Q2 2025 Smurfit WestRock PLC Earnings Call

July 30, 2025

Operator: Good day, and thank you for standing by. Welcome to the Smurfit Westrock 2025 Q2 Results Webcast and Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will 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 hand the conference over to Ciaran Potts, Smurfit Westrock Group VP, Investor Relations. Please go ahead.

Heidi: Good day and thank you for standing by. Welcome to the Smurfit Westrock 2025 Q2 results webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will 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 hand the conference over to Kiran Pott, Smurfit Westrock Group VP Investor Relations. Please go ahead.

Ciarán Potts: Thank you, Heidi. 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 filing. 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 brief and in the appendix to the presentation, which are available at investors.smurfitwestrock.com.

Ciaran Potts: Thank you, Heidi. 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 filing. 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 brief and in the appendix to the presentation, which are available at investors.smurfitwestrock.com.

Ken Bowles: Thank you, Heidi. 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 filing. The company undertakes no obligation to revise any forwarding statements. Today's remarks also refer to certain non-gap financial measures. Reconciliations to the most comparable gap 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 or Dad, could you limit your questions to two?

Day, and thank you for standing by. Welcome to the Smurfit WestRock 2025 Q2 results webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press *1, 1 on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kieran Potts, Vice President of Investor Relations at Smurfit WestRock Group. Please go ahead.

Thank you, Heidi. As a reminder, statements in today's earnings release and presentation, as well as 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 filing.

The company undertakes no obligation to revise any forward-looking statements. These remarks also refer to certain non-GAAP financial measures.

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

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

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.westrock.com.

Ken Bowles: And should you require any clarifications on what we are discussing today, Frank and I will make ourselves available after our call. I'll now hand you over to Tony Smurfit, CEO of Smurfit Westrock.

Tony Smurfit: Thank you, Ciaran, and good morning, everybody. I'm joined today by Ken Bowles, our Group Executive Vice President and CFO. I am delighted to report a strong Q2 performance as we continue to deliver fully in line with our stated guidance. Ken will take you through our financial performance in greater detail. In terms of headline numbers, we are delivering adjusted EBITDA of $1.213 million and a good adjusted EBITDA margin performance of 15.3%. Turning to our regions, we have delivered an initial, yet significant improvement within our North America business, reflecting a much sharper operational and commercial focus together with identified synergy benefits. We're only getting started here and with significant scope for continued delivery. Our Europe business continues to perform in a challenging market. However, we are comfortable that we're close to a low.

Tony Smurfit: Thank you, Kiran, and good morning, everybody. I'm joined today by Ken Bowles, our Group Executive Vice President and CFO. I am delighted to report a strong second-quarter performance as we continue to deliver fully in line with our stated guidance. Ken will take you through our financial performance in greater detail. In terms of headline numbers, we are delivering an adjusted EBITDA of 1.213 million and a good adjusted EBITDA margin to bonds of 15.3%. Turning to our regions, we have delivered an initial yet significant improvement within our North American business, reflecting a much sharper operational and commercial focus, together with identified synergy benefits. We're only getting started here and with significant scope for continued delivery. Our European business continues to perform in a challenging market. However, we are comfortable that we're close to a low.

Before handing over to Tony, I ask you to limit your questions to two. Should you require any clarifications on what we are discussing today, Frank and I will make ourselves available after our call. I'll now hand you over to Tony Murphy, CEO, Murphy, WestRock.

Thank you, Kieran, and good morning, everybody. I'm joined today by Kemp BS, our Group Executive Vice President and CFO.

I am delighted to report a strong second quarter performance, as we continue to deliver fully in line with our stated guidance.

Ken will take you through our financial performance in greater detail.

Delivering an adjusted EA of 1.213 million and a good adjusted EA margin balance of 15.3%.

Turning to our regions, we have delivered an initial yet significant improvement within our North American business, reflecting a much sharper operational and commercial focus together with identified synergy benefits.

We're only getting started here, with significant scope for continued delivery.

Tony Smurfit: Our Latin American operations delivered an outstanding margin performance in a region which continues to present opportunities for growth. We see opportunity across each region, whether it's in terms of operating efficiency, a sharper commercial focus, or capitalizing on growth areas. We continue to optimize our system, which we expect to drive improved margin performance for Smurfit Westrock with our recently announced restructurings. Finally, and of note, within the quarter, Fitch upgraded our long-term debt to BBB+ with a stable outlook, reflecting their confidence in the quality of our business and our longer-term prospects. As it is now one year from the conclusion of the combination between Smurfit Capital Group and Westrock, I want to take a step back to look forward. Let me outline our key achievements and what we have found within that timeframe.

Tony Smurfit: Our Latin American operations delivered an outstanding margin performance in a region which continues to present opportunities for growth. We see opportunity across each region, whether it's in terms of operating efficiency, a sharper commercial focus, or capitalizing on growth areas. We continue to optimize our system, which we expect to drive improved margin performance for Smurfit Westrock with our recently announced restructurings. Finally, and of note within the quarter, Fitch upgraded our long-term debt to BBB+ with a stable outlook, reflecting their confidence in the quality of our business and our longer-term prospects. As it is now one year from the conclusion of the combination between Smurfit Kappa Group and WestRock, I want to say, take a step back to look forward. Let me outline our key achievements and what we have found within that timeframe.

Our European business continues to perform in a challenging market. However, we are comfortable that we're close to a low.

Our Latin American operations delivered an outstanding margin performance in the region, which continues to present opportunities for growth.

We see opportunity across each region, whether it's in terms of operating efficiency, a sharper commercial focus, or capitalizing on growth areas.

We continue to optimize our system, which we expect to drive improved margin performance for Smurfit WestRock with our recently announced restructurings.

Finally, another note within the quarter: Fitch upgraded our long-term debt to Triple B Plus with a stable outlook, reflecting their confidence in the quality of our business and our longer-term prospects.

As it is now, one year from the conclusion of the combination between Smurfit Kappa Group and WestRock, I want to take a step back to look forward.

Tony Smurfit: First, we have very successfully and seamlessly integrated two major businesses, combining the best elements of each organization with a strong performance-led culture. Secondly, we have identified and are delivering on at least 400 million of synergies. And as we said before, we see a much greater opportunity to deliver at least equivalent value through a much sharper commercial and operating focus. For growth and increased operating efficiency, we continue to invest in a disciplined way across our regions. We are continuing and will continue to optimize our system through the elimination of non-strategic or inefficient assets. As you know, we recently announced the permanent closure of 600,000 tons of capacity. The steps we are taking and continue to take are delivering a measurable improvement to the business performance within a relatively short timeframe.

Tony Smurfit: First, we have very successfully and seamlessly integrated two major businesses, combining the best elements of each organization with a strong performance-led culture. Secondly, we have identified and are delivering on at least $400 million of synergies. And as we said before, we see a much greater opportunity to deliver at least equivalent value through a much sharper commercial and operating focus. For growth and increased operating efficiency, we continue to invest in a disciplined way across our regions. We are continuing and will continue to optimize our system through the elimination of non-strategic or inefficient assets. As you know, we recently announced the permanent closure of 600,000 tons of capacity. The steps we are taking and continue to take are delivering a measurable improvement to the business performance within a relatively short timeframe.

Let me outline our key achievements and what we have found within that time frame.

First, we have very successfully and seamlessly integrated two major businesses, combining the best elements of each organization with a strong performance-led culture.

Secondly, we have identified and are delivering on at least $400 million of synergies. As we said before, we see a much greater opportunity to deliver at least equivalent value through a much sharper commercial and operating focus.

For growth and increased operating efficiency, we continue to invest in a disciplined way across our regions.

We are continuing, and we will continue to optimize our system through the elimination of non-strategic or inefficient assets.

As you know, we reached the announced permanent closure of 600,000 tons of capacity.

Tony Smurfit: We have built strong foundations with a generally well-invested asset base, excellent market positions, and above all, the excellence of our people. You have often heard us talking about our distinct operating model that has driven our outperformance. Fundamentally, it revolves around people and the culture which exists now within the new Smurfit Westrock. Culture and values are fundamental to us, and we demand the highest ethical standards. First, we devolve profit responsibility down to the individual businesses, ensuring that each manager runs their business as a fully accountable owner with responsibility for all aspects of their business, with an emphasis on customer service and profitability. In order for our managers to be successful, there are a number of prerequisites, such as having a complete focus on their people within their organizations, safety at work, and a relentless focus on delivering value, innovation, and quality for our customers.

Tony Smurfit: We have built strong foundations with a generally well-invested asset base, excellent market positions, and above all, the excellence of our people. You have often heard us talking about our distinct operating model that has driven our outperformance. Fundamentally, it revolves around people and the culture which exists now within the new Smurfit Westrock. Culture and values are fundamental to us, and we demand the highest ethical standards. First, we devolve profit responsibility down to the individual businesses, ensuring that each manager runs their business as a fully accountable owner, with responsibility for all aspects of their business, with an emphasis on customer service and profitability. In order for our managers to be successful, there are a number of prerequisites, such as having a complete focus on their people within their organizations, safety at work, and a relentless focus on delivering value, innovation, and quality for our customers.

The steps we are taking and continue to take are delivering a measurable improvement to the business performance within a relatively short time frame.

We have built strong foundations, with a generally well-invested asset base, excellent market positions, and, above all, the excellence of our people.

You have often heard us talking about our distinct operating model that has driven our outperformance.

Fundamentally, it revolves around people and the culture that exists now within the new Smurfit WestRock.

Culture and values are fundamental to us, and we demand the highest ethical standards.

First, we devolve profit responsibility down to the individual businesses, ensuring that each manager runs their business as a fully accountable owner with responsibility for all aspects of their business, with an emphasis on customer service and profitability.

Tony Smurfit: In order to do that, we incorporate effectively give those managers the tools to do the job, ensuring clear strategic direction and support. Naturally, we tightly and centrally control capital and ensure structures are simplified, and there is an unrelenting focus on cost takeout, while at the same time eliminating unnecessary structures. Our identified synergy program is delivering at or better than plans. Importantly, though, we see very significant margin enhancement opportunities through our methodology and way of working. We're already seeing the benefit, and to demonstrate this point, we've already cut our loss-making and corrugated by approximately 40% in our US operations. We will always strongly believe that as a general principle, our assets must be world-class. Within our business, in our previous incarnation as Smurfit Capital, we continued over two strategic plan periods to develop world-class systems, world-class assets, and businesses which have a long investable future.

Tony Smurfit: In order to do that, we incorporate effectively give those managers the tools to do the job, ensuring clear strategic direction and support. Naturally, we tightly and centrally control capital and ensure structures are simplified, and there is an unrelenting focus on cost takeout, while at the same time eliminating unnecessary structures. Our identified synergy program is delivering at or better than planned. Importantly, though, we see very significant margin enhancement opportunities through our methodology and way of working. We're already seeing the benefit, and to demonstrate this point, we've already cut our loss-making in corrugated by approximately 40% in our US operations. We've always strongly believed that as a general principle, our assets must be world-class.

In order for our managers to be successful, there are a number of prerequisites, such as having a complete focus on their people within their organizations, ensuring safety at work, and maintaining a relentless focus on delivering value, innovation, and quality for our customers.

In order to do that, we incorporate effectively, give those managers the tools to do the job, ensuring clear strategic direction and support.

Naturally, we tightly and centrally control capital and ensure structures are simplified. There is an unrelenting focus on cost takeout while at the same time eliminating unnecessary structures.

Our identified Synergy program is delivering at or better than plan.

Importantly, though, we see very significant margin enhancement opportunities through our methodology and way of working.

We're already seeing the benefit, and to demonstrate this point, we've already cut our loss-making corrugated by approximately 40% in our U.S. operations.

Tony Smurfit: Within our business, in our previous incarnation of Smurfit Kappa, we continued over two strategic plan periods to develop world-class systems, world-class assets, and businesses which have a long investable future. In the new Smurfit Westrock, as always, we will be doing the same in a disciplined and measured way. We have started that journey now in the new Smurfit Westrock, with $1 billion already invested in our system, roughly equally split between paper and converting assets. We have also initiated what we call our quick win programs, with an amount of almost $200 million already committed for the next 18 months to rapidly take out costs with a minimum returns exceeding 20%+. Frankly speaking, we've been doing this for decades, and seeing the opportunity in the new Smurfit Westrock is truly exciting.

We've always strongly believed that, as a general principle, our assets must be world class.

Tony Smurfit: In the new Smurfit Westrock, as always, we will be doing the same in a disciplined and measured way. We have started that journey now in the new Smurfit Westrock with 1 billion already invested in our system, roughly equally split between paper and converting assets. We have also initiated what we call our quick-win programs with an amount of almost 200 million already committed for the next 18 months to rapidly take out costs with a minimum return exceeding 20% plus. Frankly speaking, we've been doing this for decades, and seeing the opportunity in the new Smurfit Westrock is truly exciting. But of course, equipment without people is useless because anybody can buy new equipment, and if you don't have the people with superior knowledge in their marketplace, then you will just be another average company.

Within our business, in our previous incarnation of Smurfit Kappa, we continue to, over 2 strategic plan periods, develop world-class systems, world-class assets, and businesses which have a long investable future.

In the new Smurfit WestRock, as always, we will be doing the same in a disciplined and measured way.

We have started that journey now in the new Smurfit WestRock with $1 billion already invested in our system, roughly equally split between paper and converting assets.

to rapidly take out costs with a minimum return exceeding 20% plus.

Tony Smurfit: But of course, equipment without people is useless, because anybody can buy new equipment, and if you don't have the people with superior knowledge in their marketplace, then you will just be another average company. In the first six months, we have demonstrated, with some 39 unique awards given to us, that Smurfit Westrock has some of the most powerful, innovative tools and applications that will bring our customers' packaging to another level and help them win in their own marketplaces. With over 2000 designers worldwide, we are in the early innings of bringing all that knowledge together for the benefit of our customers, so they can reduce their own costs and drive increased revenue, giving them unique designs at the same time sharing value. The sustainability journey, which a large portion of our customer base is committed to, is another area of expertise.

Frankly speaking, we've been doing this for decades, and seeing the opportunity in the new Smurfit WestRock is truly exciting.

Tony Smurfit: In the first six months, we have demonstrated with some 39 unique awards given to us that Smurfit Westrock has some of the most powerful, innovative tools and applications that will bring our customers' packaging to another level and help them win in their own marketplaces. With over 2,000 designers worldwide, we are in the early innings of bringing all that knowledge together for the benefit of our customers so they can reduce their own costs and drive increased revenue, giving them unique designs at the same time sharing value. The sustainability journey, which a large portion of our customer base is committed to, is another area of expertise. We are becoming the innovative and sustainable packaging partner of choice for our customers, which is continually demonstrated day in and day out across our regions.

But of course, equipment without people is useless because anyone can buy new equipment. If you don't have the people with superior knowledge in their marketplace, then you will just be another average company.

In the first 6 months, we have demonstrated some 20 to 39 unique awards given to us. Smurfit at WestRock has some of the most powerful innovative tools and applications that will bring our customers' packaging to another level and help them win in their own marketplaces.

With over 2,000 designers worldwide, we are in the early innings of bringing all that knowledge together for the benefit of our customers. This will allow them to reduce their own costs and drive increased revenue, providing them with unique designs while sharing value.

This is the sustainability journey, which a large portion of our customer base is committed to.

Tony Smurfit: We are becoming the innovative and sustainable packaging partner of choice for our customers, which is continually demonstrated day in and day out across our regions. And with that, I'll hand you over to Ken, who'll take you through our financials.

is another area of expertise.

Tony Smurfit: And with that, I'll hand you over to Ken, who will take you through our financials.

We are becoming the innovative and sustainable packaging partner of choice for our customers, which is continually demonstrated day in and day out across our regions.

Ken Bowles: Thank you, Tony. Good morning and good afternoon, everyone. And as always, thank you for taking the time to join us. As you can see here on slide nine, the business delivered another strong performance in the second quarter with net sales of over $7.9 billion, adjusted EBITDA margin ahead of guidance at $1.213 billion, and adjusted EBITDA margin for the group of over 15%, and a strong adjusted free cash flow of $387 million. This is a marked improvement compared to the combined performance of the business for the same period last year, showing mid-single-digit growth in adjusted EBITDA and a further improvement in the group margin. The performance reflects the strength and resilience provided by our diversified geographic footprint and product portfolio, particularly in a challenging macroeconomic environment, and the commitment and dedication of our people to delivering for our customers.

Ken Bowles: Thank you, Tony. Good morning and good afternoon, everyone, and as always, thank you for taking the time to join us. As you can see here on slide 9, the business delivered another strong performance in the second quarter, with net sales of over $7.9 billion. Adjusted EBITDA had guidance at $1.213 billion, and adjusted EBITDA margin for the group of over 15%, and a strong adjusted free cash flow of $387 million. This is a marked improvement compared to the combined performance of the business for the same period last year, showing mid-single-digit growth in adjusted EBITDA and a further improvement in the group margin.

And with that, I'll hand you over to Ken, who will take you through our financials.

Thank you, Tony. Good morning and good afternoon, everyone. And as always, thank you for taking the time to join us. As you can see here on slide 9, the business delivered another strong performance in the second quarter with net sales of over $7.9 billion and an adjusted EBITDA margin of 12.13%. We also reported a strong adjusted free cash flow of $387 million.

