broadly 8% quarter on quarter, probably three so you can see that begin to come through through the second half period paper.

Mark Weintraub: <unk> impact coming through there as well.

Mark Weintraub: And the biggest piece there back to OCC, but not necessarily seeing it in Europe, but in North America, certainly relief on OCC, probably year on year, giving you the benefit of somewhere between 100 to 150, but to those big cost buckets hasn't really moved around a lot since we would have spoken.

Tony Smurfit: ... but in North America, certainly relief on OCC, probably year-over-year, giving you the benefit of somewhere between $100 to $150. But so those big cost buckets haven't really moved around a lot since we would have spoken. Clearly, as we've spoken a lot today, the demand backdrop and volumes, clearly the biggest variable that we kinda have to pin down as we kind of go through the second half.

Mark Weintraub: Clearly as we've spoken about today the demand backdrop of volumes clearly the biggest variable that we kind of have to pin down as we kind of go through the second half.

Speaker Change #106: Super helpful. Ken just one last follow up how about FX I mean, we've had some big moves in dollar euro.

Mark Weintraub: I would've thought just on a translation basis that might have.

Speaker Change #106: Some implications can you kind of walk us through how that works for you guys.

Tony Smurfit: Negative first off.

Ken Bowles: Yeah, we've been negative so far, but it's kind of, it's not necessarily material as we sit here today, given that the US dollar's come back a bit. But we can help you model some of that, Mark, depending on where we go. We can give you some stats on, you know, taking a euro/dollar pair, in terms of where you see it, but not at the moment. Slightly negative, but not material is probably the best way to think about it for Q1, particularly in Latin America.

Speaker Change #106: Thank you first of all yes, we've been negative so far but it's kind of it's not necessarily material as we sit here today given that the data has come back a bit.

Mark Weintraub: But we can we can help you model some of that Mark depending on where we go we can give you some stats on.

Mark Weintraub: Taken a euro dollar fair in terms of where you see it but not at the moment slightly negative, but not material is probably the best way to think about it for the first quarter.

Mark Weintraub: Thanks, guys.

Mark Weintraub: Particularly in Latin America.

Tony Smurfit: Thanks, Mark.

Mark Weintraub: Thanks, guys.

Mark Weintraub: Thanks Mark.

Operator: Thank you. Your next question comes from the line of Kevin Fogarty from Deutsche Numis. Please go ahead.

Mark Weintraub: Thank you.

Speaker Change #107: Your next question comes from the line of Kevin Fogarty from Deutsche and UBS. Please go ahead.

George Staphos: Thanks very much, and hi everyone. Thanks for taking the question. So a number of them have been answered, but it's just more on exceptionals that we might see this year. Obviously, you've got some associated with the capacity closures and adjustments you've announced today. Could you just sort of step us through what else we should be thinking about? I know you've kind of previously flagged the sort of EUR 235 relating to synergies delivery. Is there anything else we should be thinking about, sort of accelerated depreciation or anything associated with the closures, or any kind of more widely sort of restructuring charges that might hit this year?

Kevin Fogarty: Thanks very much, and hi everyone. Thanks for taking the question. So a number of them have been answered, but it's just more on exceptionals that we might see this year. Obviously, you've got some associated with the capacity closures and adjustments you've announced today. Could you just sort of step us through what else we should be thinking about? I know you've kind of previously flagged the sort of EUR 235 relating to synergies delivery. Is there anything else we should be thinking about, sort of accelerated depreciation or anything associated with the closures, or any kind of more widely sort of restructuring charges that might hit this year?

Mark Weintraub: Thanks very much.

Speaker Change #108: Thanks for taking my question.

Mark Weintraub: So a number of them.

Mark Weintraub: But let's just before exceptionals.

Mark Weintraub: So we might see this year, obviously associated with <unk>.

Mark Weintraub: <unk> just on chicken now today.

Mark Weintraub: Could you just step us through what else we should be thinking.

Mark Weintraub: I mean, you've kind of previously flagged based on a 235.

Mark Weintraub: Synergy delivery.

Mark Weintraub: Anything else, we should be thinking about accelerated depreciation or anything else.

Mark Weintraub: As yours or any kind of employee restructuring charges this year.

Ken Bowles: Essentially, no, Kevin. It's kind of as guided. The only new information would be around those closures last night. The cash piece, you would have seen about $99 million, and the impairment of the fixed assets, et cetera, depreciation, if you want, about $188 million. So, with the-- we'll take the impairments, you know, now, essentially for Q2, and then the cash costs will go out over the remainder of the year. So, nothing beyond what, either what we guided already or indeed those impairments from last night.

Mark Weintraub: So essentially no Kevin.

Mark Weintraub: It's kind of as guided.

Mark Weintraub: The new innovation will be around those closures last night and the cash piece you would have seen about $99 million.

