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Smurfit WestRock plc(SW) - 2025 Q1 - Quarterly Report
SWSmurfit WestRock plc(SW)2025-05-09 10:35
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Financial Performance - Net sales for Q1 2025 reached 7,656million,asignificantincreasefrom7,656 million, a significant increase from 2,930 million in Q1 2024, representing a growth of approximately 161%[18] - Gross profit for the quarter was 1,577million,comparedto1,577 million, compared to 710 million in the same period last year, indicating a gross margin improvement[18] - Net income attributable to common shareholders was 384million,upfrom384 million, up from 191 million in Q1 2024, reflecting a year-over-year increase of 101%[20] - Comprehensive income for Q1 2025 was 749million,asubstantialrisefrom749 million, a substantial rise from 88 million in Q1 2024, highlighting improved overall financial performance[22] - Net income for Q1 2025 was 382million,a100382 million, a 100% increase from 191 million in Q1 2024[9] - Basic earnings per share remained stable at 0.74forbothQ12025andQ12024,despitethesignificantincreaseinnetincome[20]−AdjustedEBITDAforthethreemonthsendedMarch31,2025,was0.74 for both Q1 2025 and Q1 2024, despite the significant increase in net income[20] - Adjusted EBITDA for the three months ended March 31, 2025, was 1,252 million, compared to 475millionin2024,indicatingstrongoperationalperformance[195]AssetsandLiabilities−Totalassetsincreasedto475 million in 2024, indicating strong operational performance[195] Assets and Liabilities - Total assets increased to 44,649 million as of March 31, 2025, compared to 43,759millionattheendof2024,showingagrowthofapproximately243,759 million at the end of 2024, showing a growth of approximately 2%[17] - Total liabilities rose to 26,760 million from 26,372million,indicatinganincreaseofabout1.526,372 million, indicating an increase of about 1.5%[17] - Total equity increased to 17,889 million by March 31, 2025, up from 17,387millionattheendof2024[25]−Totaldebtincreasedto17,387 million at the end of 2024[25] - Total debt increased to 14,219 million as of March 31, 2025, compared to 13,595millionatDecember31,2024,representingariseof4.613,595 million at December 31, 2024, representing a rise of 4.6%[82] - The outstanding payment obligations under supplier finance programs were 389 million as of March 31, 2025, down from 450millionattheendof2024[36]CashFlowandInvestments−Cashprovidedbyoperatingactivitiesincreasedto450 million at the end of 2024[36] Cash Flow and Investments - Cash provided by operating activities increased to 235 million in Q1 2025 from 42millioninQ12024[9]−Capitalexpendituresrosesignificantlyto42 million in Q1 2024[9] - Capital expenditures rose significantly to 477 million in Q1 2025, compared to 208millioninQ12024[9]−Netcashusedforinvestingactivitieswas208 million in Q1 2024[9] - Net cash used for investing activities was 476 million in Q1 2025, primarily due to capital expenditures of 477million[186]−Netcashprovidedbyfinancingactivitieswas477 million[186] - Net cash provided by financing activities was 151 million in Q1 2025, driven by a net increase in debt of 444million[187]AcquisitionsandMergers−TheintegrationofSmurfitKappaandWestRockisexpectedtoyieldsignificantsynergies,althoughspecificfinancialbenefitswerenotquantifiedinthereport[8]−TheaggregatemergerconsiderationfortheacquisitionofSmurfitKappawas444 million[187] Acquisitions and Mergers - The integration of Smurfit Kappa and WestRock is expected to yield significant synergies, although specific financial benefits were not quantified in the report[8] - The aggregate merger consideration for the acquisition of Smurfit Kappa was 13,461 million, completed on July 5, 2024[42] - Net income attributable to common shareholders rose by 193millionto193 million to 384 million in Q1 2025, up from 191millioninQ12024,primarilyduetotheacquisitionofWestRock[139]−Thecompanyanticipatescontinuedgrowthandoperationalimprovementsasitintegratesthetwobusinessesandleveragesitsexpandedscaleandgeographicreach[8]SegmentPerformance−ForthethreemonthsendedMarch31,2025,NorthAmericasegmentnetsaleswere191 million in Q1 2024, primarily due to the acquisition of WestRock[139] - The company anticipates continued growth and operational improvements as it integrates the two businesses and leverages its expanded scale and geographic reach[8] Segment Performance - For the three months ended March 31, 2025, North America segment net sales were 4,578 million, Europe, MEA and APAC segment net sales were 2,576million,andLATAMsegmentnetsaleswere2,576 million, and LATAM segment net sales were 502 million[54] - Adjusted EBITDA for the North America segment increased by 726millionto726 million to 785 million in Q1 2025, primarily due to the WestRock acquisition[168] - The LATAM segment's net sales increased by 172millionto172 million to 513 million in Q1 2025, primarily due to the WestRock acquisition[172] - The Europe, MEA and APAC segment's net sales increased by 388millionto388 million to 2,582 million in Q1 2025, with a 378millionimpactfromtheWestRockacquisition[169]OperationalChanges−ThecompanyplanstopermanentlycloseitscoatedrecycledboardmillinSt.Paul,Minnesota,anddiscontinueproductionatitscontainerboardmillinForney,Texas,impactingapproximately650employeesandreducingcapacitybyover500,000tonsannually[123][135]−SmurfitWestrockexpectstoincurapproximately378 million impact from the WestRock acquisition[169] Operational Changes - The company plans to permanently close its coated recycled board mill in St. Paul, Minnesota, and discontinue production at its containerboard mill in Forney, Texas, impacting approximately 650 employees and reducing capacity by over 500,000 tons annually[123][135] - Smurfit Westrock expects to incur approximately 287 million in pre-tax charges related to the closures, including 188millioninnon−cashassetimpairmentcharges[136][125]TaxandLegalMatters−TheeffectivetaxrateforthethreemonthsendedMarch31,2025,was2.1188 million in non-cash asset impairment charges[136][125] Tax and Legal Matters - The effective tax rate for the three months ended March 31, 2025, was 2.1%, influenced by a tax benefit of 72 million from the resolution of unrecognized tax benefits[91] - The total amount in dispute regarding tax claims in Brazil was R761million(761 million (132 million) as of March 31, 2025, which could materially affect cash flows depending on the resolution[100] - The company has estimated liabilities of 69millionrelatedtoasbestos−relatedlitigationasofMarch31,2025,withexpectedinsurancerecoveriesof69 million related to asbestos-related litigation as of March 31, 2025, with expected insurance recoveries of 45 million[102] - An international arbitration award granted the company compensation exceeding 469millionfromVenezuela,withlegalcostsof469 million from Venezuela, with legal costs of 5 million, pending enforcement proceedings[108] Miscellaneous - The company is currently evaluating the impact of new accounting standards on its disclosures, including ASU 2023-09 and ASU 2024-03[39][40] - The company has no off-balance sheet arrangements as of March 31, 2025, ensuring transparency in its financial obligations[190] - There have been no material changes to the contractual obligations and commitments since the last fiscal year, maintaining consistency in financial planning[189]