Ken Bowles: The performance reflects the strength and resilience provided by our diversified geographic footprint and product portfolio, particularly in a challenging macroeconomic environment, and the commitment and dedication of our people to delivering for our customers. The ongoing improvement is also a clear reflection of our plan to embed a unique performance and culture right across the Smurfit Westrock organization... A culture that empowers mill and converting plant managers, places the customer at the center of decision making, underpinned by a relentless focus on cost and operating excellence. Turning now to the reported performance for our three segments, and starting with North America, where our operations delivered net sales of $4.8 billion, with Adjusted EBITDA of $752 million, and an Adjusted EBITDA margin of 15.8%. An excellent outcome.

This is a marked improvement compared to the combined performance of the business for the same period last year, showing mid-single-digit growth in adjusted data and a further improvement in the group margin.

Ken Bowles: The ongoing improvement is also a clear reflection of our plan to embed our unique performance and culture right across the Smurfit Westrock organization. A culture that empowers middle and converting bank managers, places the customer at the center of decision-making, underpinned by a relentless focus on cost and operating excellence. Turning now to the reported performance for our three segments and starting with North America, where our operations delivered net sales of $4.8 billion, with an adjusted EBITDA of $752 million, and an adjusted EBITDA margin of 15.8%, an excellent outcome.

The performance reflects the strength and resilience provided by our diversified geographic footprint and product portfolio, particularly in the challenging macroeconomic environment, and the commitment and dedication of our people to delivering for our customers.

The ongoing improvement is also a clear reflection of our plan to embed our unique performance culture right across the Smurfit WestRock organization.

A culture that empowers mail and converting bank managers places customers at the center of decision-making, underpinned by our relentless focus on cost and operating excellence.

Ken Bowles: Compared to the combined results in the Q2 of last year, we saw significant margin improvement, predominantly due to higher selling prices, early evidence of the operating model in action, and the benefits of our synergy program, alongside some input cost relief from recovered fiber, which more than offset lower volumes and cost headwinds on energy, labor, and higher mill downtime. Corrugated box pricing was higher compared to the prior year, while box volumes were down 4.5% on a same-day basis, an outcome very much in line with our ongoing Value Over Volume strategy. Third-party paper sales were 2% lower, while consumer packaging shipments, again, on a same-day basis, were down 2.7%, with volumes in Mexico being lower than in our US business.

Ken Bowles: Compared to the combined results in the second quarter of last year, we saw significant margin improvement, predominantly due to higher selling prices, early evidence of the operating model in action, and the benefits of our synergy program, alongside some info cost relief from appropriate fiber, which more than offset lower volumes and caused headwinds on energy, labor, and higher mill downtime. Corrugated box pricing was higher compared to the prior year, while box volumes were down 4.5% on a same-day basis, an outcome very much in line with our on-value over volume strategy. Third-party paper sales were 2% lower, while consumer packaging shipments, again on a same-day basis, were down 2.7%, with volumes in Mexico being lower than in our US business.

Turning now to the reported performance of our three segments, starting with North America, where our operations delivered net sales of $4.8 billion, with adjusted EBITDA of $752 million and an adjusted EBITDA margin of 15.8%. An excellent outcome.

Compared to the combined results in the second quarter of last year, we saw significant margin improvement, predominantly due to higher selling prices.

Early evidence of the operating model in action and the benefits of our Synergy program, alongside some information on cost relief from recovered fiber, which more than offset lower volumes in cost, headwinds on energy, labor, and higher mill downtime.

Targeted box pricing was higher compared to the prior year. While box volumes were down 4.5% on a same-day basis, the outcome was very much in line with our ongoing value-over-volume strategy.

Ken Bowles: One year on from the combination, we are particularly pleased with the performance of our North American team, with much of the heavy lifting now complete in terms of establishing our performance and culture based on empowerment and plant-level responsibility. Looking now at our MENA PAC segment, where we delivered net sales of $2.8 billion, adjusted EBITDA of $372 million, and an adjusted EBITDA margin of 13.4%. Despite a more challenging market backdrop in the region, our operations remained resilient, with combined adjusted EBITDA modestly below the prior year. This performance reflects the skill of our local teams in managing a highly volatile cost environment and underscores the effectiveness of our operating model, which continues to deliver the most innovative and sustainable packaging solutions and industry-leading returns.

Ken Bowles: One year on from the combination, we are particularly pleased with the performance of our North American team, with much of the heavy lifting now complete in terms of establishing our performance and culture based on empowerment and plant-level responsibility. Looking now at our EMEA and Asia Pacific segment, where we delivered net sales of $2.8 billion, Adjusted EBITDA of $372 million, and an Adjusted EBITDA margin of 13.4%. Despite a more challenging market backdrop in the region, our operations remained resilient, with combined Adjusted EBITDA modestly below the prior year. This performance reflects the skill of our local teams in managing a highly volatile cost environment and underscores the effectiveness of our operating model, which continues to deliver the most innovative and sustainable packaging solutions and industry-leading returns.

Third-party paper sales are 2% lower, while consumer packaging shipments are again down on the same day basis. We're at 2.7%, with volumes in Mexico being lower than in our U.S. business.

When you're on from the combination, we are particularly pleased with the performance of our North American team, with much of the heavy lifting now complete in terms of establishing our performance and culture based on empowerment and plant-level responsibility.

looking now at me and Apex segment where we delivered net sales of 2.88 billion and just to leave it that of 372 million and an adjusted Eva margin of 13.4%

Despite a more challenging market in the region, our operations remained resilient; however, combined adjusted debt was modestly below the prior year.

This performance reflects the scale of our local teams in managing a highly volatile cost environment and underscores the effectiveness of our operating model, which continues to deliver the most innovative and stable packing solutions and industry-leading returns.

Ken Bowles: Higher corrugated box prices year on year were more than offset by headwinds on energy, recovered fiber, and labor, while corrugated box volumes remained flat on a same-day basis. To consolidate our leadership position in the region, we have made significant investments in new converting machines, upgrades to corrugators, and significant investments in our bag-in-box business, resulting in a business that is primed to take advantage of the return of an improved demand environment. The LatAm segment again remained very strong in the quarter, with net sales of half a billion dollars, adjusted EBITDA of $123 million, and an adjusted EBITDA margin of over 23%.

Ken Bowles: Higher corrugated box prices year-on-year were more than offset by headwinds on energy, recovered fiber, and labor, while corrugated box volumes remained flat on a same-day basis. To consolidate our leadership position in the region, we have made significant investments in new converting machines, upgrades to corrugators, and significant investments in our bag and box business, resulting in a business that is primed to take advantage of the return of an improved demand environment. Our LATAM segment again remained very strong in the quarter, with net sales of half a billion dollars, Adjusted EBITDA of $123 million, and an Adjusted EBITDA margin of over 23%. Corrugated box volumes were down 1.9% on the same-day basis, with the demand picture in Argentina showing decent, yet marked improvement and strong demand growth in Colombia and Chile, among others.

Higher targeted box prices year-on-year were more than offset by headwinds in energy, recovered fiber, and labor. While carrying a box of volumes remained flat on a same-day basis.

To consolidate our leadership position in the region, we have made significant investments in new converting machines, upgrades to the corrugators, and significant investments in our bag and box business.

Resulting in a business that is primed to take advantage of the return of an improved demand environment.

Million dollars.

As an adjustable margin of over 23%.

Ken Bowles: Corrugated box volumes were down 1.9% on a same-day basis, with the demand picture in Argentina showing decent yet marked improvement, and strong demand growth in Colombia and Chile, among others, all while our value over volume strategy continues to play out in Brazil as we continue to phase out unprofitable legacy contracts. The region successfully implemented pricing initiatives that almost entirely offset a negative currency translation impact and lower box volumes to deliver this strong result. We believe that Latin America continues to be a region of high growth potential for Smurfit Westrock and one where we are well positioned to drive long-term success. And just a reminder of our proven capital allocation framework, a framework that is flexible and returns focused at its core.

Carried about volumes were down 1.9% on a same-day basis, with the demand picture in Argentina showing yet margin improvement.

Ken Bowles: All while our value over volume strategy continues to play out in Brazil as we continue to phase out unprofitable legacy contracts. The region successfully implemented pricing initiatives that almost entirely offset a negative currency translation impact and lower box volumes to deliver this strong result. We believe that Latin America continues to be a region of high growth potential for Smurfit Westrock, and one where we are well positioned to drive long-term success. And just a reminder of our proven capital allocation framework, a framework that is flexible and returns focused at its core. In Smurfit Westrock, we see internally allocated capital, backed by a management team with deep industry experience, as key to the future success of the business.

A strong demand growth in Colombia and Chile. Among us all, while our value-over-volume strategy continues to play out in Brazil as we continue to phase out unprofitable legacy contracts.

The region successfully implemented pricing initiatives that almost entirely offset a negative currency translation impact and lower box volumes to deliver this strong result.

We believe that Latin America continues to be a region of high growth potential for Smurfit WestRock, and one where we are well positioned to drive long-term success.

And just a reminder of our proven capital allocation framework.

A framework that is flexible and return-focused at its core.

Ken Bowles: In Smurfit Westrock, we see internally allocated capital backed by a management team with deep industry experience as key to the future success of the business. After conducting the near-term assessment of the capital needs of the business, our CapEx range of $2.2 to $2.4 billion a year includes high-return quick-win projects already underway, while we continue to build out broader strategic plans for the business. The dividend is also a cornerstone of the framework, delivering on our expectation of paying a dividend stream in line with legacy SKG's progressive policy, subject to the necessary board approvals, and demonstrates our confidence in the cash generative ability of the business. You will note that today we've declared a quarterly dividend of 43.08 cents per share. The balance sheet of Smurfit Westrock has significant strength and flexibility.

Ken Bowles: After conducting the near-term assessment of the capital needs of the business, our CapEx range of $2.2 to 2.4 billion a year includes high return, quick win projects already underway, while we continue to build out broader strategic plans for the business. The dividend is also a cornerstone of the framework, delivering on our expectation of paying a dividend stream in line with legacy SKG's progressive policy, subject to the necessary board approvals, and demonstrates our confidence in the cash generative ability of the business. You will note that today, we've declared a quarterly dividend of $0.4308 per share. The balance sheet of Smurfit Westrock has significant strength and flexibility.

In Smurfit WestRock, we see internally allocated capital, backed by a management team with deep industry experience, as key to the future success of the business.

For conducting the near-term assessment of the capital needs of the business, our capex range of $2.2 to $2.4 billion a year includes high-return, quick-win projects already underway while we continue to build out a broader strategic plan for the business.

The dividend is also a cornerstone of the framework, delivering on our expectation of paying a dividend stream in line with Legacy SKU's progressive policy.

Subject to the necessary board approvals, this demonstrates our confidence in the cash-generating ability of the business.

Today, we have declared a quarterly dividend of 43.08% per share.

Ken Bowles: We are committed to maintaining a strong investment-grade credit rating, and I am particularly pleased with the upgrade to our long-term issuer rating from Fitch earlier this month to BBB+ with stable outlook. Given the scale of our operations and indeed our ability to generate significant free cash flow, we are targeting a long-term leverage ratio of below two times through the cycle. We will also maintain a disciplined approach to M&A, benchmarking any growth opportunities in this area against all other capital allocation alternatives. And the inclusion of other shareholder returns reflects our strong confidence in the future prospects of the business and signals our commitment to continue exploring avenues to create and deliver value for shareholders and benchmark those opportunities against available options. Ultimately, this framework is all about creating long-term value for all shareholders.

Ken Bowles: We are committed to maintaining a strong investment-grade credit rating, and I am particularly pleased with the upgrade to our long-term issuer rating from Fitch earlier this month to BBB+, with stable outlook. Given the scale of our operations and indeed our ability to generate significant free cash flow, we are targeting a long-term leverage ratio of below 2x through the cycle. We will also maintain a disciplined approach to M&A, benchmarking any growth opportunities in this area against all other capital allocation alternatives. The inclusion of other shareholder returns reflects our strong confidence in the future prospects of the business and signals our commitment to continuing exploring avenues to create and deliver value for our shareholders and benchmark those opportunities against available options. Ultimately, this framework is all about creating long-term value for all shareholders.

The balance sheet of Smurfit Westrock has significant strength and flexibility.

We are committed to maintaining a strong investment-grade credit rating, and I am particularly pleased with your upgrade to our long-term issue rating from 'S' this month to 'B+' with a stable outlook.

Given the scale of our operations and indeed our ability to generate significant free cash flow, we are targeting a long-term leverage ratio of below 2 times through the cycle.

We will also maintain a disciplined approach to M&A, benchmarking any growth opportunities in this area against all other capital allocation alternatives.

And the inclusion of other shareholder returns reflects our strong confidence in the future prospects of the business and signals our commitment to continue exploring avenues to create and deliver value for our shareholders and benchmark those opportunities against the available options.

Ultimately, this framework is all about creating long-term value for all shareholders.

Ken Bowles: Turning now to slide 12, and I'm pleased to confirm that our synergy program is delivering as planned. We are on track to deliver $400 million of full-year, full-runway synergies exiting 2025, and moreover, we have identified a minimum of $400 million of additional opportunities following from a sharper operating and commercial focus. The drivers of that medium-term target involve our longstanding value proposal philosophy, the consolidation of production and more efficient machines, the ongoing benefits of our decentralized operating model, and through the rollout of our unique innovations offering. Furthermore, as we note in the release, we expect to deliver a third-quarter adjusted EBITDA of approximately $1.3 billion, and our full-year adjusted EBITDA guidance remains between $5 billion and $5.2 billion. And with that, I'll pass it back to Tony for some concluding remarks.

Ken Bowles: Turning now to Slide 12, and I'm pleased to confirm that our synergy program is delivering as planned. We are on track to deliver $400 million of full year, full runway synergies exiting 2025. And moreover, we have identified a minimum $400 million of additional opportunities following from a sharper operating and commercial focus. The drivers of that medium-term target involve our long-standing value over volume philosophy, the consolidation of production of more efficient machines, the ongoing benefits of our decentralized operating model, and through the rollout of our unique innovation offering. Furthermore, as we note in the release, we expect to deliver a Q3 adjusted EBITDA of approximately $1.3 billion, and our full-year adjusted EBITDA guidance remains between $5 billion and $6.2 billion. And with that, I'll pass it back to Tony for some concluding remarks.

Turning to slide 12, I'm pleased to confirm that our Synergy program is delivering as planned.

We are on track to deliver $400 million of full-year run-rate synergies exiting 2025, and we're over. We have identified a minimum of $400 million of additional opportunities arising from a sharper operating and commercial focus.

The drivers of that Medium Town Target involve our long-standing, valuable volume for philosophy, the consolidation of production of more efficient machines, the ongoing benefits of our decentralized operating model, and the rollout of a unique Innovation offering.

Furthermore, as we know from the release, we expect to deliver a third quarter that is approximately $1.3 billion, and our full-year adjusted EVA guidance remains between $5 billion and $5.2 billion.

Tony Smurfit: Thank you, Ken. Well, as I said at the outset, we are happy that we've come a long way in a short space of time, but clearly, there is much to play for. Our North American business has seen significant improvement in its first year of the combination. Our European business continues to be resilient, with a decent margin performance despite a challenging environment. As the region recovers, we will be a major beneficiary. Our Latin American business continues to be an area of significant opportunity, where we see significant growth in many of the countries in which we operate. Smurfit Westrock is about building on the strong foundation we've laid to be the go-to, innovative, and sustainable packaging partner of choice for our customers, with an emphasis on value, quality, and service. Smurfit Westrock, which operates in 40 countries, is truly at the beginning of this journey.

Tony Smurfit: Thank you, Ken. Well, as I said at the outset, we are happy that we've come a long way in a short space of time, but clearly there is much to play for. Our North American business has seen significant improvement in its first year of the combination. Our European business continues to be resilient with a decent margin performance despite a challenging environment. As the region recovers, we will be a major beneficiary. Our Latin American business continues to be an area of significant opportunity where we see significant growth in many of the countries in which we operate. Smurfit Westrock is about building on the strong foundation we have laid to be the go-to innovative and sustainable packaging partner of choice for our customers, with an emphasis on value, quality, and service. Smurfit Westrock, which operates in 40 countries, is truly at the beginning of this journey.

And with that, I'll pass you back to Tony for some concluding remarks.

Uh, thank you, Ken. Well, as I said at the outset, we are happy that we've come a long way in a short space of time, but clearly, there is much to play for.

Our North American business has seen significant improvements in its first year of the combination.

European business continues to be resilient, with a decent margin performance despite a challenging environment.

As the region recovers, we will be a major beneficiary.

Our Latin American business continues to be an area of significant opportunity, where we see significant growth in many of the countries in which we operate.

Smurfit WestRock is about building on the strong foundation we've laid to be the go-to innovative and sustainable packaging partner of choice for our customers, with an emphasis on value, quality, and service.

Tony Smurfit: We believe that we have the best people in the business. We believe we have the best knowledge in our business, and we have strong market positions in practically all countries in which we operate. All senior management in the company are fully aligned with shareholders with a proven track record of delivering. As we have set out in this morning's release, our confidence and conviction on our performance and prospects in part reflects the measurable progress that we've already done within this very short timeframe. I thank you for your attention, and now I will hand it back to our operator for some questions and answers. Thank you, operator.

Tony Smurfit: We believe that we have the best people in the business. We believe we have the best knowledge in our business, and we have strong market positions in practically all countries in which we operate. All senior management in the company are fully aligned with shareholders, with a proven track record of delivering. As we have set out in this morning's release, our confidence and conviction on our performance and prospects, in part, reflects the measurable progress that we've already done within this very short timeframe. I thank you for your attention, and now I will hand it back to our operator for some questions and answers. Thank you, operator.

