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SW Q3 Earnings Miss Estimates on Higher Costs, Weak Volumes
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Key Takeaways
Smurfit Westrock's Q3 adjusted EPS fell 22.4% y/y to 45 cents, missing the consensus estimate of 60 cents.
Higher input costs and weaker converting volumes caused margin declines, while LATAM EBITDA rose 8.6%.
Smurfit Westrock cut its 2026 adjusted EBITDA outlook to $4.7B from $4.9-$5.1B.
Smurfit Westrock Plc (SW - Free Report) has reported third-quarter 2026 adjusted earnings of 45 cents per share, down 22.4% year over year. The figure missed the Zacks Consensus Estimate of 60 cents. Higher freight, energy and raw material costs, along with weaker-than-expected converting volumes, pressured profitability.
Net sales increased 2% year over year to $8.16 billion but missed the consensus estimate of $8.32 billion.
SW's Gross Profit & Margins Decline in Q3
Smurfit Westrock reported an operating profit of $487 million, down 7.4% year over year. The company's cost of sales increased 4.5% to $6.72 billion from the year-ago quarter. Gross profit fell 8.2% to $1.44 billion from $1.57 billion. The gross margin contracted to 17.6% from the year-ago quarter’s 19.6%.
Adjusted EBITDA declined 7.5% to $1.21 billion from $1.30 billion a year ago. The adjusted EBITDA margin contracted to 14.8% from 16.3%.
Smurfit Westrock's Q3 Segmental Performance
In North America, net sales totaled $4.75 billion, increasing 2.4% from $4.64 billion in the year-ago quarter. Adjusted EBITDA declined 6.2% to $760 million, while the adjusted EBITDA margin contracted to 15.6% from 17.2%. Corrugated volumes declined 3.4% on a days-adjusted basis. However, the company noted continued improvements in its converting operations, although opportunities remain in Mexico and agricultural markets.
The Europe, MEA & APAC segment generated net sales of $2.82 billion in the third quarter of 2026, increasing 0.2% from the prior-year quarter. Adjusted EBITDA declined 9.5% to $379 million, with the adjusted EBITDA margin contracting to 13.4% from 14.8%. Corrugated volumes inched up 0.4% on a days-adjusted basis. European containerboard pricing strengthened in September, while energy inflation continued to pressure profitability.
Net sales in the LATAM segment increased 7.7% to $587 million from $545 million. Adjusted EBITDA rose 8.6% to $126 million, while the adjusted EBITDA margin improved to 21.4% from 21.3%. Corrugated volumes declined 1.8% on a days-adjusted basis.
SW’s Q3 Cash Position & Balance Sheet
Smurfit Westrock had cash and cash equivalents of $723 million as of Sept. 30, 2026, compared with $892 million at the end of 2025. Total assets stood at $45.15 billion compared with $45.16 billion at the end of 2025.
Net cash provided by operating activities was $874 million, down from $1.13 billion in the year-ago quarter.
The company announced a quarterly dividend of 45.23 cents per ordinary share, payable Dec. 10, 2026, to shareholders of record as of Nov. 13.
Smurfit Westrock’s 2026 Outlook
For the fourth quarter of 2026, SW expects adjusted EBITDA of $1.3 billion. The adjusted EBITDA is projected at $4.7 billion compared with the prior stated $4.9-$5.1 billion, reflecting continued cost inflation and operating challenges.
SW expects 2026 capital expenditure of $2.3 billion, cash interest of $700 million and cash taxes of $500 million.
The company expects ongoing pricing initiatives and operating improvements to help offset elevated input costs, with the full benefits of certain price increases anticipated in 2027.
SW Stock’s Price Performance
Shares of the company have lost 1.3% in the past year compared with the industry’s 12.2% decline.
Packaging Corporation of America (PKG - Free Report) reported third-quarter 2026 adjusted earnings of $3.04 per share, rising 11.4% year over year and beating the Zacks Consensus Estimate of $2.95 by 3.05%. The bottom line also exceeded the company's guidance of $2.91, driven by favorable price and mix in the Packaging segment and contributions from the acquired operations.
Packaging Corp’s net sales increased 12.5% year over year to $2.60 billion and beat the consensus estimate of $2.56 billion. Total corrugated products shipments rose 10.6% year over year, supported by the acquired operations.
International Paper Company (IP - Free Report) reported adjusted operating earnings of 37 cents per share for the third quarter of 2026, against an adjusted loss of 43 cents in the year-ago quarter. The figure beat the Zacks Consensus Estimate of 30 cents by 23.3%. International Paper’s net sales declined 0.4% year over year to $6.20 billion and missed the consensus mark of $6.35 billion by 2.4%.
Paper & Related Product Stock Awaiting Results
Rayonier Advanced Materials (RYAM - Free Report) is scheduled to release third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for the bottom line is pegged at earnings of 2 cents per share. The company incurred a loss of 7 cents in the year-ago quarter.
