SOURCE - The Target Report
It didn’t take long. The ink was hardly dry. International Paper’s shareholders had just approved its acquisition of DS Smith, the UK-based manufacturer of corrugated case materials and related fiber-based products. Only days before, DS Smith had obtained its own shareholders’ approval to proceed with the deal. Within the following week, International Paper announced the closure of no fewer than six facilities, spread out from North Carolina to Texas, mostly in the corrugated box segment. The job of rationalizing the total combined production capacity of the merged operations was clearly underway in advance of the deal’s consummation. Unlike many plant closures in the paper manufacturing industry, we view these changes as a signal that the demand for corrugated packaging products will remain strong. Consequently, International Paper is positioning itself as a leading global player in the segment. (For more, see: The Target Report: Paper Manufacturers Shift Grades – April 2024.)
International Paper Gets Lean Before Merger with DS Smith
Five months into the job, new Chairman & CEO Andrew Silvernail continues to shake up things at International Paper as restructuring, cost-cutting, and workforce reductions continue. The mega US-based pulp and paper company seeks to expand its European presence, cementing its position as the world’s largest paper giant (by revenue) at a time of consolidation in the paper industry. Fiscal-year revenues are expected to exceed $18.8 billion for 2024. When combined with DS Smith, International Paper’s pro-forma annual revenues are projected to be approximately $28.2 billion, with 90% of sales coming from corrugated products. International Paper is permanently shutting down facilities in six states: two packaging plants in Rockford, Illinois, and Kansas City, Missouri, respectively; two corrugated container plants, one in Statesville, North Carolina, and the other in Cleveland, Tennessee; one corrugated sheet feeder plant in San Antonio, Texas; and a cellulose pulp mill in Georgetown, South Carolina. The combined result of the recently announced mill closures is an expected $230 million improvement in adjusted earnings.
Additionally, some 400 people at its Memphis headquarters are being let go. In all, 989 employees face being without their jobs by mid-December – that number represents about 2.5% of the company’s workers in 35 states and 10 countries worldwide. These moves follow another 900 layoffs announced 13 months ago, when a containerboard mill in Texas was closed and two pulp machines (one North Carolina and the other in Florida) were retired.
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