Smurfit WestRock, which operates in 40 countries, is truly at the beginning of this journey.

We believe that we have the best people in the business.

We believe we have the best knowledge in our business, and we have strong market positions in practically all countries in which we operate.

All senior management in the company are fully aligned with shareholders, with a proven track record of delivering.

As we have said, out in this morning's release, our confidence and conviction in our performance and prospects in part reflects the measurable progress that we've already made within this very short time frame.

Heidi: As a reminder, 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 take our first question, and the question comes from the line of Mike Roxlett from Truist Securities. Please go ahead. Your line is open. Mike, go ahead. Your line is open.

And answers.

Operator: Thank you. As a reminder, 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 take our first question, and the question comes from the line of Michael Roxland from Truist Securities. Please go ahead. Your line is open. Michael Roxland, your line is open.

Thank you.

As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced to withdraw your question. Please press *11 again.

We will take our first question, and the question comes from the line of Mike Roxland from Truist Securities. Please go ahead. Your line is open.

Tony Smurfit: Mark, we can't hear you. Mike, sorry, we can't hear you.

Mic Blend. Your line is open.

Michael Roxland: Hi. So hi, I'm here. So can you hear me now? Sorry about that.

Various Analysts: Hey, it's both. Hi, I'm here. Can you hear me now? Sorry about that.

Tony Smurfit: Yeah. Okay.

Tony Smurfit: Yeah.

Various Analysts: Okay. Apologies. Yeah, thank you. Thank you for taking my questions, everyone, and congrats on all the progress. First question I had was, you know, Tony, you mentioned you cut the loss making, I believe I heard you say, in North America corrugated by 40%. What metric or metrics are you referring to exactly? And just can you provide some more details around that?

Michael Roxland: Apologies. Yeah, thank you. Thank you for taking my questions, everyone, and congrats on all the progress. First question I had was, did... Tony, you mentioned, you know, cut, you cut the loss making, I believe I heard you say, in North America, corrugated by 40%. What metric or metrics are you referring to exactly? Just provide some more details around that.

Mark, we can't hear you. Mike, sorry, we can't hear you. Hey, go. Hey, I'm here, so I can hear me now. Sorry about that. Yeah, okay, apologies. Thank you for taking my questions, everyone, and congrats on all the progress.

Um,

Tony Smurfit: Yeah, sure. Mike, basically, you know, when we came in, we obviously put the profitability back to plant level, and we could see that a lot of plants, and actually the numbers are pretty well the same, about 40% of our plants have moved into profit from being in loss and about 40% improvement in the overall number. So, you know, we've basically gone through every account very systematically, and there have been some accounts that have been, you know, heavily underwater. And we have, a part of the reason for our volume performance is that we have lost some business that was very uneconomic for us to run. And so, you know, that's been a systematic process. I mean, we can't get out of all contracts that we're in that are not necessarily good ones. And so we're going through that process, you know, continually in the company.

Tony Smurfit: Yeah, sure. Mike, basically, you know, when we came in, we obviously put the profitability back to plant level, and we could see that a lot of plants, and actually the numbers are pretty well the same. About 40% of our plants have moved into profit from being in loss and about 40% improvement in the overall numbers. So you know, we've basically gone through every account very systematically, and there has been some accounts that have been, you know, heavily underwater, and we have. A part of the reason for our volume performance is that we have lost some business that was very uneconomic for us to run. And so, you know, that's been a systematic process.

First question I had was, you know, Tony, you mentioned, you know, cut the loss making, I believe I heard you say in North America corrugated by 40%. What metric or metrics are you referring to exactly? And just keep providing more details around that.

Yeah, sure. Uh, Mike basically. You know, when we came in we we obviously put put the profitability back to plant level and we we could see that a lot of plants and actually the numbers are pretty well. The same about 40% of our plants.

Tony Smurfit: I mean, we can't get out of all contracts that we're in that are not necessarily good ones. And so we're going through that process, you know, continually in the company. And, you know, the good news is that when you open up valuable machine space, and you give a sales team the chance to go and fill that valuable machine space, you know, if you're losing a lot of money on an account, you know, just getting break-even accounts, business is not so hard, so you improve your business substantially. It does take a little bit of a lag period. So, you know, if you lose, let's say, a machine of a customer, it'll probably take you six months to refill that machine with better customers.

Tony Smurfit: And you know, so the good news is that when you open up valuable machine space and you give a sales team the chance to go and fill that valuable machine space, you know, if you're losing a lot of money on an account, you know, just getting break-even accounts business is not so hard. So you improve your business substantially. It does take a little bit of a lag period. So, you know, if you lose, let's say, a machine of a customer, it'll probably take you six months to refill that machine with better customers. So that's why you get this sort of lag period of getting your volume back. But overall, you know, just by the actions that we've taken of removing poor volume and, you know, replacing some of that already, you know, we're seeing the benefits and we'll continue to see the benefits.

Have moved into uh profit from being in loss and about 40% Improvement in in the overall number. So you know we we um we we've basically gone through every account very systematically. And there has been some accounts that have been, you know, heavily underwater and we have a part of the reason for our volume performance is that we have lost some business that has was very uneconomic for us to to, to run. Um, and so, uh, you know, that's been a systematic process. I mean, we can't get out of all contracts that were in that are not necessarily good ones. Um, uh and so we're going through that process, uh, you know, continually in the company. Um, and you know, there's so so the the good news is that when you when you open up valuable machine space, uh, and you give a sales team, the chance to go and fill that valuable machine space. You know, if you're losing a lot of money on an account, you know, just getting Break. Even accounts, uh, uh, business is

Tony Smurfit: So that's why you get this sort of lag period of getting your volume back. But overall, you know, just by the actions that we've taken of removing poor volume, and, you know, replacing some of that already, you know, we're seeing the benefits, and we'll continue to see the benefits. There will be some factories, Mike, that will be unsavable for different reasons, but the vast majority of them are savable and will improve continually. And I would say to you that all that we've said about operational improvement is really continuing to do what normal corrugated factories do, which is sell at a reasonable rate of return, giving value and service and quality to the customer.

Tony Smurfit: There will be some factories, Mike, that will be unsavable for different reasons, but the vast majority of them are savable and will improve continually. And I would say to you that all that we've said about operational improvement is really continuing to do what normal corrugated factories do, which is sell at a reasonable rate of return, giving value and service and quality to the customer, and ensuring that the plant is able to continue to, you know, pull the paper through the system rather than push the paper through the system. And that's what's happened and is happening.

Tony Smurfit: And ensuring that the plant is able to continue to, you know, pull the paper through the system rather than push the paper through the system. That's what's happened, and it's happening.

Is not so hard so you improve your business substantially. Uh, it does take a little bit of a lag period. So, you know, if you lose a let's say a, a machine of a customer, it'll probably take you 6 months to to refill that machine with better customers. So that's why you get this sort of lag, period of of of uh, um, uh, getting your volume back. But but overall, you know, just by the actions that we've taken of of removing poor volume, uh, and you know, replacing some of that already, uh, you know, we're seeing seeing the benefits and we'll continue to see the benefits. There will be some factories mic, that will be unsavable for different reasons, uh, but the vast majority of them are saveable and will improve continually. And I would say to you, that the all that we've said about operational Improvement is really continuing to do. What, normal corrugated Factories do, which is sell at a, a reasonable rate of return, giving value, and service, and quality to the customer and ensuring

That the plant is able to continue to, you know, pull the paper through the system rather than push the paper through the system.

That's what's happened, and it's happening.

Michael Roxland: Got it. I appreciate the color, Tony. And then just two... One quick follow-up. How much of the business in North America remains in a loss position? And then quickly, just on, on Europe, you mentioned you feel like you're close to a, a low in Europe, but that said, you know, it looks like pricing continues to weaken, which could potentially threaten into the back, the back half of this year into 2026. So would love to get your sense as to why you feel you're close to a low right now in Europe as well. Thank you.

Various Analysts: Got it. I appreciate the color, Tony. And then just one quick follow-up. How much of the business in North America remains in a loss position? And then quickly, just on Europe, you mentioned you feel like you're close to a low in Europe, but that said, you know, it looks like pricing continues to weaken, which could potentially threaten certainly the back half of this year and into the 26th. So we'd love to get your sense as to why you feel you're close to a low right now in Europe as well. Thank you.

Tony Smurfit: Okay. Well, you know, we still, we still have a number of facilities in loss-making. There'll be, going back to the, the first question. We still have a lot still to do. You know, there are, as I said, there are companies that's where we have contracts that we have to continue to honor with our customers that are, you know, significantly underwater, that as those contracts come up, we will, we will either get the prices up or we will, we will lose the business, and replace it with better business. So we have still, you know, as I say, about 60% of the loss makers, corrugated loss makers, to, to move into profit. So that's a big opportunity and, and, and chance for us.

Tony Smurfit: Okay. Well, you know, we still have a number of facilities in loss making. Going back to the first question, we still have a lot still to do. You know, there are, as I said, there are companies where we have contracts that we have to continue to honor with our customers that are, you know, significantly underwater, that as those contracts come up, we will either get the prices up or we will lose the business and replace it with better business. So we have still, you know, as I say, about 60% of the loss makers, corrugated loss makers, to move into profit. So that's a big opportunity and chance for us. I don't say all of them will get there, but I would say that at least another 40% will get there over the coming year or so.

Appreciate the call there Tony. And then just 1 quick follow up. How much of the business in North America remains in a lost position and then quickly just like on Europe you mentioned you feel like you're close to a low in Europe but that said you know it looks like pricing continues to weaken which could potentially threaten certainly the back the back half of this year and into the 26th so would love to get your sense as to why you feel, you're close to a low right now in Europe as well. Thank you.

Tony Smurfit: As I, I don't say all of them will get there, but I would say that at least for another 40% will get there over the coming year or so. So, and the ones that have come from loss-making to marginal profitability, we should start to see them improve as well. And then hopefully, we'll see our decent plants continue to improve over time as well. So without being too optimistic, I see a lot of opportunity in our corrugated space to improve our business. With regard to Europe, I think there was an announcement today, Mike, about a paper mill closing down. What we're saying in Europe is that at the current levels, if you're a third or fourth player paper mill in Europe, and you have no integration, you are not in good shape right now.

Tony Smurfit: And the ones that have come from loss making to marginal profitability, we should start to see them improve as well. And then hopefully, we'll see our decent plants continue to improve over time as well. So without being too optimistic, I see a lot of opportunity in our corrugated space to improve our business. With regard to Europe, I think there was an announcement today, Mike, about a paper mill closing down. What we're saying in Europe is that at the current levels, if you're a third or fourth player paper mill in Europe and you have no integration, you are not in good shape right now. And you saw the one closure today. That's just an indication of how difficult it is for independent paper makers right now in Europe with the current level of pricing.

Profitability we should start to see them improve as well and then hopefully we'll see our decent plants continue to improve over time as well. So with that being too optimistic, I see a lot of opportunity in in our corrugated uh space to to improve our business with regard to Europe.

Tony Smurfit: And that's you saw the one closure today, that's just an indication of how difficult it is for independent paper makers right now in Europe with the current level of pricing. You know, so I think that our business model has proven out. We've got very good assets, which we've invested in over the years. We've got very good integration, which we continue to invest in. We will, you know, in fact, our pricing should move up in corrugated in the second half or slightly move ahead, as we push forward our contracts, that will come up for renew during the second half of the year.

Tony Smurfit: And you know, so I think that our business model has proven out. We've got very good assets, which we've invested in over the years. We've got very good integration, which we continue to invest in. And we will, you know, in fact, our pricing should move up in corrugated in the second half or slightly move ahead as we push forward our contracts that will come up for renew during the second half of the year. So, you know, I think at the current level of paper, it's not sustainable for the vast majority of players. And that's why you're seeing some closure, and I suspect you're going to see some more.

Tony Smurfit: So, you know, I think at the current level of paper, it's not sustainable for the vast majority of players, and that's why you're seeing some closures, and I suspect you're gonna see some more.

I think there was an announcement today, uh, Mike about uh, a paper mill, closing down what we're saying in Europe. Is that at the current levels, if you're a third or fourth player, paper mill, in Europe, and you have no integration, you are in, in, in, not, in good shape right now. And, uh, that's you saw the 1 closure today that's just an indication of how difficult it is. For independent paper makers right now in Europe with the current level of pricing. Uh, and um, you know, so I think that, uh, our business model has proven out, we've got very good assets, uh, which we've invested in over the years. Uh, we've got very good integration, uh, which we continue to invest in. And, uh, we will, you know, in fact, our pricing should move up in corrugated in the second half or slightly move ahead. As we, as we integrate, as we push forward, our contracts, uh, that, that will come up for re renew during during the second half of the year. So, you know, uh, I, I think,

Various Analysts: Thank you very much, Heidi.

Lars Kjellberg: Thank you very much, Tony.

Michael Roxland: Thank you very much, Tony.

At the current level of paper, it's not sustainable for the vast majority of players. And that's why you're seeing some closures. Now, I suspect you're going to see some more.

Tony Smurfit: That's great. Thanks, Mike.

Thank you very much, honey.

Operator: Thank you. We will take our next question. Your next question comes from the line of Lewis Sheridan from Goodbody. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. Your next question comes from the line of Louis Roxbride from Goodbody. Please go ahead. Your line is open.

That's great. Thank you, Mike.

Lewis Sheridan: Hi. Thanks for taking my questions. The first is just on tariffs and consumer confidence. So I guess Q2 would have captured some of that initial tariff impact, and obviously, the delivery was encouraging in that context. But as we move into Q3 with a little bit more visibility, uncertainty, and policy, are you seeing any signs of improvement in consumer confidence or demand across your key markets? And the second question is just, I guess, a follow-up on European capacity rationalization. I know you mentioned weakness in non-integrated players. You've already announced some closures in Germany, but just given the scale of the US reduction and the fact that sort of European market stands relatively oversupplied, do you think there's scope for further capacity closures on your side? Thanks.

Lewis Roxburgh: Hi. Thanks for taking my questions. The first is just on tariffs and consumer confidence. So I guess Q2 would have captured some of that initial tariff impact, and obviously, the delivery was encouraging in that context. But as we move into Q3 with a little bit more visibility, uncertainty, and policy, are you seeing any signs of improvement in consumer confidence or demand across your key markets? And the second question is just, I guess, a follow-up on European capacity rationalization. I know you mentioned weakness in non-integrated players. You've already announced some closures in Germany, but just given the scale of the US reduction and the fact that sort of European market stands relatively oversupplied, do you think there's scope for further capacity closures on your side? Thanks.

Thank you. We will take our next question. Your next question comes from the line of Lewis Roxborough from Goodbody. Please go ahead. Your line is open.

Various Analysts: Hi. Thanks for taking my questions. The first is just on tariffs and consumer confidence. So I guess Q2 would have captured some of that initial tariff impact, and obviously, the delivery was encouraging in that context. But as we move into Q3 with a little bit more visibility and certainty in policy, are you seeing any signs of improvement in consumer confidence or demand across your key markets? And the second question is just, I guess, a follow-up on European capacity rationalization. I know you mentioned weakness in non-integrated players. You've already announced some closures in Germany, but just given the scale of the US reduction and the fact that sort of European market stands relatively oversupplied, do you think there's scope for further capacity closures on your side? Thanks.

Tony Smurfit: Yeah. I mean, we continue to look at, Louis, our portfolio. And so, you know, at this moment, we closed the mill last year in Europe, in France. We don't in the short term because all of our mills continue to be profitable because they're integrated. And so we're in reasonably good shape. And as I say, we're mainly first and second-tier mills in our system because we've been investing in them for the last decade. If you remember, if you go back a long time, we used to have 23 mills doing 3 million tons. Now we've about 15 mills doing 5 million tons. So, you know, our footprint has become ever more efficient over, you know, the last 15 years or so. So we're ourselves in good shape because we have people to sell to, which is ourselves.

Tony Smurfit: Yeah. I mean, we continue to look at, Lewis, our portfolio. And so, you know, at this moment, we closed the mill last year in Europe, in France. We don't in the short term because all of our mills continue to be profitable because they're integrated, and so, so we're in reasonably good shape. And as I say, we're mainly first and second tier mills, in our system because we've been investing in them for the last decade. If you remember, if you go back a long time, we used to have 23 mills doing 3 million tons. Now we've about 15 mills doing 5 million tons. So, you know, our footprint has become ever more efficient over, you know, the last 15 years or so.

Hi. Thanks for taking my questions. The first is just on tariffs and consumer confidence, so I guess Q2 would have captured some of that initial tariff impact. And obviously the delivery was encouraging in that context but as we move into Q3 with a little bit more visibility and certainty in policy, are you seeing any signs of improvement in consumer confidence or demand across your key markets? And the second question is just I guess a follow up on European capacity, rationalization, um, I know you mentioned weakness and non-integrated players. Uh, you've already announced some closures in Germany but just given the scale of the US reduction and the fact that sort of European market stands relatively over Supply. Do you think there's scope for further capacity closures on your side? Thanks.

Tony Smurfit: So we're ourselves in good shape because we have people to sell to, which is ourselves, and that's the integrated model that we continue to talk about. So I suspect there are many, many mills that are in desperate trouble right now, and that was indicated by just one closure today. And I suspect that as we go forward into Q3 and Q4, if things persist, that those will continue to happen. The first part of your question, Ken, do you want to take the tariff question?