The consensus estimate for Rayonier Advanced Materials’ top line is pegged at $387 million, indicating 9.5% growth from the prior-year reported figure.
View the Zacks #1 Rank List
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SW Q3 Earnings Miss Estimates on Higher Costs, Weak Volumes
Key Takeaways
Smurfit Westrock Plc (SW - Free Report) has reported third-quarter 2026 adjusted earnings of 45 cents per share, down 22.4% year over year. The figure missed the Zacks Consensus Estimate of 60 cents. Higher freight, energy and raw material costs, along with weaker-than-expected converting volumes, pressured profitability.
Net sales increased 2% year over year to $8.16 billion but missed the consensus estimate of $8.32 billion.
SW's Gross Profit & Margins Decline in Q3
Smurfit Westrock reported an operating profit of $487 million, down 7.4% year over year. The company's cost of sales increased 4.5% to $6.72 billion from the year-ago quarter. Gross profit fell 8.2% to $1.44 billion from $1.57 billion. The gross margin contracted to 17.6% from the year-ago quarter’s 19.6%.
Adjusted EBITDA declined 7.5% to $1.21 billion from $1.30 billion a year ago. The adjusted EBITDA margin contracted to 14.8% from 16.3%.
Smurfit Westrock's Q3 Segmental Performance
In North America, net sales totaled $4.75 billion, increasing 2.4% from $4.64 billion in the year-ago quarter. Adjusted EBITDA declined 6.2% to $760 million, while the adjusted EBITDA margin contracted to 15.6% from 17.2%. Corrugated volumes declined 3.4% on a days-adjusted basis. However, the company noted continued improvements in its converting operations, although opportunities remain in Mexico and agricultural markets.
The Europe, MEA & APAC segment generated net sales of $2.82 billion in the third quarter of 2026, increasing 0.2% from the prior-year quarter. Adjusted EBITDA declined 9.5% to $379 million, with the adjusted EBITDA margin contracting to 13.4% from 14.8%. Corrugated volumes inched up 0.4% on a days-adjusted basis. European containerboard pricing strengthened in September, while energy inflation continued to pressure profitability.
Net sales in the LATAM segment increased 7.7% to $587 million from $545 million. Adjusted EBITDA rose 8.6% to $126 million, while the adjusted EBITDA margin improved to 21.4% from 21.3%. Corrugated volumes declined 1.8% on a days-adjusted basis.
SW’s Q3 Cash Position & Balance Sheet
Smurfit Westrock had cash and cash equivalents of $723 million as of Sept. 30, 2026, compared with $892 million at the end of 2025. Total assets stood at $45.15 billion compared with $45.16 billion at the end of 2025.
Net cash provided by operating activities was $874 million, down from $1.13 billion in the year-ago quarter.
The company announced a quarterly dividend of 45.23 cents per ordinary share, payable Dec. 10, 2026, to shareholders of record as of Nov. 13.
Smurfit Westrock’s 2026 Outlook
For the fourth quarter of 2026, SW expects adjusted EBITDA of $1.3 billion. The adjusted EBITDA is projected at $4.7 billion compared with the prior stated $4.9-$5.1 billion, reflecting continued cost inflation and operating challenges.
SW expects 2026 capital expenditure of $2.3 billion, cash interest of $700 million and cash taxes of $500 million.
The company expects ongoing pricing initiatives and operating improvements to help offset elevated input costs, with the full benefits of certain price increases anticipated in 2027.
SW Stock’s Price Performance
Shares of the company have lost 1.3% in the past year compared with the industry’s 12.2% decline.
Image Source: Zacks Investment Research
Smurfit Westrock’s Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
SW’s Peer Performance
Packaging Corporation of America (PKG - Free Report) reported third-quarter 2026 adjusted earnings of $3.04 per share, rising 11.4% year over year and beating the Zacks Consensus Estimate of $2.95 by 3.05%. The bottom line also exceeded the company's guidance of $2.91, driven by favorable price and mix in the Packaging segment and contributions from the acquired operations.
Packaging Corp’s net sales increased 12.5% year over year to $2.60 billion and beat the consensus estimate of $2.56 billion. Total corrugated products shipments rose 10.6% year over year, supported by the acquired operations.
International Paper Company (IP - Free Report) reported adjusted operating earnings of 37 cents per share for the third quarter of 2026, against an adjusted loss of 43 cents in the year-ago quarter. The figure beat the Zacks Consensus Estimate of 30 cents by 23.3%. International Paper’s net sales declined 0.4% year over year to $6.20 billion and missed the consensus mark of $6.35 billion by 2.4%.
Paper & Related Product Stock Awaiting Results
Rayonier Advanced Materials (RYAM - Free Report) is scheduled to release third-quarter 2026 results on Nov. 3. The Zacks Consensus Estimate for the bottom line is pegged at earnings of 2 cents per share. The company incurred a loss of 7 cents in the year-ago quarter.
The consensus estimate for Rayonier Advanced Materials’ top line is pegged at $387 million, indicating 9.5% growth from the prior-year reported figure.