Mark Weintraub: The impairments of fixed assets et cetera, depreciation if you want about $188 million so with.

Mark Weintraub: We will take will take the impairments we've now essentially for the second quarter and then the cash cost will go out over the remainder of the year. So.

Mark Weintraub: Nothing beyond what either what we guided already R&D those impairments from last night.

George Staphos: Would you go related to synergies, just kind of as expected, sort of 235?

Kevin Fogarty: Would you go related to synergies, just kind of as expected, sort of 235?

Speaker Change #109: Could you guide relates to synergies you just kind of as expected to three five.

Ken Bowles: At exactly, yeah, as expected, Kevin.

Kevin Fogarty: Yes as expected Kevin.

George Staphos: Great. All right, thanks very much. Bye.

Kevin Fogarty: Great. All right, thanks very much. Bye.

Roger: Alright, alright, thanks Roger.

Ken Bowles: Thanks, Kevin.

Operator: Thank you. Your next question comes from the line of Gaurav Jain from Barclays. Please go ahead.

Roger: Thanks, Kevin Thank you.

Speaker Change #111: Your next question comes from the line of Gaurav Jain from Barclays. Please go ahead.

Gaurav Jain: Hi, good morning or good afternoon, thank you so much. Two questions from me. One is, you know, recently we have read that, you know, the Chinese containerboard importers who are no longer importing from US, they are shifting some of their demand to Latam. Is this something that you are noticing, and do these changing trade flows somehow position you in a better context versus your other peers who are more sort of geographically, you know, fixed? That was question number 1. And the second question was on, you know, future potential M&A. You have done acquisitions in prior cycles, in prior down cycles, and yes, you just did this acquisition 8 months ago, and, you know, the balance sheet is leveled up to, like, 2.5x.

Roger: Hi.

Gaurav Jain: Good morning, and good afternoon. Thank you so much so two questions from me one is.

Roger: No.

Roger: <unk> read that.

Roger: Chinese containerboard importers, who are no longer important interim U S. Shifting some of their demand to Latam is there something that you are noticing on Moody's changing trade flows somehow position you're in a better context.

Roger: The PFS was more sort of geographically.

Roger: So that was question number one and the second question was on future potential on Monday. So you have done acquisitions and client cycles in prior down cycles and yes. Your agenda. This acquisition eight months ago and the balance sheet has leveled up.

Gaurav Jain: But if, you know, if we indeed get into weaker macro cycle and there is some opportunity which is too good to pass, would you consider it?

Roger: When the off times.

Roger: Indeed, we are going to be good macro cycle and there is some opportunity images too good to pass we'll do come together.

Tony Smurfit: Well, I'll take the second one. Well, I'll take them both, actually.

Roger: Well I'll take the second one I'll take them both.

Ken Bowles: Yeah, please.

Tony Smurfit: Listen, our objective is to get our balance sheet down to 2.0 times. That's where we're solely focused on that. We will be making some smaller bolt-on acquisitions, as and when, if they make sense, for the overall company. But, you know, we're not going to do anything that's off the pitch, so to speak. We're very focused on making sure that we bed the organization down. We're very focused on making sure that we bed every part of the business down.

Roger: Thanks.

Roger: There is and our objective is to get our our balance sheet down to towards the 2.0 times.

Roger: What we are solely focused on that we will be making some.

Roger: We will be making some smaller bolt on acquisitions.

Roger: When if they make sense for the overall company, but but.

Roger: We're not going to.

Roger: Do anything that's off the pitch so to speak where we're very focused on.

Roger: Making sure that we bet the organization down.

Roger: Focused on making sure that we bet every every part of the business down there is still a lot of work to do John about.

Tony Smurfit: There's still a lot of work to do, Jain, about, you know, making sure the accounting function works well, making sure that everything, you know, the reporting is great, that the operations are improving, that the integration continues on its path. So there's a lot to do before we would even think about a larger acquisition and do anything off the pitch, so to speak. With regard to the Chinese flows, you know, we are hearing that there are people who are having to adjust. We saw public quotes for sort of some of our competitors taking downtime, and we believe that that's continuing to happen.

Roger: Making sure the accounting function works, well, making sure that everything.

Roger: The reporting is great that the the operations are improving that the integration continues on its path. So theres a lot to do before we would even think about a larger acquisition and do anything.

Roger: After off the pitch so to speak with regard to the Chinese flows.

Roger: We are hearing that there are there are.

Roger: People, who are having to adjust we said we saw public of quotes for some of our competitors, taking downtime and we believe that thats continuing to happen because of the lack of exports. There are many mills with regard to.

Tony Smurfit: Because of the lack of exports, there are many mills with regard to that have specifically their focus on exporting to China out of the US, and that would obviously be problematic for them right now. We don't do any significant amount of exports to China. We do a lot of exports to Latin America, where we have long-standing good relationships with, you know, excellent customers, and we continue to keep those and develop those because, you know, we believe in long-term relationships in Smurfit Westrock, and, you know, I don't think the Chinese thing is going to influence us negatively and can only be positive for us.