Tony Smurfit: And that's the integrated model that we continue to talk about. So I suspect there are many, many mills that are in desperate trouble right now, and that was indicated by just one closure today. And I suspect that as we go forward into the third and fourth quarter, if things persist, that those will continue to happen. The first part of your question, Ken, do you want to take the tariff question?

Yeah, I mean, we continue to look at Lewis our portfolio. Um, and so, you know, at this moment, we closed the mill last year, in Europe, in France, uh, we don't in the short term because all of our Mills continue to be profitable because they're integrated or and so, so we're in reasonably, good shape. Um, and as I say, we're mainly first and second tier, tier Mills, uh, in our system because we've been investing in them for the last decade. Uh, if you remember, if you go back a long time, we used to have 23 mils, doing 3 million tons. Now we've about 15 mils doing 5 million tons. So, you know, our footprint has become ever more efficient over over over, you know, the the last 15 years or so. So we're in we're ourselves in good shape because we have people to sell to which is ourselves and that's the, the integrated model that we continue to talk about. Um, so do I? I suspect there are many, many mils that are in Desperate trouble right now and that was indicated.

Ken Bowles: Tariff. Just, and just clarify, Lewis, that the closures we announced in Germany last quarter were corrugated box plants, not paper mills. So generally, that we were consolidating that volume across the existing footprint in Germany. So, you know, the volume remains just over a lower fixed cost overhead, was better for the system, so natural benefit. In terms of tariffs, important to remember that the 10% was already in for a lot of the paper imports into North America anyway, across the piece. So the incremental 5%, you know, doesn't present that much of an upwards correction given what the number could have been as of 1 August. I think, you know, historically, the consumer tends to take on about 70% of all the tariff increase.

Ken Bowles: And just clarify, Louis, that the closures we announced in Germany last quarter are corrugated box plants, not paper mills. So generally, we were consolidating that volume across the existing footprint in Germany. So, you know, the volume remains just over a lower fixed cost overhead, which is better for the system. So natural benefits. In terms of tariffs, it's important to remember that the 10% was already in for a lot of the paper imports into North America anyway across the piece. So the incremental five doesn't present that much of an upward correction given what the number could have been out of the 1st of August. I think, you know, historically, the consumer tends to take on about 70% of all the tariff increase. So I think we've seen some of that come true.

By just 1 closure today. Um and I I suspect that as we go forward into the third and fourth quarter, if things persist uh that those will continue to happen. Um, the first part of your question, Ken, do you want to take the Tariff of tariffs just and just clarify L that the closure we announced in Germany last quarter or a carry out of Boston's not paper mills?

Ken Bowles: So I think we've seen some of that come through, but I think our, our position based on where we sit today is, I don't think we'll naturally see any change in flows of imports or exports of papers in or out of North America based on the tariffs as they currently sit today. You know, while they... Yes, the margins might eroded for the imports into North America for the European producers, it still probably presents a slightly better market than other markets for them. So I wouldn't necessarily expect any shift or change there. Clearly, you know, given our footprint in North America around paperboard, probably does present an opportunity around, you know, the, the cost of the domestic product versus the imported, imported product is much more attractive. I think you would hear that yesterday from one of our peers, too.

Ken Bowles: But I think our position based on where we sit today is I don't think we'll naturally see any change in flows of imports or exports of papers in or out of North America based on the tariffs as they currently sit today. You know, while yes, the margins might erode for the imports into North America for the European producers, it still probably presents a slightly better market than other markets for them. So I wouldn't necessarily expect any shift or change there. Clearly, you know, given our footprint in North America around paperboard, it probably does present an opportunity around, you know, the cost of the domestic product versus the imported product is much more attractive. And I think you would hear that yesterday from one of our peers too. So you won't be surprised by that.

So generally that we were consolidating that volume across the existing footprint in Germany. So you know, the volume remains just over a lower fixed cost. Overhead was better for the system. So natural benefit in terms in terms of tariffs important to remember that the 10% was already in for a lot of the paper Imports into North America anyway across the the piece. So the incremental 5 um you know, doesn't present that much of a upwards correction. Give them what the number could have been out of the 1st of August. I think in, you know, historically the consumer tends to take on about 70% of all the Tariff increase. So I think we've seen some of that come through, but I think our our position based on where we sit today is I don't think we would naturally see any change in flows of imports or exports of papers in or at a North American based on the tariffs as they currently do today. You know, while they yes the margins might eroded for the Imports into North America for the European producers, it still probably represents a slightly better Market than other markets for them. So I would necessarily expect any shift or change their clearly, you know, given our footprint.

Ken Bowles: So you won't be surprised by that. We've always kind of said that the real impact on the system will be what happened to consumer demand. I think you can see the volumes in Q2, particularly in North America, you know, market down 2.5. We were slightly more than that, but again, that was targeted around exactly what Tony spoke about there, eliminating loss makers and unprofitable volume. I think in Europe, given where Germany sits as part of that economy, you know, the settling of the tariffs should in theory, given the size of the German economy in the context of Europe, give some impetus if Germany wants that in terms of pushing Europe forward, but we are flat volumes in Q2 in Europe. But as we look out-...

Ken Bowles: We've always kind of said that the real impact on the system will be what happened to consumer demand. And I think you can see the volumes in the second quarter, particularly in North America, you know, market down two and a half. We were slightly more than that, but again, that was targeted around exactly what Tony spoke about there, limiting loss makers and unprofitable volume. I think in Europe, given where Germany sits as part of that economy, you know, the settling of the tariffs should, in theory, given the size of the German economy in the context of Europe, give some impetus if Germany wants that in terms of pushing Europe forward. But we are flat volumes in the second quarter in Europe. But as we look out, nothing yet to suggest that that demand picture will change very quickly.

Across the important important product is much more attractive. I think you would hear that yesterday from 1 of our peers too. Um, so you won't be surprised by that. We've always kind of said that the the real impact on the system will be what happened to Consumer demand. And I think you can see the volumes in the second quarter, particularly in North America. You know, Market Down 2 and a half, we were slightly more than that but again, that was targeted around. Exactly what Tony spoke about their eliminating loss makers and and unprofitable volume I think in Europe given where Germany sits as part of that economy you know the the settling of the terrorists shouldn't here. He gives the size of the German economy in the context of Europe, gives some

Ken Bowles: Nothing yet to suggest that the demand picture will change very quickly, and we're certainly not baking that into any of our forecasts. So it remains sort of a relatively, you know, the volume is okay, demand is okay, but could be a whole lot better. And I think as the tariff picture settles in, I think we'll see where consumer confidence might come back in certain areas that's been lacking, I think, you know, in the last year or so.

Ken Bowles: And we're certainly not baking that into any of our forecasts. So it remains sort of a relatively, you know, volume is okay, demand is okay, but could be a whole lot better. And I think as the tariff picture settles in, I think we'll see where consumer confidence might come back in certain areas that's been lacking, I think, you know, in the last year or so.

Impetus. If Germany wants that in terms of pushing Europe forward, we are flat volumes in the second quarter in Europe. But as we look out, nothing yet suggests that that demand picture will change very quickly, and we're certainly not baking that into any of our forecasts.

Tony Smurfit: Yeah. The only thing I would say is that we're waiting for the seasonal demand pick up in the United States to happen. We didn't see it move forward in July, and hopefully, we'll start seeing that come forward in August and September, based upon the settling of the tariff situation, if that happens. Because there's still a lot of unanswered questions with regard to Canada, Mexico, and a lot of Latin American countries. So, you know, we'll wait and see over the next few days, and indeed, including China. So we'll wait and see over the next few days what transpires in those areas.

Tony Smurfit: Yeah. The only thing I would say is that we're waiting for the seasonal demand pickup in the United States to happen. We didn't see it move forward in July. And hopefully, we'll start seeing that come forward in August and September based upon the settling of the tariff situation if that happens, because there's still a lot of unanswered questions with regard to Canada, Mexico, and a lot of Latin American countries. So, you know, we'll wait and see over the next few days, and indeed including China. So we'll wait and see over the next few days what transpires in those areas.

So it remains sort of a relatively, you know, volume is okay, demand is okay, but could be a whole lot better and I think as as a tariff picture settles in, I think we'll see where our consumer confidence. Might come back in certain areas. That's been lacking, I think, you know, in the last year or so. Yeah, the only thing I would say is that we're waiting for the seasonal demand pick up in the United States to happen. We didn't see it move forward in in July. And uh, hopefully, we'll start seeing that come forward in August and September based upon the settling of the, the Tariff situation. If, if that happens because there's still a still, a lot of answer questions with regard to Canada, Mexico. And and a lot of Latin

American country. So, you know, we'll wait and see over the next few days, and indeed including China. So, we'll wait and see over the next few days what transpires in those areas.

Lars Kjellberg: That's very helpful. Thank you.

Lewis Roxburgh: That's very helpful. Thank you.

Ken Bowles: That's very helpful. Thank you.

Tony Smurfit: Thanks, Lewis.

Tony Smurfit: Thanks, Louis.

It's very helpful. Thank you.

Operator: Thank you. We will take our next question. The question comes from the line of Phil Ng from Jefferies. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. And the question comes from the line of Phil Ng from Jefferies. Please go ahead. Your line is open.

Thank you.

We will take our next question.

Philip Ng: Hey, guys. Tony, you gave some great color with Roxland earlier. So on the loss-making contracts in North America, can you kind of give us a little more flavor in terms of how that winds down? Is that a, like a two-year cycle waterfall? And when you think about your team, are you in a good spot to value sell, right? It's about offering the service throughout your liability and the buy-in from your sales force. Just give us a little sense on where they sit on that front, and then just the environment as well, because we've seen obviously a lot of capacity come out. So you've been in North America for some time. How do you think about the set up here, from an industry structure standpoint as well?

Various Analysts: Hey, guys. Tony, you gave some great color with Roxlett earlier. So on the loss-making contracts in North America, can you kind of give us a little more flavor in terms of how that winds down? Is that like a two-year cycle waterfall? And when you think about your team, are you in a good spot to value sell it, right? It's about offering the service throughout reliability and the buy-in from your sales force. Just give us a little sense on where they sit on that front and then just the environment as well, because we've seen obviously a lot of capacity come out. So you've been in North America for some time. How do you think about the setup here from an industry structure standpoint as well?

The question comes from the line of Phil and G from Jeffrey's. Please go ahead. Your line is open.

Tony Smurfit: Okay, a lot of questions there. Are we in a good spot with regard to innovation? Yes. But as I said in my, my commentary, we're in the early innings. So for example, Phil, we have just recently hired a new innovation person. When I say recently, about four or five months ago now, to be our corrugated innovation person from a major brewery company, and he's been learning our business and is doing very well. I'm very happy with him. We're all happy with him. And we have a global innovation conference with our innovators in September, whereby we're going to pool the knowledge that we have across our companies.

Tony Smurfit: Okay. A lot of questions there. Are we in a good spot with regard to innovation? Yes, but as I said in my commentary, we're in the early innings. So for example, Phil, we have just recently hired a new innovation person, when I say recently, four or five months ago now, to be our corrugated innovation person from a major brewery company. And he's been learning our business and is doing very well. I'm very happy with him. We're all happy with him. And we have a global innovation conference with our innovators in September, whereby we're going to pool the knowledge that we have across our companies. And I have to say that there's some really good innovation in the legacy Westrock business too, that we need to make sure that we got all the information corralled.

Hey guys. Um Tony uh you gave some great color with uh um uh rocks on earlier earlier. So on these last making contracts in North America, can you kind of give us a little more flavor in terms of how that winds down? Is that a a 2 year cycle waterfall, and when you think about your team, are you in a good spot to Value yourself, right? It's about offering the service throughout reliability and the Buy in from your sales force. So just give us a little sense on where they sit on that front and then just the environment as well, because we've seen obviously a lot of capacity come out. So you've been in North America for some time. Uh, how do you think about uh, the setup here? Uh, from the from the industry structure standpoint as well.

Okay, a lot of questions there. Um, are we in a good spot uh with regard to Innovation? Yes. But as I said in my my commentary, we're in the early Innings. So, for example, uh, Phil we have just recently hired, a new innovation person when I say recently, f*** 4 or 5 months ago now, uh, to be our corrugated Innovation person from a major um uh Brewery company and he's been learning our business and uh and is doing

Tony Smurfit: I have to say that there's some really good innovation in the legacy WestRock business too, that we need to make sure that we got all the information corralled, and then we have to bring it into the organizations, you know, in a controlled way, that... So from the point of view of where we're at, in Europe, obviously, you know, we're in very good shape. In North America, we've got some very good spots of it, but we've got to corral it a bit more. And in Latin America, we're in good shape.

Tony Smurfit: And then we have to bring it into the organizations, you know, in a controlled way that. So from the point of view of where we're at in Europe, obviously, you know, we're in very good shape. In North America, we've got some very good spots of it, but we've got to corral it a bit more. And in Latin America, we're in good shape. So I think what we'll do, you'll see a big, big move over the next year in our whole innovative selling as we roll this out across a global basis, but specifically in North America. We're set up, you know, a lot of capacity has come out of the market, that's for sure. You know, demand, if there's any pickup in demand, that will obviously be very good for the situation.

Tony Smurfit: So I think what we'll do, you'll see a big, big move over the next year in our whole innovative selling, as we roll this out, across our global basis, but specifically in North America. We're set up, you know; there are a lot of capacities come out of the market, that's for sure. You know, demand, if there's any pickup in demand, that will obviously be very good for the situation. You know, we don't envisage taking much downtime, if any, in the second half of the year, other than the normal maintenance type of downtime and the odd problem that we're going to have inevitably in some of our mills. So we don't envisage taking downtime. You know, we would like to see demand a little bit stronger, Philip, to be honest.

Very well, I'm very happy with them. We're all happy with them and we have a global Innovation conference with our innovators in September whereby, we're going to pool uh, the knowledge that we have across our companies and and I I have to say that there's some really good innovation in in the Legacy West Rock business, too. That that we need to make sure that we got all the, uh, the the information corralled. And then we have to bring it into the organizations, you know, in a control worldwide.

In in in, in North America, uh, we're set up, you know, a lot of capacities come out of the market, that's for sure. Um, you know, demand

Tony Smurfit: You know, we don't envisage taking much downtime, if any, in the second half of the year, other than the normal maintenance type downtime and the odd problem that we're going to have inevitably in some of our mills. But so we don't envisage taking downtime. You know, we would like to see demand a little bit stronger, Philip, to be honest. You know, we know that we're going to replace that bad volume with, you know, better volume. And every plant I go to, you can see the enthusiasm of the sales teams. And when we start to roll out this innovation, even in a greater way, then it's going to be much stronger for our team. So we, with the normal lag of replacing it, I think we're going to be in good shape, but we would like to see the general market be better.

If there's any pickup in demand, that that will be very good for the situation. You know, we are we don't Envision taking much downtime if any in the second half of the Year other than the normal maintenance type of downtime and the odds problem that we're going to have inevitably in some of our Mills. Um, but uh, so we don't Envision taking down time, you know, we would like to see the

Tony Smurfit: You know, it's, it's... You know, we know that we're gonna replace that bad volume with, you know, better volume. And every plant I go to, you can see the enthusiasm of the sales teams. And when we start to roll out this innovation, even in a greater way, then it's gonna be, it's gonna be much stronger for, for our team. So we, with the normal lag of replacing it, I think we're gonna be in good shape, but we would like to see the general market be better. We're hearing about a lot of customers themselves taking downtime, you know, for a week or two weeks, which obviously, you know, not what we want to hear. We want to hear about an economy that's moving forward.

Tony Smurfit: We're hearing about a lot of customers themselves taking downtime, you know, for a week or two weeks, which is obviously, you know, not what we want to hear. We want to hear about an economy that's moving forward. So that's the only, I suppose, issue that I would have right now. With regard to the first question, which was.

Tony Smurfit: So that's the only, I suppose, issue that I would have right now. With regard to the first question, which was-

Ken Bowles: The wind down of unprofitable contracts and-

Philip Ng: The wind down of unprofitable contracts and-

Ken Bowles: The wind down of unprofitable contracts.

Tony Smurfit: The wind down. I would say by the time, by this time next year, you know, with the exception of very few, we would suggest that they will all be gone, this time next year.

Tony Smurfit: The wind down. I would say by this time next year, you know, with the exception of very few, we would suggest that they will all be gone this time next year.

Various Analysts: Okay. That's great color, Tony. Really appreciate it. An exciting opportunity in front of you. Europe, I'm just generally less familiar with. The margins were a little lighter than expected. Can you provide some color on some of the headwinds in the quarter and how you kind of see that progressing in the back half of the year, especially with some of the movement you've seen on OCC and gas prices?

Philip Ng: Okay. That's great color, Tony. Really appreciate it. An exciting opportunity in front of you. Europe, I'm just generally less familiar with. The margins were a little lighter than expected. Can you provide some color on some... the headwinds in the quarter and how you kind of see that progressing in the back half of the year, especially with some of the movement you've seen on OCC and gas prices?

Going to be in good shape, but we would like to see the General market be better. We're hearing about a lot of customers themselves, taking downtime, you know, for a week or 2 weeks, which is which obviously, you know, not not what we want to hear. We want to hear about an economy that's moving forward. Um, so that's, that's the only, I suppose, uh, issue that I would have right now with regard to the first question which was, um, the, the wind down of 1 proper contracts. So the wind down, I would say, by the time, by this time. Next year, you know, with the exception of very few, we we would suggest that they will all be gone. Um, this time next year.

