International Paper Company PFD $4

What they do

International Paper produces renewable fiber-based packaging products with manufacturing operations in North America, Latin America, Europe and North Africa. The company operates primarily in sustainable packaging, focusing on corrugated boxes and containerboard. It recently completed the acquisition of DS Smith and sold its Global Cellulose Fibers business.

Revenue drivers

• North America Packaging — Generates most of its revenue from corrugated packaging and containerboard sales. Box shipments increased 1.7% daily year-over-year in Q2 2026, and capacity utilization improved 5% versus 2025.
• EMEA Packaging — Includes operations in Europe, Middle East and Africa, contributing roughly half of net sales. In Q2 2026, volumes declined modestly due to soft demand, but cost-out actions supported margins.
• Sustainable Packaging Solutions — The company sells fiber-based packaging products such as corrugated boxes, containerboard, and specialty packaging, with revenue growing due to the DS Smith acquisition.

Recent performance

In Q2 2026, net sales were $6.00 billion, down from $6.14 billion a year ago, with a loss from continuing operations of $12 million. Adjusted EBITDA (non-GAAP) fell to $587 million from $670 million, and free cash flow was negative $7 million. For full-year 2025, revenue was $23.63 billion, but net income was a loss of $3.52 billion, driven by special items. Operating cash flow remained steady at $1.70 billion in 2025.

Strategy

The company is executing its 'IP 80/20' performance system focused on simplification, segmentation, resourcing and growth. It completed the acquisition of DS Smith and sold Global Cellulose Fibers to streamline its portfolio. A planned separation into two independent publicly traded companies for North America and EMEA is targeted for late 2026 or early 2027. Capital expenditures in 2026 are expected to be $2.0 to $2.1 billion, with two new greenfield packaging plants announced in 2025.

Risks

• Demand cyclicality — Product prices and volumes can fall due to economic downturns, tariffs, slower housing starts, and lower industrial production, as seen in North America during 2025.
• Raw material and energy costs — Higher costs for virgin fiber, recycled fiber, energy, and freight may compress margins if not fully recovered, with ongoing inflationary pressures.
• Separation risk — The planned separation into two public companies creates execution risks and may disrupt operations or fail to achieve expected benefits.
• Competition — Competitors may add capacity, innovate, or price aggressively, pressuring margins and market share.

Outlook

Management expects Q3 2026 adjusted EBITDA (non-GAAP) between $780 million and $830 million, including an $85 million negative impact from the temporary Pine Hill mill closure. Full-year 2026 adjusted EBITDA is forecast at $3.20 to $3.40 billion. The company sees higher sequential EBITDA in both regions due to improved pricing and lower maintenance outages, partially offset by higher input costs.