Roger: Yes.

Roger: Specifically their focus on export into China.

Roger: Out of the U S and that would obviously be problematic for them right now we don't do any significant amount of exports to China, we do.

Roger: Lot of exports to Latin America, where we have long standing good relationships with excellent customers and we continue to keep those and develop those because we believe in long term relationships and smurfit West rock.

Roger: I don't think the Chinese thing is going to influence influences negatively and can only be positive for us.

Gaurav Jain: Thank you very much.

Roger: Thank you very much.

Tony Smurfit: Thank you.

Operator: Thank you. We will now take our final question for today, and your final question comes from the line of George Stathas from Bank of America. Please go ahead.

Operator: Thank you. We will now take our final question for today, and your final question comes from the line of George Staphos from Bank of America. Please go ahead.

Roger: Thank you.

Speaker Change #113: Thank you we will now take our final question for today and Youll final question comes from the line of George Staphos from Bank of America. Please go ahead.

Mark Weintraub: Hi, everyone. Good morning. Good afternoon. Thanks for all the details, Tony and Ken. There's been a lot of discussion on containerboard today, so,

George Staphos: Hi, everyone. Good morning. Good afternoon. Thanks for all the details, Tony and Ken. There's been a lot of discussion on containerboard today, so,

George Staphos: Hi, everyone. Good morning, good afternoon, Thanks for all the details Tony and Ken.

Speaker Change #113: There's been a lot of discussion on containerboard today, so I'm going to focus a little bit more on <unk>.

Kevin Fogarty: ... I'm gonna focus a little bit more on consumer board. You know, you're 9 months into the acquisition. What have been the learnings that you can share on kind of an open mic discussion about the value addness of being able to sell both consumer and secondary packaging? Well, we shouldn't call it that necessarily, but corrugated packaging across all of your customers. And, you know, what's changed, perhaps, again, to what degree you can share versus what your perceptions might have been in July.

George Staphos: ... I'm gonna focus a little bit more on consumer board. You know, you're 9 months into the acquisition. What have been the learnings that you can share on kind of an open mic discussion about the value addness of being able to sell both consumer and secondary packaging? Well, we shouldn't call it that necessarily, but corrugated packaging across all of your customers. And, you know, what's changed, perhaps, again, to what degree you can share versus what your perceptions might have been in July.

Speaker Change #114: Consumer board.

Speaker Change #113: You are.

Speaker Change #114: Nine months into the acquisition.

Speaker Change #114: What have been the learnings that you can share.

Speaker Change #114: On kind of an open mic discussion about the value add in this of being able to sell both consumer and secondary packaging well, we shouldn't call that initially but targeted packaging across all of your customers and whats changed perhaps again to what degree you can share what your perceptions.

Speaker Change #114: Might've been in July.

Kevin Fogarty: Relatedly, within consumer, are there any differences that you can share in terms of how you're allocating capital, looking at the footprint and so on, relative to how you might go about your business in, in corrugated, and what should we take away, if anything, other than just you're aligning the footprint with the adjustment in CRB? The fact that you're taking some capacity out of CRB would suggest that, you know, there's a long-term plan. You're viewing it as a, you know, ongoing business within Smurfit. Any thoughts that you can share would be great, and good luck on the quarter. Thank you, guys.

George Staphos: Relatedly, within consumer, are there any differences that you can share in terms of how you're allocating capital, looking at the footprint and so on, relative to how you might go about your business in, in corrugated, and what should we take away, if anything, other than just you're aligning the footprint with the adjustment in CRB? The fact that you're taking some capacity out of CRB would suggest that, you know, there's a long-term plan. You're viewing it as a, you know, ongoing business within Smurfit. Any thoughts that you can share would be great, and good luck on the quarter. Thank you, guys.

Relatedly.

Speaker Change #114: Within consumer.

Speaker Change #115: Are there any differences that you can share in terms of how you're allocating capital looking at the footprint and so on relative to how you might go about your business in corrugated and what should we takeaway if anything other than just youre lying footprint.

Speaker Change #114: With the adjustment in CRB.

<unk> taken some capacity out of CRB, which suggests that there is a long term plan youre viewing it as a.

Speaker Change #114: Ongoing bids within smart, but any thoughts that you can share would be great and good luck in the quarter. Thank you guys.

Tony Smurfit: Thanks, George, and good to hear you. I think that there is a very good business here in consumer packaging. We've got some great people, we've got some great assets, and we've got some great opportunities. And so we will view this business the same way we view as our corrugated business, our bag and box business, our sack business, you know, and decide where the best returns are gonna come from, as we look at each individual capital request. So, you know, we think we've got a superior offering, or potentially have a superior offering. Let me put it like that. We need to work on some strategic elements of it, George, and that's something that we'll work through, and we'll communicate to the market when we're able.