Tony Smurfit: Yeah, I mean, I can take that. But I mean, you know, we're in better shape on costs in the second half than we were in the first half as a general view. But Ken?

Tony Smurfit: Yeah, I mean, I'll let Ken take that. But I mean, you know, we're in better shape on costs in the second half than we were in the first half, as a general view. But, Ken?

Okay, that's a great color. I totally appreciate it. Uh, an exciting opportunity in front of you. Um, Europe, I'm just generally less similar with, um, the margins were a little lighter than expected. Can you provide some color on some, the headwinds in the quarter and how you kind of see that progressing in the back half of the year, uh, especially with some of the movement you've seen on OCC and gas prices,

Ken Bowles: Yeah, Jay, hey, Phil. Generally, in Europe in the second quarter, I mean, APAC, you know, we did do a good bit on price at the positive in that quarter, about 3% on boxes, but that was offset by, you know, a little bit of volume lower than we would have thought. Energy higher than we thought, but that's come down a piece since. Recovered fiber, I think, was the big headwind of about 28 million in the quarter itself versus last year. And labor, actually, about 17. They were the two big ones. So predominantly box pricing offset by, you know, call it some energy, recovered fiber, a little bit of labor getting us to where they are.

Ken Bowles: Yeah, hey, Phil. Generally, in Europe in the Q2, the impact, you know, we did do a good bit on price. That's positive in that quarter. But, you know, about 3% on boxes. But that was offset by, you know, a little bit of volume lower than we would have thought. Energy higher than we thought, but that's come down a piece since. Recovered fiber, I think, was the big headwind of about $28 million in the quarter itself, versus last year. And labor actually, about $17 million. They were the two big ones. So predominantly, box pricing offset by, you know, call it some energy, recovered fiber, a little bit of labor, getting us where we are.

Yeah, I mean I I I can take that. But I mean you you know, we're we're in better shape on costs in the second half than we were in the first half as a as a general rule of view But Ken. Yeah, J J. How you feel? Uh, generally in Europe in the second quarter of the night back. You know, we we did do good but on price as deposit in that quarter, but you know, about 3% on boxes, but that was offset by, you know, a little bit of volume lower than we would have thought, um, energy higher than we thought. But that's come down to peace since. Um, recovery at 5, I think was the big headwind of about 28 million in the quarter itself versus

Ken Bowles: But as you kind of move forward through the year, I think you see the backdrop around recovered fiber, a little bit of labor, and certainly energy get a lot better than we would have thought at the start of the year.

Various Analysts: Okay. Thank you. Appreciate the color.

Philip Ng: Okay. Thank you. Appreciate the color.

Last year and labor actually about 17. Um they were the 2 big ones so predominantly box pricing offset by you know, calling some energy, recovered. Fiber a little bit of Labor getting us to where they are but as as you kind of move forward through the year I think you see the backdrop around recovered fiber, a little bit of Labor and certainly energy. You get a lot better than we would have thought at the start of the year.

Tony Smurfit: Thank you, Phil.

Okay, thank you. I appreciate the caller.

Operator: ... Thank you. We will take our next question, and the question comes from the line of Gabe Hajde from Wells Fargo. Please go ahead, your line is open.

Heidi: Thank you. We will take our next question. And the question comes from the line of Gabe Heiday from Weldfargo. Please go ahead. Your line is open.

Thank you. Phil.

Gabe Hajde: Tony, Ken, good afternoon.

Various Analysts: Tony, Ken, good afternoon.

Thank you. We will take our next question and the question comes from the line of gay Pi Day from Wild Fargo. Please go ahead. Your line is open.

Tony Smurfit: Hey, Gabe.

Various Analysts: Hey, Gabe.

Gabe Hajde: Tony, if you can, on the second half, maybe put a little bit more of a finer point on some of the, the underlying assumptions, sort of in the 1.3, and I guess sort of at the midpoint around 1.3 for, for the Q4, in terms of volume expectations across the three regions. And just more specifically in North America, we're reading some reports about, some retail business moving around, and I was curious if you were expecting kind of that down 4.5%-ish rate to, accelerate in the back half or, or get better. I know you just kind of told us by June of next year or, or Q2, things should be getting close to normalized, but any, any color there would be helpful.

Various Analysts: Tony, if you can, on the second half, maybe put a little bit more of a finer point on some of the underlying assumptions sort of in the 1.3, I guess, sort of at the midpoint around 1.3 for the fourth quarter in terms of volume expectations across the three regions. And just more specifically in North America, we're reading some reports about some retail business moving around. And I was curious if you were expecting kind of that down four and a half-ish percent rate to accelerate in the back half or get better. I know you just kind of told us by June of next year or second quarter, things should be getting close to normalized. But any color there would be helpful.

Uh, Tony can good afternoon. Um, hey. If you can

Tony Smurfit: I'll do the volume piece and then hand over the assumptions to Ken. Basically, you know, I would suspect that, you know, we should start to see normal seasonal pickup in volumes. That's what we're obviously believing. That's what typically happens. At this time, we've no reason to believe it won't happen. But we're not assuming that. Even if I think that we've won a lot of business in new places, that will probably impact us next year. I think that the second half, we're assuming basically flat volumes to where we are now. We don't expect deterioration, but neither do we expect things to be materially better. So that's sort of our assumption on volume.

Tony Smurfit: I'll do the volume piece and hand over the assumptions to Ken. Basically, you know, I would suspect that, you know, we should start to see normal seasonal pickup in volume. That's what we're obviously believing. That's what typically happens. At this time, we've no reason to believe it won't happen. But we're not assuming that we're, even if I think that we've won a lot of business in new places, that will probably impact us next year. I think that the second half, we're assuming basically flat volumes to where we are now. We don't expect deterioration, but neither do we expect things to be materially better. So that's sort of our assumption on volume. So, Ken, you want to take any other assumption?

On the second half, maybe put a little bit more of a finer point on some of the the underlying assumptions sort of in the 1.3. Um, and I get sort of, at the midpoint around 1.3 for for the fourth quarter, in terms of volume expectations, across the 3 regions, um, and just more specifically in North America, we we're reading some reports about, uh, some retail business moving around. And I was curious, if you were expecting kind of that down 4 and a half percent rate to, uh, accelerate in the back half or or get better. Um, and I know you just kind of told us by June the next year or or second quarter. Things should be getting close to normalized. But any any color that would be helpful

Tony Smurfit: So Ken, you want to take any other assumptions?

Ken Bowles: Hey, Gabe. Taking the Q3 specifically, I think we can make it really easy for you. The Q3 going $1.2 to $1.3 is just really two things. It's lower downtime, which is about a $50 million impact in the quarter, positively. And the rest is really around recovered fiber, predominantly for the other $50 million. So it's really relief on cost inflation. There's no real assumptions there, as Tony said, flat volume, not necessarily baking anything in, in price for the Q3. So really, the Q3, $1.2 to $1.3, is cost relief, predominantly recovered fiber, and then lower maintenance downtime in the Q3 over the Q2. For the full year, we kind of end up at the same place as we guided all year.

Ken Bowles: Hey, Gabe. Taking the third quarter specifically, I think we can make it really easy for you. The third quarter going 1.2 to 1.3 is just really two things. It's lower downtime, which is about a 50 million impact in the quarter, positively. And the rest is really around recovered fiber predominantly for the other 50. So it's really relief on cost inflation. There's no real assumptions there, as Tony says, flat volume, not necessarily baking anything in on price for the third quarter. So really, the third quarter, 1.2 to 1.3 is cost relief, predominantly recovered fiber, and then lower maintenance downtime in the third quarter over the second quarter. For the full year, we kind of end up with the same place as we guided all year.

I I'll do the volume piece on the hand, over the assumptions to to, to can basically, you know, I would suspect that, you know, we should we should start to see uh, normal seasonal pickup in volumes, that's what, we're we're obviously believing. That's what typically happens. Um, uh, at this time, we've no reason to believe it won't happen. Um, the, um, but we're not assuming that we we even if I think that we've won a lot of business in new places, uh, that that will probably impact us next year. Um, the, um, I think that the second half, we're assuming basically flat volumes to where we are now. Uh, we don't expect deterioration, uh, but neither do we expect uh, things to be, uh, material, uh, materially better. So, so that's sort of our assumption on volume. So can you want to take any other assumptions? Hey Gabe, um, taken the the third quarter specifically I think we can make it really easy for you. Um the third quarter going, 1.2 to 1

1.3 is just really 2 things. Uh, it's lower lower down time which is about a 50 million impact in the quarter positively and the rest is really around recovered fiber predominantly for the other 50. So it's really relief on cost inflation. There's no real assumptions there as Tony says flat volume. Not necessarily baking in the end prices of the third quarter. So really the third quarter 1.24.3 is costly predominantly recovered fiber, and then uh lower maintenance downtime in the third quarter, over the second quarter uh for the full year.

Ken Bowles: As with the moving parts of being, you know, as Tony just said there, moving to flat volumes for the back half, albeit lower for the first 6 months. So lower on volume, but doing a bit better on price across the year than we would've initially thought, and certainly a lot better on energy. So energy, where we might have guided, you know, about $350 million headwind year-over-year, is now about $250 million. You know, other raw materials, probably doing a bit better, $50 million. You know, things like recovered fiber itself, where we might have guided a headwind of about $154 million, $155 million at the start of the year. Probably see that more down to $105 million to $110 million, 110 space, so about $40 million, $50 million saving there.

Ken Bowles: I suppose the moving parts have been, you know, as Tony just said there, moving to flat volumes for the back half, albeit lower for the first six months, so lower on volume, but doing a bit better on price across the year than we would have initially thought. And certainly a lot better on energy. So energy where we might have guided, you know, about 350 headwind year on year, now about 250. You know, other raw materials probably doing a bit better, 50. You know, things like recovered fiber itself, where we might have guided a headwind of about 154, 155 million at the start of the year, probably see that more down to 105 to 110 space, about 40-50 million saving there. And across even labor, a little bit better as we get into the second half.

We we kind of end up with the same place as we regarded all year. I, I suppose the moving parts of being, you know, as Tony just said, they're moving to Fat volumes.

Ken Bowles: And across, even labor is a little bit better as we get into the second half. So there's some big, chunky moving parts, and I know Ciaran and Frank can take you through in a bit more detail. But broadly, I think if you were characterizing the second half from where we are now, doing a bit better on energy, doing a bit better on labor, bit better on recovered fiber, bit better on price, volumes remain flat, and you kind of, you know, dealt on all that as you end up back at the same place.

Ken Bowles: So there's some big chunky moving parts, and I know Kiran and Frank can take you through them in a bit more detail. But broadly, I think if you were characterizing the second half from where we are now, doing a bit better on energy, doing a bit better on labor, a bit better on recovered fiber, a bit better on price, volumes remain flat, and you kind of, you know, delta on all that as you end up back at the same place.

5 million to start of the Year, probably see that more down to 105, to 10, 110 space of a 4050 million saving their um and a cross. Even labor is a little bit better as we get into the second half. So there's some big chunky moving parts and I know, Karen and Frank can take you through a little bit more detail. But broadly, I think if you're a characterizing the second half, where we are now doing it better and energy doing a bit better and labor, bit better in recovered, fiber did better on price volumes remain flat and you kind of, you know, dealt on all that as you end up back at the same place,

Gabe Hajde: Thank you. All right, and one last one, I guess. Tony, you alluded to not being a million miles away, kind of giving us an update on the consumer packaging business. I think you talked about volumes being down. Ken, 2.7, if I heard you correctly, in Americas, and that includes Mexico, down a little bit more. Just curious, kind of again, you know, another quarter under the belt and thinking about sort of the opportunity set there to be on both sides of the house in terms of consumer and corrugated. Any updates there? Thank you.

Various Analysts: Thank you. All right. And one last one, I guess. Tony, you alluded to not being a million miles away, kind of giving us an update on the consumer packaging business. I think you talked about volumes being down. Ken, 2.7, if I heard you correctly, in America, and that includes Mexico down a little bit more. Just curious, kind of, again, you know, another quarter under the belt and thinking about sort of the opportunity set there to be on both sides of the house in terms of consumer and corrugated. Any updates there? Thank you.

Tony Smurfit: Yeah, I still feel like it's a very good business to be involved in. I think we've got some very strong market positions. The cross-selling opportunities are in Europe, where we're a bit more advanced on that, is very strong. Because we're much bigger in corrugated than we are in consumer, we're introducing our consumer folks who were really very, let's say, either in health and beauty, which is more of a niche, but on the general market, they didn't really have a lot of selling tools, which we're now obviously opening up for them. So that's a big opportunity in Europe for our consumer businesses. And if you take the United States, I think generally speaking, we've got some very good businesses with great people. And, you know, we've got to think about structurally a couple of issues like SBS, our long position in SBS.

Tony Smurfit: Yeah, I still feel like it's a very good business to be involved in. I think we've got some very strong market positions. The cross-selling opportunities are in Europe, where we're a bit more advanced on that, very strong. Because we're much bigger in corrugated than we are in consumer, we're introducing our consumer folks who are really very, let's say, either in health and beauty, which is more of a niche. But on the general market, they didn't really have a lot of selling tools, which we're now obviously opening up for them. So that's a big opportunity in Europe for our consumer businesses. And if you take the United States, I think generally speaking, we've got some very good businesses with great people.

Thank you. All right and and 1 um last 1 I guess uh Tony you alluded to not being a Million Miles Away um kind of giving us an update on the consumer packaging business. Uh, I think you talked about volumes being down again, 2.7 if I heard you correctly, uh, in America and that includes Mexico down a little bit more. Um, just curious kind of again, you know, another quarter under the belt and thinking about sort of the opportunity set there to be on both sides of the house and in terms of consumer and corrugated, uh any updates there. Thank you.

Yeah, I still feel like it's a very good business to be involved in that. I think we've got. We've got, uh, we've got some very strong Market positions. The cross-selling opportunities are in Europe, where we're a bit more advanced on that is, is is very strong. Um, we're we're, uh, because we're a much bigger in corrugated than we are in consumer. We're introducing our consumer folks who are really very, let's say either in health health and beauty, which is more of a niche. Uh, but

Tony Smurfit: You know, we've got to think about, structurally, a couple of issues like SBS, our long position in SBS. But you know, we have ideas that we'll come forward with probably towards the back end of this year or early part of next year as to what we're doing on that.

Tony Smurfit: But, you know, we have ideas that we'll come forward with probably towards the back end of this year, early part of next year, as to what we're doing on that.

Ken Bowles: Gabe, just to help you out on that, the consumer volumes. Yep, 2.7 down for the quarter, including Mexico. If you exclude Mexico, it's probably more like 2% down.

Ken Bowles: And, Gabe, just to help you out, the consumer volumes, yep, 2.7 down for the quarter, including Mexico. If you exclude Mexico, it's probably more like 2% down.

Ken Bowles: Gabe, just to help you out on that, the consumer volumes. Yep, 2.7 down for the quarter, including Mexico. If you exclude Mexico, it's probably more like 2% down.

The the General market they didn't really um, have a lot of uh, selling selling tools which were now obviously opening up for them. So that's a big opportunity in Europe for our consumer, uh, businesses. Um, and if you take the United States, I think generally speaking, we got some very good businesses with great people and, um, uh, you know, we've got to think about, uh, structurally, a couple of issues like, SPS or long position and SPS, uh, but you know, we have, we have ideas that we'll, we'll come forward with probably towards the back, end of this year, early part of next year. Uh, as to what we're doing on that,

And Gabe just to help you out. And that that the consumer volume. Yep, 2.7 down for the quarter including Mexico. If you exclude Mexico, it's probably more like, 2% down,

Gabe Hajde: Thank you, and good luck.

Various Analysts: Thank you and good luck.

Tony Smurfit: Thank you very much.

Thank you and good luck.

Operator: Thank you. We will take our next question, and the question comes from the line of Charlie Muir-Sands from BNP Paribas Exane. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. And the question comes from the line of Charlie Muehl Sands from BNP Paribas. Spain. Please go ahead. Your line is open.

Thank you very much.

Charlie Muir-Sands: Good afternoon, guys. Thanks for taking the questions. Just a couple of follow-ups on the topics that have already been covered. Just firstly, on the loss-making box contracts. Obviously, you said you're sort of 40% through. Is there any possibility of putting any kind of dollar numbers around the level of losses you think that, you know, on a fully costed basis, that business was dragging profits historically? And then secondly, you know, you're talking about some of the assumptions into the second half and talked about flat volumes. I just wanted to clarify, are you talking half on half or year on year.

Thank you. We will take our next question and the question comes from the launch of Charlie mu. Sans from BMP. Paric Zane, please go ahead. Your line is open.

Various Analysts: Good afternoon, guys. Thanks for taking the questions. Just a couple of follow-ups on the topics that have already been covered. Just firstly on the loss-making box contracts. Obviously, you said you're sort of 40% through. Is there any possibility of putting any kind of dollar numbers around the level of losses you think that, you know, on a fully costed basis, that that business was dragging profits historically? And then secondly, you know, you're talking about some of the assumptions into the second half and talked about flat volumes. I just wanted to clarify, are you talking half on half or year on year? The reason I somewhat ask is that the last two years on a pro forma basis, there's been a bit of a historic dip in profits, particularly in the North America business in Q4.

