Smurfit Westrock Plc (SW) is a global leader in sustainable paper-based packaging. Headquartered in Dublin, Ireland, it operates extensively worldwide, manufacturing corrugated, consumer, and specialized packaging through an integrated network of plants and mills. The company has a market capitalization of $23.01 billion.
Ongoing margin pressures from higher input costs and a challenging demand environment in the packaging sector have led to a decline in stock. Over the past 52 weeks, Smurfit Westrock’s stock has been down 14.5%. However, it is up 18.3% year-to-date (YTD). The shares had reached a 52-week low of $32.73 in November, but are up 39.8% from that level.
On the other hand, the S&P 500 Index ($SPX) has gained 14.4% over the past 52 weeks and 1.4% YTD. Therefore, the stock has underperformed the broader market over the past year but has outperformed year-to-date. Turning our focus to the company’s own consumer cyclical sector, we see that the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) is up 4.6% over the past 52 weeks but is down marginally YTD.
Smurfit Westrock recently announced the permanent closure of one of the paper machines at its La Tuque, Quebec, mill, with 127,000 tons of annual production capacity for solid bleached sulfate (SBS), citing ongoing scale and cost challenges. Additionally, the company is set to close the extrusion facility in Pointe-aux-Trembles, Quebec, which converts grades produced on the La Tuque machine. This was a difficult step for Smurfit Westrock’s management, but it was carried out to align with “market realities.”
For the fourth quarter, facing a difficult market backdrop, the company reported marginal growth in net sales to $7.58 billion, while adjusted EPS fell 27.7% year-over-year (YOY) to $0.34. For the current fiscal year, Wall Street analysts expect the company’s profit to climb 36.4% YOY to $3 per share on a diluted basis.