Speaker Change #116: Thanks, George and good to hear you.

Speaker Change #114: Let me be.

Speaker Change #114: I think that there is a very good business here in consumer packaging, we've got some great people, we've got some great assets and we got some great opportunities and so we will view this business the same way we views our corrugated business our bag in box business, our sock business.

Speaker Change #114: And decide where the best returns are going to come from.

Speaker Change #114: As we look at each each individual.

Speaker Change #114: Our capital request so.

Speaker Change #114: We think we've got a superior offering.

Or potentially have a superior offering let me put it like that we need to work on some strategic elements of it George.

And that's something that we'll work through and we will communicate to the market when we are able to.

Tony Smurfit: You know, we're literally nine months into this, and you know, we are discovering a lot. You've asked what our findings are. I think it's probably a little bit tougher of a marketplace than we would have anticipated. But when I see the positives, I see we've got some incredibly good people and incredibly--potentially incredibly good assets and incredibly good market positions to develop. So, you know, that's the work in progress, is to figure out, you know, how do we--where do we apply the capital and when, and what markets can give the shareholders the best returns.

Speaker Change #114: We're literally nine months into this.

Speaker Change #114: And.

Speaker Change #114: We are discovering a lot you've you've asked what's what's what our findings are as I think it's probably a little bit tougher of a marketplace.

Speaker Change #114: We would have anticipated, but when I see the positives I see we've got some incredibly good people and incredibly potentially incredibly good assets an incredibly good market positions two to develop so.

Speaker Change #114: That's the work in progress is to figure out.

Speaker Change #114: How do we where do we apply the capital and win.

Speaker Change #114: What markets can give you the share or give the shareholders. The best returns and that's still work in progress but.

Tony Smurfit: And that's still a work in progress, but, you know, I would say this is a, you know, potentially very strong market for us because there is a cross-sell opportunity. There is a good foundation of business that we can really develop and grow. But, you know, as I say, with regard to the specific grades, we... I mean, you know, you will know that, that's the... And I think I've been upfront on this, is that there we do need to have a CRB strategy, and we do need to have an SBS strategy, and a CUK strategy for all of our operations. And, you know, we're in the process of developing that, and when we're ready, we'll come back to you and tell you what that is.

Speaker Change #114: I would say this is a.

Speaker Change #114: <unk> potentially very strong market for us because there is a cross sell opportunity. There is there is a.

Speaker Change #114: A good foundation of business that we can really develop and grow but.

Speaker Change #114: As I say with regard to the specific grades I mean.

Speaker Change #114: You will know that that's the.

Speaker Change #114: And I think I've been upfront on this is that we do need to have a CRB strategy and we do need to have an Sps strategy.

Speaker Change #114: The UK strategy for all of our operations and we're in the process of developing that and when we're ready we'll come back to you and tell you what that is but.

Tony Smurfit: But we're not a million miles away from telling you.

Speaker Change #114: But we're not a million miles away from telling you.

Kevin Fogarty: That's good. Good to hear. Appreciate the thoughts. Good luck in the quarter. Thank you, guys.

George Staphos: That's good. Good to hear. Appreciate the thoughts. Good luck in the quarter. Thank you, guys.

That's good to hear.

Speaker Change #114: Appreciate the thoughts good luck on the quarter. Thank you guys.

Tony Smurfit: Thanks, George. Appreciate it. So, operator, I think that's our last question. With that, I would say to all participants and all those that asked the questions, many thanks for listening to us. You know, we, we are very proud of what this company has already become, but as I say, we are at the start of a long journey, a never-ending journey. But, you know, my colleagues and myself are really excited about the future. And, you know, obviously, it'll be. We're living in uncertain times, as, as you all know, and, you know, when we get back to growth, this company is going to be extremely well positioned to take advantage of that, in, in every way.

Speaker Change #117: Thanks, George appreciate it.

Speaker Change #118: So operator, I think thats our last question.

Speaker Change #119: With that I would say to all participants and all those that ask the questions. Many thanks for listening to us.

Speaker Change #119: We are very proud of what this company has already become but as I say, we are at the start of a long journey and never ending journey.

Speaker Change #119: But my colleagues and myself are really excited about the future.

Speaker Change #119: Obviously, it will be we are living in uncertain times as you all know.

Speaker Change #119: When we get back to growth. This company is going to be extremely well positioned to take advantage of that.

Tony Smurfit: Thank you for your time and your attention, and we look forward to seeing you in person, or at the next quarter call. Thank you all.

Speaker Change #119: In every way so thank you for your time and your attention and we look forward to seeing you in person.

Speaker Change #119: Or at the next quarter call. Thank you all.

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