Uh, good afternoon, guys. Thanks for taking the questions. Just a couple of follow-ups on the topics that have already been covered. Just uh, firstly on the um, loss making Bots contracts. Um, obviously you said you're a 40% through? Is there any possibility of putting any kind of dollar numbers around the, the level of losses? You think that, um, you know, on a fully costed basis?

That that business was um dragging profits historically. Um and then secondly you know you're talking about some of the assumptions into the second half and talked about flat volumes. I just wanted to clarify. Are you talking?

Charlie Muir-Sands: The reason I somewhat ask is that the last two years on a pro forma basis, there's been a bit of a historic dip in profits, particularly in North America business in Q4. I don't know whether there's a sort of a reshuffle of the phasing of maintenance, which means that that won't recur this year, but I'm just trying to get some understanding so we don't get caught out. Because obviously the implied fourth quarter guide range is now quite wide. Thanks.

Various Analysts: I don't know whether there's a sort of reshuffle of the phasing of maintenance, which means that that won't recur this year, but I'm just trying to get some understanding so we don't get caught out. Because obviously, the implied fourth quarter guide range is now quite wide. Thanks.

Half on half or a year on year. Um, the reason a somewhat ask is that the last 2 years on, on a pro forma basis has been a bit of a historic dip in, in profits, particularly in the North America business in Q4. I don't know whether there's a sort of, a reshuffle of the phasing of Maintenance which means, that, that won't recur this year, but I'm just trying to get some understanding so we don't get caught out. Um, because obviously, the implied fourth quarter guide range is now quite wide. Thanks.

Tony Smurfit: Let Ken take the second question. Ken?

Tony Smurfit: Let Ken take the second question, Ken.

Ken Bowles: I suppose the reason the range is there, Charlie, to take account of that fact. I suppose if we think about where we sit, the two assumptions, the two big calls in the second half are, well, one big call really, is where does demand go? Currently, the first two quarters are probably underwhelmed in terms of where it ended up. And the second half, we're not really baking in much in terms of assumptions of an uptick, other than, as Tony talked about, seasonality and everything else. So I think with the range we've put in place, there's a lot to play for there, both on the upside, but slightly moderating to the downside. But we're not talking about a big number either side of this, either way.

Ken Bowles: I suppose the reason the range is there, Charlie, to take account of that fact. I suppose, look, if we think about where we sit, the two big calls in the second half are, well, one big call really is where does demand go? Currently, the first two quarters are probably underwhelmed in terms of where it ended up. And the second half, we're not really baking in much in terms of assumptions of an opportunity other than as Tony talked about, seasonality and everything else. So I think with the range we put in place, there's a lot to play for there, both on the upside, but slightly moderating to the downside. But we're not talking about a big number either side of this either way. So, and as you know, given our history, volume is not really the real predictor of where we'll end up.

Uh, like I can take the second question. Okay, um, I suppose the reason the range is there are charges to take account of that fact. Um, I suppose, look, as if we think about where we sit.

Ken Bowles: So, as you know, given our history, volume is not really the real predictor of where we'll end up. It's what we do on price, and certainly in that sense, we're doing a bit better on price than we might have thought as we go into the six months.

Ken Bowles: It's what we do on price. And certainly in that sense, we're doing a bit better on price than we might have thought as we come into the six months.

The 2 assumptions, the 2 big calls and the second half are 1, big car, really is. Where does the man go? Um currently the first 2 quarters are probably underwhelmed in terms of where it ended up and the second half. We're not really baking in much in terms of assumptions of an uptick. But then it's telling us about seasonality and everything else. So I think with the range we put in place, there's a lot to play for their. Uh, but on the other side, but slightly moderating to the downside. But we're not talking about a big number either side of this either way. Um, so and and as you know, given our history volume is not really the real predictor of where we'll end up, is what we do on price. And and certainly, in that sense we're doing a bit

Tony Smurfit: Charlie, on the box plants, let me just try and articulate it. I mean, you know, they have over 100 box plants, so obviously some are profitable. But you know, if you take a box plant system that was losing relatively significant money, I don't want to break it out, last year. And if you take a box plant system that's call it $1 billion in sales or so, you know, you should be making about somewhere between 8% and 12% margin in your box plant system.

Tony Smurfit: Charlie, on the box plants, let me just try and articulate it. I mean, you know, they have over 100 box plants. So obviously, some are profitable. But, you know, if you take a box plant system that was losing relatively significant money, I don't want to break it out last year. And if you take a box plant system that's, call it a billion in sales or so, you know, you should be, sorry, you should be making about somewhere between 8 and 12 percent margin in your box plant system. So on a 10 bit, I should say the billion, on a 10 billion sales system, you know, you should be making somewhere between 800 million and 1.2 billion on a box plant system. And it was loss making last year.

On price and we might have thought as we come into the 6 months.

Charlie on, on the box plan. Let me just just, uh, try and articulate it. I mean, you know, they have over a 100 box plans, so obviously some are profitable. Um, but um, you know, uh, if you take a box plan system, that was losing relatively significant money, I don't want to break it out last year. Um, and if you take a box plan system, that's

You know, um, you know, you should be.

Sorry. Um, you should be making

Tony Smurfit: So on a $10 billion sales system, you know, you should be making somewhere between $800 million and $1.2 billion on a box plant system, and it was loss-making last year. So obviously, we're not there yet, but that will be our goal over the next five years to get there.

Tony Smurfit: So, obviously, we're not there yet, but that will be our goal over the next five years to get there.

Ken Bowles: I'm sorry, Charlie.

Various Analysts: And sorry, Charlie.

Tony Smurfit: And that's a material improvement and obviously a long, long way ahead of where, where, you know, when we talk about synergies, it's a lot more than the synergies we can get if we get to that point.

About somewhere between 8 and 12 margin in your box plan system, so on on, on a 10 bit. So I should say the billion on the 10 billion sales system, you know, you should be making somewhere between 800 million and 1.2 billion on a box plan system, and it was last making last year. So, so obviously, we're not there yet, but that will be our, our goal over the next 5 years to get there.

Tony Smurfit: And that's a material improvement and obviously a long way ahead of where, you know, when we talk about synergies, it's a lot more than the synergies we can get if we get to that point.

Ken Bowles: I'm sorry, Charlie, I skipped your fundamental question and given you the long answer. It's flat volume, half two versus half one.

Ken Bowles: Sorry, Charlie, I skipped your fundamental question. Give me a long answer. It's flat volumes half two versus half one.

I'm sorry. Sure. And that's a material improvement and obviously a long, long way ahead of where, you know, when we talk about synergies, it's a lot more than the system we can get if we get to that point.

I'm sorry China. I I skipped your fundamental question and giving you a long answer. It's that volumes have 2 versus half 1.

Charlie Muir-Sands: Great, thank you.

Various Analysts: Great. Thank you.

Great. Thank you.

Tony Smurfit: Thank you.

Operator: Thank you. We will take our next question. The next question comes from the line of Detlef Winkelmann from JP Morgan. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. The next question comes from the line of Detlef Winkelmann from JP Morgan. Please go ahead. Your line is open.

Thank you.

Detlef Winckelmann: Hi there. Thanks for taking my questions. I've got two. So the very first one comes back to your EBITDA bridge into Q3. I understood from the earlier question that it's $50 million maintenance, $40 to 50 million in lower OCC or recovered fiber costs. I'm a bit surprised that there's no price in there. I mean, my understanding was that the linerboard price increases we saw in the US, as well as in Europe, wouldn't have been fully implemented by Q2. Can you just touch on that, and then I'll come back to my second?

Various Analysts: Hi there. Thanks for taking my questions. I've got two. So the very first one comes back to your EBITDA bridge into Q3. I understood from the earlier question that it's 50 million in maintenance, 42-50 million in lower OCC or recovered fiber costs. I'm a bit surprised that there's no price in there. I mean, my understanding was that the line-of-board price increases we saw in the US, as well as in Europe, wouldn't have been fully implemented by Q2. Can you just touch on that? And then I'll come back for my second.

Thank you. We will take our next question. The next question comes from the line of debt left Winkleman, from JP Morgan. Please go ahead, your line is open,

Hi there, thanks for taking my questions. I've got, uh, 2. So the very first one comes back to your IBA dog bridge into Q3. Um, I understood from the earlier question that it's $50 million in maintenance, um, $425 million in lower OC or recovered fiber costs. Um, I'm a bit surprised that there's no price in there. I mean, my understanding was, um, that.

Ken Bowles: Hey, Detlef. Yeah, but I suppose that, that's to be played out during the quarter. Like, in reality, the big building, roughly 1.2, 2 and 1.3, are $50 million for downtime and the $50 million for other cost buckets. You also have to remember that within that, we're not baking in any assumptions where our volume might go in Q3 either. So there's a bit of moderation there in terms of conservatism around price and volume. So as we sit here today, 1.3 there, thereabout, seems right in our heads into where we'll end up.

Lander board price increases. We saw this in the US as well as in Europe. It wouldn't have been fully implemented by Q2. Can you just touch on that? And then I'll come back to my second.

Ken Bowles: Hey, Detlef. Yeah, but I suppose that's to be played out during the quarter. Like in reality, the big building props in 1.2, 2, and 1.3 are the 50 million for downtime and the 50 million for other cost buckets. You also have to remember that within that, we're not at baking in any assumptions where a volume might go in the third quarter either. So there's a bit of moderation there in terms of hervadism around price and volume. So as we sit here today, 1.3 there thereabouts seems right in our heads and to where we'll end up.

Hey, hey, Della. Um

Yeah, but I suppose that's that's to be played out during the quarter. Like in reality, the big building block is 1.2 2 and 1.3 are the 50 million for downtime and the 50 million for the cost book. It's you also have to remember that within that we're not at baking in any assumptions where a volume might go on the third quarter eaters. So there's a bit of moderation there in terms of conservatism around price and volume. So as we sit here today,

Detlef Winckelmann: Okay, perfect. Thank you. And then a very technical one, or maybe a stupid question, but I mean, when I look at your synergies here, you've given us I think it was Q1 synergies of $80 million, Q2 implied is about $100 million. And then for the full year, we've got about $350 million. So that implies that we're gonna go backwards at some point in Q3, Q4? Does that make sense, or am I just misreading that?

Various Analysts: Okay, perfect. Thank you. And then a very technical one, or maybe a stupid question. But I mean, when I look at your synergies here, you've given us, I think it was Q1 synergies of 80. Q2 implied is about $100 million. And then for the full year, we've got about 350. So that implies that we're going to go backwards at some point in Q3, Q4. Does that make sense, or am I just misreading that?

1.3 there there about seems right in our heads is where we'll end up.

Ken Bowles: I don't think it's going backwards. It's about how you achieve them and when you achieve them. I think, look, they all come in at different times depending on if it's in purchasing, when you get those purchasing contracts through, if it's around whatever it might be, consolidation of volume on more efficient machines. They all just happen at different pace. I think it's, you know, with synergies, you're not necessarily looking for a constant run rate in terms of the quarter itself, but the ultimate run rate in terms of where the synergies go. So, you know, the achievement in the quarter is something, but ultimately, I don't think we think about it going backwards. I think we think about hitting the synergy number and exiting 25 of that full 400 in our pocket.

Ken Bowles: I don't think, I don't think it's going backwards. It's about how you achieve them and when you achieve them. And look, they all come in at different times, depending on if it's in purchasing, when you get those purchasing contracts through. If it's around, whatever it might be, consolidation of volume on, on more efficient machines, they all just happen at different pace. I think it's, you know, with synergies, you're not necessarily looking for a constant run rate in terms of the quarter itself, but the ultimate run rate in terms of where the synergies go. So, you know, the achievement in the quarter is something, but ultimately, I don't think we think about it as going backwards. I think we think about it as hitting the synergy number and exiting 2025 with that full $400 in our pocket.

Okay. Perfect. Thank you. And then, uh, the technical 1 or maybe a stupid question, but I mean, when I look at your synergies here, um, you've given us I think it was q1 synergies of 80. Um, Q2 implied is a is about 100 million dollars. Um, and then for the full year, we've got about 350, so that implies that we're going to go backwards at some point in, Q3 Q4. Does that make sense? Or am I just misreading that

I don't think I don't think it's going backwards it's about how you achieve and then when you achieve them and they look they all come in in different times depending on if it's in purchasing when you get those purchasing contracts through, if it's around.

Detlef Winckelmann: Okay, thanks very much.

Various Analysts: Okay, thanks very much.

Whatever it might be consolidation and volume on on more efficient machines. They all just happen at different pace. I think it's you know with Synergy you're not necessarily looking for a constant run rate in terms of the quarter itself but the ultimate run rate in terms of where the synergies go. So you know the achievement in the quarter is something but ultimately I don't think we think of it as going backwards. I think we think about hitting the Synergy number and exiting 25 with that full 400 in our pocket.

Okay, thanks very much.

Operator: Thank you. We will take our next question. The next question comes from the line of Lars Kjellberg from SEB. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. The next question comes from the line of Lars at Kellberg from Stifel. Please go ahead. Your line is open.

Thank you. We will take our next question. The next question comes from the line of laws at kber.

Various Analysts: Yeah, thank you for taking my question. Tony, you just alluded to a number of 800 to a billion in a box system. And of course, you have spoken to the operational commercial improvement opportunities of at least 400 million, i.e., equal to the synergies. Two questions on that. I mean, you highlighted that potentially a much larger number. But the second real question is, where are we on this now? Are we starting to see any of that equal to at least the synergies coming through in the current year, or is that starting to come through in '26 and build over the years to come?

Tony Smurfit: Yeah, thank you for taking my question. Tony, you just alluded to a number of $800 million to $1 billion in the box system, and of course, you have spoken to the operational commercial improvement opportunities of at least $400 million, i.e., equal to the synergies. Two questions on that. I mean, you highlighted a potentially much larger number, but the second real question is: Where are we on this now? Are we starting to see any of that equal to at least the synergies coming through in the current year, or is that starting to come through in 2026 and build over the years to come? I know we're definitely starting to see some of that, Lars. I mean, you know, we have continued to see improvement in our box system, as I mentioned.

Lars Kjellberg: Yeah, thank you for taking my question. Tony, you just alluded to a number of $800 million to $1 billion in the box system, and of course, you have spoken to the operational commercial improvement opportunities of at least $400 million, i.e., equal to the synergies. Two questions on that. I mean, you highlighted a potentially much larger number, but the second real question is: Where are we on this now? Are we starting to see any of that equal to at least the synergies coming through in the current year, or is that starting to come through in 2026 and build over the years to come?

From Skyfall. Please go ahead. Your line is open.

And of course, you have spoken to the operation commercial improvement opportunities of at least $400 million equal to the synergies.

Yeah, thank you for taking my question. Um Tony you just alluded to a number of 800 to billion in the Box system and and of course your house spoken to the operational commercial Improvement.

Two questions on that I mean, you highlighted that potentially much larger number at the second real question is where are we on this now or are we starting to see any of that equal to at least the synergies coming through in the current year or is that.

Starting to come through in 2006 and built over the years to come.

Tony Smurfit: I know we're definitely starting to see some of that, Lars. I mean, you know, we have continued to see improvement in our box system, as I mentioned.So that, some of that improvement is already in our numbers, and we have, you know, a long way to go in our box system. But, you know, there's already an improvement in the first half in our corrugated system, versus last year in a considerable way. I'm very happy with how that system is moving and how the team are responding. You know, if you look at the performance of the company, and you can see that the margins have grown in the United States, it's basically synergies and improvement in our corrugated box system.

Tony Smurfit: I know we're definitely starting to see some of that, Lars. I mean, you know, we have continued to see improvement in our box system, as I mentioned. So some of that improvement is already in our numbers. And we have, you know, a long way to go in our box system. But you know, there's already an improvement in the first half in our corrugated system versus last year in a considerable way. I'm very happy with how that system is moving and how the team are responding. You know, if you look at the performance of the company, and you can see that our margins have grown in the United States, it's basically synergies and improvement in our corrugated box system.

Definitely starting to see some of that Lars.

We have.

Continue to see improvement in our box system as I mentioned, so that some of that improvement is already in our numbers and we have.

Tony Smurfit: So that, some of that improvement is already in our numbers, and we have, you know, a long way to go in our box system. But, you know, there's already an improvement in the first half in our corrugated system, versus last year in a considerable way. I'm very happy with how that system is moving and how the team are responding. You know, if you look at the performance of the company, and you can see that the margins have grown in the United States, it's basically synergies and improvement in our corrugated box system.

A long way to go in our box system, but.

There is there is there is already an improvement in the first half in our corrugated system.

Versus the versus last year in a considerable way.

I'm very happy with how that system is moving and how the team are responding.

If you look at the performance of the company and you can see that our margins have grown in the United States, It's basically synergies and improvement in our corrugated box system.

Tony Smurfit: And then you look at where our company has had difficulty, has been in Europe, where we have had 18-19% margins in the past, and we're down, you know, in the mid to low teens at the moment. And that's a reflection on the market, which as I said, I think is at the bottom or close to the bottom and will improve. The question is: When will the demand environment improve to really pull that thing forward? And that's, you know, is it 2026 or the second half, first half 2027? We don't know.

Tony Smurfit: And then you look at where our company has had difficulty, has been in Europe, where we have had 18-19% margins in the past, and we're down, you know, in the mid to low teens at the moment. And that's a reflection on the market, which, as I said, I think is at the bottom, or close to the bottom, and will improve. The question is, when will the demand environment improve to really pull that thing forward? And that's, you know, is it 2026 or the second half, first half, 2027? We don't know. But, you know, Europe itself is not too bad with the exception of one or two markets. And unfortunately, one of those markets is Germany, which is the biggest, and that pulls Europe down.

