WestRock(WRK) - 2023 Q4 - Annual Report

Sales Performance - Sales of corrugated packaging products to external customers accounted for 48.1%, 42.3%, and 43.2% of net sales in fiscal 2023, 2022, and 2021, respectively[23] - Sales of consumer packaging products to external customers accounted for 24.2%, 23.2%, and 23.5% of net sales in fiscal 2023, 2022, and 2021, respectively[26] - Sales of global paper products to external customers accounted for 21.5%, 27.9%, and 26.6% of net sales in fiscal 2023, 2022, and 2021, respectively[27] - Sales in the Distribution segment to external customers accounted for 6.2%, 6.6%, and 6.7% of net sales in fiscal 2023, 2022, and 2021, respectively[28] - Non-U.S. operations accounted for 24.4% of net sales in fiscal 2023, up from 18.3% in both 2022 and 2021[87] Financial Outlook - The company expects more earnings and cash flows to be generated in the second half of the fiscal year than in the first half due to seasonal demand variations[29] - The company estimates an investment of approximately $103 million for capital expenditures during fiscal 2024 for environmental compliance[47] - Freight costs continued to increase in fiscal 2023 compared to fiscal 2022, impacting overall operational expenses[34] Sustainability Initiatives - The overall fiber sourcing for all mills is approximately 60% virgin and 40% recycled, with recycled fiber costs lower in fiscal 2023 compared to fiscal 2022[31] - During fiscal 2023, the recycling operations helped divert approximately six million tons of paper and packaging from landfills[51] - The company aims to reduce absolute Scope 1 and 2 GHG emissions by 27.5% by 2030 from a 2019 baseline[55] - The company plans to invest in energy efficiency projects, fuel switching, and low carbon technology to achieve its science-based targets (SBT)[56] - The company’s sustainability program is built on three pillars: supporting people and communities, bettering the planet, and innovating for customers[54] - The company’s board of directors includes six members with sustainability experience, ensuring governance oversight on sustainability matters[52] - The company has systems in place for tracking GHG emissions and monitoring climate-related laws and regulations[62] - The company’s sustainability reports are prepared in accordance with the Global Reporting Initiative and include information on GHG targets and strategies[63] Workforce and Diversity - Approximately 56,100 employees were employed as of September 30, 2023, with 90% in sales and operations[68] - 24% of the global workforce is comprised of women, and 36% of the U.S. workforce consists of people of color[75] - The company has a multi-year Diversity, Inclusion, Equity and Belonging action plan to enhance workforce diversity and inclusion[75] - Approximately 71% of hourly employees in the U.S. and Canada are covered by collective bargaining agreements[68] - The company has implemented part-time work opportunities and benefits for employees working 20 hours or more per week starting January 2023[86] - Approximately 65% of the workforce is located in the U.S. and Canada, while 35% is in Europe, South America, Mexico, and Asia Pacific[68] Risk Management - The company emphasizes the importance of forward-looking statements, which are based on current expectations and involve various risks and uncertainties[90] - Key risks include economic conditions, supply chain disruptions, and competition, which could materially affect future performance[91] - The company is focused on sustainability targets and commitments, with potential impacts from climate change on operations[91] - The proposed Transaction may lead to integration difficulties and management focus being diverted, impacting overall business performance[91] - The company is actively managing risks related to indebtedness and potential increases in interest rates[91] - The company acknowledges the potential for adverse effects from information security incidents and the importance of business continuity plans[91] Governance and Compliance - The company has made available its SEC filings and corporate governance documents on its website for stakeholders[88] - The company is committed to providing copies of governance documents upon request from stockholders[89] - The company’s capital project approval process includes a tool to assess the impact of proposed investments on GHG emissions, water intake, and solid waste generation[57] - The company has established procedures for managing asbestos-containing materials in facilities where they are present, despite not using asbestos in manufacturing[44]