And then you look at you look at where our company has.

<unk> had difficulty has been in Europe, where we have had 18, 19% margins in the past and were down.

The.

Mid to low teens at the moment.

Thats.

That's a reflection on the market, which is as I said I think is at the bottom.

Close to the bottom.

We will improve the question is when will the demand environment has improved to really pull that thing forward and thats.

Is it 2026, our second half first half 2027th we don't know but.

Tony Smurfit: But, you know, Europe itself is not too bad, with the exception of one or two markets, and unfortunately, one of those markets is Germany, which is the biggest, and that pulls Europe down.

Europe itself is not too bad with the exception of one or two markets and Unfortunately, one of those markets is Germany, which is the biggest in.

Europe.

Lars Kjellberg: And just coming back to what you just said about some of that is all in your numbers. You spoke to, of course, well, Value Over Volume is making progress, but at the same time, you said it will take a bit of time to fill those machines. So basically, what you have in your numbers now, cutting the losses, and the real benefit where it really start to move into the revenue line and EBITDA, that's still to come. Just to clarify on that.

Various Analysts: Just coming back to what you just said about some of that is all in your numbers. You spoke to, of course, well, value or volume is making progress, but at the same time, you said it will take a bit of time to fill those machines. So basically, what you have in your numbers now, cutting the losses and the real benefit for it really starting to move into the revenue line and EBITDA, that's still to come, just to clarity on that. And, you know, on.

Just coming back to what you just said about some of some of that at all.

In your numbers.

Okay.

Value over volume.

Progress, but at the same time, you said it.

It will take a bit of time to fill those machines, so basically which abbvie numbers now cutting the losses.

And the real benefit when you really start to move into the revenue line and an EBITDA that's still to come just to correct you on that.

Tony Smurfit: Yeah.

Lars Kjellberg: And then, Ken, you know... Yeah. Sorry, yeah.

Tony Smurfit: Yeah.

Lars Kjellberg: And then, Ken, you know... Yeah. Sorry, yeah.

Ken.

Tony Smurfit: Yeah.

Yes.

Various Analysts: Sorry, go ahead.

Okay.

Tony Smurfit: No, go ahead.

Lars Kjellberg: Go ahead.

Got it.

Various Analysts: No, I was going to say, you're right.

Tony Smurfit: No, you're right. I'm, I'm just agreeing with you.

That was going on there you're right.

Tony Smurfit: I was just agreeing with you.

Just agreeing with you.

Lars Kjellberg: Good. Very good. The rating upgrade, does that mean anything to you from a financing point of view?

Various Analysts: Good. Very good. The rating upgrade, does that mean anything to you from a financing point of view?

Good very good.

<unk> upgrade does that mean anything to you from a financing point of view.

Ken Bowles: Not really, Lars, to be honest with you, from an economic point of view, it's very little. It did give us a small decrease in our revolver and some of our commercial paper programs. But actually, when you look at our bonds and how they price, we probably price already at BBB+, to be honest with you. So we present as a BBB+ credit, which we would've done out of the box with all the agencies from an economics perspective. So small savings, but not material in the round.

Tony Smurfit: Not really, Lars. To be honest with you, from an economic point of view, it's very little. It did give us a small decrease in our revolver and some of our commercial paper programs. But actually, when you look at our bonds and how they price, we probably price already at triple B+, to be honest with you. So we present as a triple B+ credit, which we would have done out of the box with all the agencies from an economics perspective. So small savings, but not material in the round.

Not really to be honest with you from a from an economic point of view, it's very little it did give us a small decrease in our revolver.

And some of our commercial paper programs, but actually when you. When you look at our bonds and has a price we probably price already answer it would be close to be honest with you. So we present is attributable to those credits.

Which would've done out of the box with all the agencies from an economics perspective, so small savings, but not material in the round.

Lars Kjellberg: All right. Very well. Thank you and good luck.

Various Analysts: All right, very well. Thank you and good luck.

Alright, Thank you and good luck.

Tony Smurfit: Thank you.

Thank you.

Operator: Thank you. We will take our next question. The next question comes from the line of Mark Weintraub from Seaport Research Partners. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. The next question comes from the line of Mark Wendrobe from Seaport Research Partners. Please go ahead. Your line is open.

Thank you.

We will take our next question.

The next question comes from the line of Mark Weintraub from Seaport Research Partners. Please go ahead. Your line is open.

Mark Weintraub: Thank you. Thanks for a very comprehensive review so far. I mean, one thing I haven't heard is currency very much, and we've obviously had a very big move in the euro relative to the dollar over the course of this year. Can you explain to us a little bit how that's impacted results and sort of sensitivities in the way we should be thinking about it as we model forward?

Various Analysts: Thank you. Thanks for the very comprehensive review. So I mean, one thing I haven't heard is currency very much. And we've obviously had a very big move in the euro relative to the dollar over the course of this year. Can you explain to us a little bit how that's impacted results and sort of sensitivities in the way we should be thinking about it as we model forward?

Thanks for the very comprehensive review so far I mean, one thing I haven't heard is currency very much and we've obviously had a very big move in.

Euro relative to the dollar over the course of this year.

Can you explain to us a little bit how that's impacted.

And sort of sensitivities in the way, we should be thinking about as we model forward.

Ken Bowles: Hey, Mark. Actually, the reason you haven't heard it, it didn't actually have much of an impact, to be honest with you. Any of the moves in the dollar in Europe, for example, were compensated or offset by moves in Latin America. So I think net-net, if memory serves me, I think it was about $8 million in total, was the currency impact on EBITDA, year-over-year, I think. So that was it. So square root of really nothing. In terms of sensitivities, broadly, every 1-cent move in the dollar would, you know, be ±$12 million, is the simplest. Every-

Ken Bowles: Hey, Mark. Actually, the reason you haven't heard is it didn't actually have much of an impact, to be honest with you. Any of the moves in the dollar in Europe, for example, were compensated or offset by moves in Latin America. So I think net net, if memory serves me, I think it was about $8 million in total was the currency impact on EBITDA year in year, I think. So that was it. So the square root of really nothing. In terms of sensitivities, broadly, every one cent moved in the dollar would be plus or minus $12 million, is the simple thing. Every in euro. So if you take a euro number moved by a cent, you get an impact of about $12 million broadly. And on the debt side, that's about $30 million.

Hey, Mark actually the reason you haven't heard it didn't actually have much of an impact to be honest with you.

Any of the moves in the dollar in Europe. For example, we're compensated offset by moves in Latin America. So I think net net if memory serves me I think it was about $8 million in total was the currency impact on EBITDA year on year I think.

That was it the square root of really nothing in terms of sensitivities.

Broadly everyone one cent move in the dollar would be plus or minus $12 million.

Is the simplicity.

Mark Weintraub: Okay.

Every okay in Europe, if you take a euro number move I sense, you get impacted by $12 million.

Ken Bowles: In euro. If you take a euro number move by a cent, you get an impact of about $12 million, broadly. And on the debt side, that's about $30 million.

Broadly and on the debt side, that's about $30 million.

Mark Weintraub: Okay. And so, that captures the translation of,

Various Analysts: Okay. And so that captures the translation of.

Okay. So in that captures the the translation of.

Ken Bowles: Yeah, broadly. As you can imagine, it's a rough crude calculation based on what we see and what we know over time. But broadly, what we see is if you take our euro earnings on a translation basis, every one cent will be plus or minus $12 million.

Ken Bowles: Yeah, broadly.

Mark Weintraub: Uh.

Ken Bowles: It's, as you can imagine, it's a rough, crude calculation based on what we see and what we know over time. But broadly, what we see is if you take our euro earnings on a translation basis, every 1 cent will be ±$12 million.

Yes.

As you can imagine.

It's a rough crude calculation based on what we see and what we know over time, but broadly what we see is if you take or your earnings on a translation basis, everyone will be plus or minus $12 million.

Mark Weintraub: Okay, super. And then just this last sort of big picture as I was hearing it, you know, a number of things have played out a bit favorably relative to initial expectations, which is great. And you kind of listed a bunch of them. And you sort of kept guidance and to where it was. Is that primarily that you know, your... The volume situation, the uncertainty on the volume situation, or what has sort of held you back from, you know, this leading to perhaps a little bit more optimism on the outcome for the year?

Various Analysts: Okay, super. And then just this last sort of big picture, as I was hearing it, you know, a number of things have played out a bit favorably relative to initial expectations, which creates, and you kind of listed a bunch of them. And you've sort of kept guidance to where it was. Is that primarily that, you know, the volume situation, the uncertainty on the volume situation, or what has sort of held you back from, you know, this leading to perhaps a little bit more optimism on the outcome for the year?

Okay Super and then just last sort.

What sort of big picture as I was hearing it.

A number of things that played out.

<unk> relative to initial expectations, which is great and you kind of you listed a bunch of them.

And you sort of kept guidance.

To where it was is that primarily that.

The volume situation and the uncertainty on the volume situation.

What has sort of held you back from.

This leading to perhaps a little bit more optimism on the outcome for the year.

Tony Smurfit: I think it's. I mean, you read the same newspapers that we all read and there's obviously a lot of uncertainty out there, whether it's tariffs or whether it's the general economy or the consumer confidence. So, you know, I think that each individual economy has its own different challenges. But when you - we haven't seen volume picking up yet in the United States, and clearly, if volume picked up in the United States, that would give us more confidence. But we haven't seen that yet, and until we see that, then we're gonna hold our - hold our fire. Because, you know, it's. You know, there are a couple of markets that are pretty important to us.

Tony Smurfit: I think it's, I mean, you read the same newspapers that we all read, and there's obviously, there's a lot of uncertainty out there, whether it's tariffs or whether it's the general economy or the consumer confidence. So, you know, I think that each individual economy has its own different challenges, but when you, we don't see, we haven't seen volume picking up yet in the United States. And clearly, if volume picked up in the United States, that would give us more confidence, but we haven't seen that yet. And until we see that, then we're going to hold our fire because, you know, it's, you know, there are a couple of markets that are pretty important to us. Germany is one, and, you know, we don't see any major improvements in that market at this juncture.

I think it's I mean.

If you read the same newspapers that we all read and there is obviously, there's a lot of uncertainty out there, whether it's tariffs or whether it's.

The general economy, or the consumer confidence so I think that.

Each individual economy has its own different challenges, but when you we don't see we havent seen volume picking up yet in the United States.

Clearly a volume picked up in the United States that would give us more confidence, but we haven't seen that yet.

Until we see that then we're going to hold our hold our fire because.

It's.

There are a couple of markets that are that are.

Tony Smurfit: Germany is one, and you know, we don't see any major improvements in that market at this juncture. And the United States, as I say, we're going through this transition period where we are, you know, looking for newer volumes and phasing out some volumes where we're not able to make any money on it. So that's outside the whole economic environment, which, as I say, you know, we all read the same newspapers, or maybe we don't read them, we look at them all online anymore. But you know, I think so we're just... If you see volumes pick up, then clearly things will be much better.

Pretty important to us Germany is one.

We.

We don't see any major improvements in that market at this juncture.

Tony Smurfit: And the United States, as I say, we're going through this transition period where we are, you know, looking for newer volumes and phasing out some volumes where we're not able to make any money on it. So that's, and that's outside the whole economic environment, which is, as I say, you know, we all read the same newspapers there. I mean, we don't read them. We're looking at them all online anymore, but, you know, I think, so we're just, we're just, if you see volumes pick up, then clearly things will be much better.

In the United States as I say, we're going through this transition period, where we are.

No.

Looking for newer volumes and phasing out some volumes where were not able to make any money on it so.

Sure.

That's outside the whole the whole economic environment, which as I say.

We all read the same newspapers, there or maybe you don't read them, we will look at them online any more of them.

I think.

So we're just we're just.

If you see volumes pick up then clearly things will be much better.

Mark Weintraub: Fair, fair, fair enough. And maybe this is related to all of this. And maybe I remember wrong, but I thought we, we had, like $100 million negative from maintenance in the second quarter. And you're talking about getting $50 million back, but running pretty full. So I'm just trying to understand that, that dynamic.

Various Analysts: Fair enough. And maybe this is related to all of this. And maybe I remember wrong, but I thought we had like 100 million negative from maintenance in the second quarter. And you're talking about getting 50 million back, but running pretty full. So I'm just trying to understand that dynamic.

Fair enough and maybe this is related to all of this.

And maybe I remember wrong, but I thought we had a $100 million negative from maintenance in the second quarter, and then youre talking about getting $50 million back, but running pretty full so I'm just trying to understand that dynamic.

Ken Bowles: Yeah, but remember also, we begin to see the impact of the closure of 40 that quarter too. So the need to take less downtime comes into view too. Clearly, Mark, it's an estimate as we start the quarter. If the demand picture deteriorates to any significant impact or doesn't change much, we can flex that. You know, it's not, it's just currently where we sit, the demand picture, the order book, everything else would suggest that the less downtime in the third quarter over the second quarter. And some of that is the impact of the closure of 40, helping that out.

Ken Bowles: Yeah. But remember also, we begin to see the impact of the closure of Forney that quarter too. So the need to take less downtime, it comes into view, too. Clearly, it's an estimate as we start the quarter. If the demand picture deteriorates to any significant impact, it doesn't change much, we can flex that. You know, it's not. It's just currently where we sit, the demand picture, the order book, everything else would suggest that less downtime in the third quarter over the second quarter. And some of that is the impact of the closure of Forney helping that out.

Yes, but remember also we began to see the impact of the closure for any of that quarter. Two so the need to take less downtime and comes into view too.

Clearly market internationally as we start the quarter, if the demand picture deteriorates to any significant impact or doesn't change much weakened flexpath.

It's just currently where we said the demand picture of the order book everything out to suggest that.

The less downtime in the third quarter over the second quarter.

That is the impact of the closure forney, helping that.

Mark Weintraub: All right. Thank you.

Various Analysts: All right. Thank you.

Alright, thank you.

Operator: Thank you. We will take our next question. The next question comes from the line of Anthony Pettinari from Citi. Please go ahead. Your line is open.

Operator: Thank you. We will take our next question. The next question co`mes from the line of Anthony Pettinari from Citi. Please go ahead. Your line is open.

Heidi: Thank you. We will take our next question. The next question comes from the line of Anthony Petinari from City. Please go ahead. Your line is open.

Thank you.

We will take our next question.

Question comes from the line of Anthony Pettinari from Citi. Please go ahead. Your line is open.

Anthony Pettinari: Good morning.

Various Analysts: Good morning.

Good morning.

Tony Smurfit: Good morning.

Anthony Pettinari: With some of the actions that you've taken in North America, can you remind us what your integration rate is in corrugated and consumer? And then, you know, broadly, as you kind of execute the operational improvement in your box system, I'm wondering how you kind of compare the carton converting system in terms of sort of opportunity, quality, and where you are versus where you want to be.

Various Analysts: Morning.

I'm wondering with some of the actions that you've taken in North America can you remind us what your integration rate is in corrugated and consumer and then broadly as you kind of execute on operational improvement.

Various Analysts: Hey, with some of the actions that you've taken in North America, can you remind us what your integration rate is in corrugated and consumer? And then, you know, broadly, as you kind of execute the operational improvement in your box system, I'm wondering how you kind of compare the, you know, the carton converting system in terms of sort of opportunity, quality, and where you are versus where you want to be.

In your box system I'm wondering how you kind of compare the.

Carton.

Converting system.

In terms of sort of opportunity quality, and where you are versus where you want to be.

Tony Smurfit: Okay, I'll take the second one. I mean, you know, we're. I have to say that I've been very impressed with the carton. Most of the carton plants which I've seen and the operations that we have, we obviously have some very strong market positions with very big customers. And you know, as you will have seen, a lot of our larger customers have some volume issues themselves in the consumer business. Their profitability is effectively being held up by price. And that's great, but it's not great for volumes.

Tony Smurfit: Okay, I'll take the second one. I mean, you know, we're, I have to say that I've been very impressed with the carton, most of the carton plants which I've seen and the operations that we have. We obviously have some strong, very strong market positions with very big customers. And, you know, as you will have seen, a lot of our larger customers have some volume issues themselves in the consumer business. Their profitability is effectively being held up by price. And that's great, but it's not great for volumes. And so we would expect that situation to change as we see more promotional activity going forward into the second half and next year as these bigger customers look for market share gains or market share back.

Okay I'll take the second one.

<unk>.

Sure.

I have to say that I've been very impressed with the carton most of the carton plants, which ive seen in the operations that we have we we obviously have some strong very strong market positions with very big customers in.

As you will have seen a lot of our larger customers have some volume issues themselves in.

Sure.

In the consumer business.

Their profitability is effectively being held up by price.

And that's.

That's great, but it's not great for volumes and so we would expect that situation to change.

Tony Smurfit: And so we would expect that situation to change as we see more promotional activity going forward into the second half and next year, as these bigger customers look for market share gains or market share back. But with the one or two exceptions, I think in fairness to Legacy Westrock, they did a very good job in the carton board system in rationalizing their carton board operations over a number of years. And I think I'm guessing from memory; it's about 15 closures that they've made in

As we see more promotional activity going forward into.

Second half and next year as these bigger customers.

Look for market share gains or market share back.

Tony Smurfit: But with the one or two exceptions, I think in fairness to Legacy Westrock, they did a very good job in the carton board system in rationalizing their carton board operations over a number of years. And I think I'm guessing from memory is about 15 closures that they've made in.

<unk>.

With the one or two exceptions I think.

In fairness to legacy West drop David a very good job in that.

Carton board system in rationalizing their cardboard operations over a number of years.

I think I think I'm guessing from memory is about 15 closures that they've made in.

Ken Bowles: Near twenty.

Ken Bowles: Near 20.

Tony Smurfit: Near 20. Near 20 closures they've made, including Europe, yeah, over the last number of years in the carton board system. So they have a very good system. And, you know, I think that it's a very—it potentially is a very good business for us to continue to invest in and grow as... And that's what we've been doing. Very good systems business, very good business in health and beauty, very good business in consumer, but, you know, obviously somewhat impacted by demand. And then when you look around the globe at our business, whether it's in Europe, Mexico, or indeed in Asia, and I think we've got, you know, strong market positions with strong businesses that you know are investable in.

2000, and there were 2000 near 20 closures they've made.

Tony Smurfit: Near 20 closures they've made, including Europe over the last number of years in the carton board system. So they have a very good system. And, you know, I think that it's a very, it potentially is a very good business for us to continue to invest in and grow. And that's what we've been doing. Very good systems business, very good business in health and beauty, very good business in consumer, but, you know, obviously somewhat impacted by demand. And then when you look around the globe at our business, whether it's in Europe, Mexico, or indeed in Asia, and I think we've got, you know, strong market positions with strong businesses that, you know, are investable in. So that's where we sit on the consumer business.

In Europe.

Over the last number of years in the car more systems. So they have a very good system.

And.

<unk>.

I think that it's a very.

Potentially it's a very good business for us to continue to invest in and grow.

What we've been doing very good systems business very good business in health and beauty very good business in consumer but.

Obviously somewhat impacted by by demand and then when you look around the globe at our business, whether it's in Europe, Mexico.

Indeed in Asia.

I think we've got.

Strong market positions with strong businesses.

Our investable in.

Tony Smurfit: So that's where we sit on the consumer business. Ken?

So that's where we sit on the consumer business, Okay, Hey, Anthony in terms of integration levels on the containerboard side, but 90% now after closure.

Ken Bowles: He asked me in terms of integration levels on the container board cargo side, but 90% now after the closure of 40. And on the consumer side, on the consumer side, it's about 60% if you take all grades in.

Ken Bowles: Hey, Anthony, in terms of integration levels on the containerboard corrugated side, about 90% now after the closure of Forney. And on the consumer side? On the consumer side, it's about 60% if you take all grades in.

And on the consumer side on the consumer side, it's about 60% if you take all grades.

Anthony Pettinari: Got it. Got it.

Tony Smurfit: On corrugated.

Alright good.

Ken Bowles: On corrugated, yep.

Tony Smurfit: On cargo?

Ken Bowles: On cargo in general.

Tony Smurfit: Yes, on cargo papers.

Tony Smurfit: On corrugated papers.

Targeting yet on cargo papers.

Ken Bowles: Yeah.

Various Analysts: Yeah. Great, great. That's very helpful. And then just one really quick follow-up. You mentioned Mexico and I think volumes underperforming consumer there. Can you just, I assume that's tariff-related uncertainty, but can you just tell us, you know, what your customers are telling you in Mexico and what that volume number was?

Anthony Pettinari: Great. Great. That's very helpful. And then just one really quick follow-up. You mentioned Mexico, and I think volumes underperforming consumer there. Can you just... I assume that's tariff-related uncertainty, but-

Great Great. That's very helpful. And then just one really quick follow up you mentioned, Mexico, and I think volumes underperforming consumer there can you just I assume that's tariff related uncertainty, but can you just tell us what your customers are telling you in Mexico, and what that volume number was.

Tony Smurfit: Uh.

Anthony Pettinari: Can you just tell us, you know, what your customers are telling you in Mexico and, and what that volume number was?

Tony Smurfit: The Mexican business actually is like the Brazilian business. It's been relatively, you know, one or two very large customers have either underperformed due to tariffs or due to changes in habits. And then we've also taken a very strong view on some legacy business of WestRock that has been, you know, really poor business that we have exited. So that's why it's a bit, a little bit of our own making, in the sense that we've chosen to move. I'll give you a good example. One of our factories on the border, you know, was supplying a large customer, and we couldn't make any money on it, and it was a plant that was losing $ half a million a month.

The Mexican business actually is like the Brazilian business has been relatively.

Tony Smurfit: The Mexican business actually is like the Brazilian business. It's been relatively, you know, one or two very large customers have either underperformed due to tariffs or due to changes in habits. And then we've also taken a very strong view on some legacy business of Westrock that has been, you know, really, really, really poor business that we have exited. So that's why it's a little bit of our own making in the sense that we've chosen to move. I'll give you a good example. One of our factories on the border, you know, was supplying a large customer and we couldn't make any money on it. And it was a plant that was losing half a million a month. And as soon as we exited that customer, it was making half a million a month. So, you know, so it was a big customer.

One or two very large customers have have either underperformed due to.

Due to tariffs are due to changes in habits.

And then we've also taken a very strong view on some legacy business.

Ill.

West rock that has been.

Really really really poor business that we have we have exited so thats why.

Little bit of our own making in the sense that we've chosen to move.

A good example, one of our factories.

The border was was supplying a large customer.

We couldnt make any money on it and it was a plant that was losing half a million dollars a month and as soon as we exited that customer it was making half a million a month. So so.

Tony Smurfit: As soon as we exited that customer, it was making $0.5 million a month. So, you know, it was a big customer, so it was taking up a lot of machine time. And, you know, that's the kind of action that we continue to look to take, and that's why the Mexican volumes are, you know, so poor and, you know, not like anything we've seen before. We'll get back to growth in Mexico. We've got a fabulous business there, fabulous market position, and generally speaking, great people that are really enthusiastic, with, you know, a strong share in the business. So I think, I'm... Absent the tariff issue, I would be incredibly optimistic about our business in Mexico to continue to grow.

So.

It was a big customer so so it was taken up a lot of machine time and.

Tony Smurfit: So it was taking up a lot of machine time. And, you know, that's the kind of action that we continue to look to take. And that's why the Mexican volumes are, you know, so, so, so poor and, you know, not like anything we've seen before. We'll get back to growth in Mexico. We've got a fabulous business there, fabulous market position, and generally speaking, great people that are really enthusiastic with, you know, a strong share in the business. So I think I'm absent the tariff issue, I would be incredibly optimistic about our business in Mexico to continue to grow.

And.

That's the kind of action that we continue to look to take and Thats why the Mexican volumes are so so.

So poor.

Not like anything we've seen before we'll get back to growth in Mexico, We've got a fabulous business, there fabulous market position and generally speaking great people that are really enthusiastic.

Our strong share in the business So I think.

Sure.

Absent the tariff issue.

Would be incredibly optimistic about our business in Mexico to continue to grow.

Anthony Pettinari: Okay.

Various Analysts: Okay, that's very helpful. I'll turn it over.

Tony Smurfit: And-

Anthony Pettinari: That's very helpful. I'll turn it over.

Okay, that's very helpful.

Tony Smurfit: Okay. Thanks, very much, Anthony.

Tony Smurfit: Okay, thanks very much, Anthony.

I'll turn it over okay. Thanks.

Thanks, very much Anthony.

Operator: ... Thank you. We will take our final question, and the final question comes from the line of Reinhard van der Walt from Bank of America. Please go ahead. Your line is open.

Heidi: Thank you. We will take our final question. And the final question comes from the line of Reinhardt van der Wolt from Bank of America. Please go ahead. Your line is open.

Thank you we will take our final question and our final question comes from the line of Ryan <unk> from Bank of America. Please go ahead. Your line is open.

Reinhardt van der Walt: Morning, folks. So thanks for taking my question. Without laboring the point too much on the loss-making contract, I just wanted to check the ones that you've cut. Are we referring here to EBITDA loss-making contracts, or are you also looking at this from an EBIT lens? I guess what I'm looking for here is, you know, do you have the visibility from, from an ERP point of view at the moment to be able to, to push ROIC optimization?

Various Analysts: Morning, folks. So thanks for taking my question. Without laboring the point too much on the loss-making contracts, I just wanted to check the ones that you've cut. Are we referring here to EBITDA loss-making contracts, or are you also looking at this from an EBIT lens? I guess what I'm looking for here is, you know, do you have the visibility from an ERP point of view at the moment to be able to push ROIC optimization?

Good morning folks. Thanks for taking my question without laboring the point too much on the loss making contract.

Wanted to check the ones that you've got or were you referring to EBITDA loss, making contracts or are you also looking at this from an E. <unk> I guess, what I'm looking for here is do you have visibility from from an ERP point of view at the moment to be able to push ROIC optimization.

Tony Smurfit: I'll certainly give the second part of that question to Ken, but on the first part, yes, they were EBITDA loss-making. I mean, there is no way that you would run the businesses that we have walked away from. There is no way that you would, as an independent owner of your business, which is what I go back to, that we are asking our management to be independent owner-operators responsible for their own P&L responsibilities. And, you know, if you had that business as your own plant, you would not be running it because you're using up valuable machine time to lose money, and that's not a very sensible way to run a business.

Tony Smurfit: I'll certainly give the second part of that question to Ken, but on the first part, yes, they were EBITDA loss-making. I mean, there is no way that you would run the businesses that we have walked away from. There is no way that you would, as an independent owner of your business, which is what I go back to, that we are asking our management to be independent owner-operators responsible for their own P&L responsibilities. And, you know, if you had that business as your, if it was your own plant, you would not be running it because you're using up valuable machine time to lose money. And that's not a very sensible way to run a business. So we have exited that kind of business. And we will, you know, replace it with, it doesn't even have to be good business.

Ill certainly give the second part of that question to Ken but on the first part yesterday, where EBITDA loss, making.

<unk>.

There is no there is no way that you would run the businesses that we've walked away from there is no way that.

You would.

As an independent owner of your business, which is what.

Go back to that we are asking our management to be in.

Independent owner operators responsible for their own P&L responsibilities.

And if you have that business as if it was your own plants, you would not be running it because youre using up valuable machine time too.

Two two.

To lose money and that's not a very sensible way to run the business. So we have exited that kind of business.

Tony Smurfit: So we have exited that kind of business, and we will, you know, replace it with—it doesn't even have to be good business. It has to be average business or, you know, even poor business, and it's better than what we had. Ken?

And we will replace it with it doesn't even have to be good business. It has to be average business are.

Tony Smurfit: It has to be average business or, you know, even poor business. And it's better than what we had. Ken?

Even poor business.

Better than what we had.

Ken Bowles: Yeah. Hey, Reinhard. Yeah, we do have, we have full visibility on the income statement side now. A lot of heavy work done by the team here, and the team in Atlanta to achieve that in a very short space of time. So full visibility on an individual entity basis across their full P&L, which really feeds directly into the point Tony's making there around responsibility. You can really only have responsibility for something if you have it in your hand and then can own it. In terms of the balance sheet, that is the next phase of the exercise. We're currently breaking those balance sheets out first, the segment level is there clearly, then into the divisional level of mills, box plants, and indeed, consumer. Then we go beyond that into the entity level as we get there.

Ken Hey, Reinhart.

Ken Bowles: Hey, Reinhardt. Yeah, we do have, we have full visibility on the income statement side now. A lot of heavy work done by the team here and the team in Atlanta to achieve that in a very short space of time. So full visibility on an individual entity basis across their full P&L, which really feeds directly into the point Tony's making there around responsibility. You can really only have responsibility for something if you have it to your hand and then can own it. In terms of the balance sheet, that is the next phase of the exercise. We're currently breaking those balance sheets out first, the segment levels there clearly, then into the divisional level of mills, box plants, and indeed consumer. And then we go beyond that into the entity level as we get there.

We do have we have full visibility on the income statement side now.

A lot of heavy work done by the team here and these new Atlanta to achieve that in a very short space of time, so full visibility on an individual entity basis across their full P&L, which which really feeds directly into the point Tony is making their own responsibility you can really only have responsibility for something that you have with your hand, and one is in terms of the balance sheet that that is the next phase of the <unk>.

<unk> currently breaking those balance sheets at first the segment levels Theyre clearly then into the division level of mills box plants, and indeed consumer and then we go beyond that into the entity level as we get there, but we still have a reasonable view if you like it where it really comes out of a rocky comes out simply because we do have the balance sheet.

Ken Bowles: But we still have a reasonable view, if you like, of where ROIC comes out, simply because we do have the balance sheets of the segment itself, and we do understand where the capital goes and how we allocate the returns associated. So not necessarily vital to have it at the plant level, but will be at the plant level in a relatively short space of time.

Ken Bowles: But we still have a reasonable view, if you like, of where ROIC comes out, her ORIC comes out, simply because we do have the balance sheets of the segment itself and we do understand where the capital goes and how we allocate every return associated. So not necessarily vital to have it at the plant level, but will be at the plant level in a relatively short space of time.

The segment itself and we do understand where the capital goes and how we allocate the returns associated so not necessarily.

Vital to have it at the plant level, but will be at the plant level in a relatively short space of time.

Reinhardt van der Walt: Got it. That's very helpful. Thank you. Sounds like it's going well. And, maybe just a second question just on the CapEx outlook. I think, Tony, you've mentioned before that, you know, FY 2026 CapEx is gonna depend on, on the market environment, but just as things are today, any steer on just directionally how we should think about CapEx into next year?

Various Analysts: Got it. That's very helpful. Thank you. Sounds like it's going well. And maybe just a second question just on the CapEx outlook. I think Tony, you've mentioned before that, you know, FY26 CapEx is going to depend on the market environment. But just as things are today, any steer on just directionally how we should think about CapEx into next year?

Got it that's very helpful. Thank you it sounds like it's going well and maybe just second question just on the Capex outlook I think Tony you had mentioned before that FY 'twenty Capex is going to depend on on the market environment, but just as things are today.

Any steer on just Directionally, how we should think about capex into next year.

Tony Smurfit: Not yet, Reinhard. We're, as you know, we're developing a strategic plan for the new Smurfit Westrock, and we will give you full guidance on that in February of next year and probably some earlier guidance on CapEx towards the end of this year, so you have a feel for at least next year's view. You know, clearly we see tremendous opportunity for cost reduction and some growth in certain markets. And so, so that's all gonna be baked into our thinking as we go forward over the next five years. And as I say, we'll bring that forward, the five-year view in February, and then we'll bring it forward in next year for next year; we'll probably give you a bit of steer for next year earlier.

Tony Smurfit: Not yet, Reinhardt. We're, as you know, we're developing a strategic plan for.The

Not yet Brian Harvey.

As you know we are developing a strategic plan for the new Smurfit West rock and we will give full guidance on that in February of next year and probably some earlier guidance on capex towards the end of this year. So you have a feel for at least next year's view.

Heidi: new Smurfit Westrock, and we will give you full guidance on that in February of next year and probably some earlier guidance on CapEx towards the end of this year so you have a feel for at least next year's view. You know, clearly, we see tremendous opportunity for cost reduction and some growth in certain markets. And so that's all going to be baked into our thinking as we go forward over the next five years. And as I say, we'll bring that forward, the five-year view in February, and then we'll bring it forward in next year for next year. We'll probably give you a bit of steer for next year earlier. But you know, the key for us as a company has always been and will always be to be agile.

Clearly, we see tremendous opportunity for cost reduction and some growth in certain markets.

Answer.

So that's all going to be baked into our thinking as we go forward over the next five years.

And as I say, we'll bring that forward to five year view in February and then we'll bring it forward in next year for next year will probably give you a bit if there for next year earlier, but the key for US as a company has always been and will always be to be agile.

Tony Smurfit: But, you know, the key for us as a company, it has always been and will always be, to be agile. We're not a company that's gonna be doing any grandiose plans of billion-dollar CapExes and that sort of stuff. We're in, you know, improve mode, develop mode, cost takeout mode, growth mode, but nothing that's gonna get us too far ahead of our skis.

Heidi: We're not a company that's going to be doing any grandiose plans of billion-dollar CapExs and that sort of stuff. We're in, you know, improve mode, develop mode, cost takeout mode, growth mode, but nothing that's going to get us too far ahead of our skis.

We're not a company that's going to be doing any grandiose plans of $1 billion Capex is in that sort of stuff. We're in we're in.

Improved mode developed mode cost takeout mode growth mode, but nothing that's going to get us too far ahead of our skis.

Reinhardt van der Walt: Brilliant. Thanks a lot.

Ken Bowles: Brilliant. Thanks a lot.

Thanks, a lot.

Tony Smurfit: Okay. Okay, everybody, thank you for joining the call today. I really appreciate you joining the call. It's, I know it's been a busy earnings season for you, and, we look forward to continuing to work hard to try and ensure that we get to our stated goals in the years ahead. Thank you all for joining, and have a good morning or good afternoon, wherever you are.

Heidi: OK. OK, everybody, thank you for joining the call today. I really appreciate you joining the call. I know it's been a busy earning season for you, and we look forward to continuing to work hard to try and ensure that we get to our stated goals in the years ahead. Thank you all for joining, and have a good morning or good afternoon wherever you are.

Okay.

Okay, everybody. Thank you for joining the call today really appreciate it.

You joining the call.

I know, it's been a busy earnings season for you.

We look forward to continuing to work hard.

To try and ensure that we get to our.

State It goes in the years ahead.

Thank you all for joining and have a good morning or good afternoon wherever you are.

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

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

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

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