International Paper’s EMEA packaging sales surge 50% to US$2.3B despite cost increase

GLOBAL – International Paper has reported Q1 net sales of US$5.97 billion, up 13.4%, with earnings swinging from a US$124 million loss to US$76 million profit, as EMEA packaging sales surged 49.8% to US$2.3 billion while North America packaging held at US$3.6 billion.

The North America segment recorded an operating profit of US$248 million for the quarter, up from US$142 million a year earlier. 

The company said reduced seasonal volumes outweighed the effect of stronger export pricing and a more favourable sales mix. 

Cost of sales increased due to higher operating and input costs, partly offset by lower planned maintenance outage expenses.

A Tale of Two Regions

The EMEA segment posted an operating loss of US$51 million in Q1 2026, compared with an operating profit of US$46 million in the same period last year. Lower paper selling prices were offset by better packaging margins. 

The contrast is striking: North America generated US$248 million in packaging profit while EMEA bled red ink despite its 50% revenue surge. 

The DS Smith acquisition, which closed last year, added substantial top-line volume but integration costs and market conditions have kept profitability out of reach.

International Paper received US$1.1 billion in net proceeds from the disposal of its global cellulose fibres business and reduced debt by US$660 million. 

The cellulose fibres divestment provides dry powder for the planned separation of the company’s North American and EMEA operations into two independent publicly traded companies.

The CEO’s Take

Andy Silvernail, chairman and CEO of International Paper, explained that this quarter the company delivered meaningful progress across the business. 

He noted that in North America, commercial actions are gaining traction and helping the company outgrow the market while cost-out efforts advance and productivity improves in mills and box plants. 

In EMEA, the company is accelerating commercial and cost initiatives while a small core team focuses on the planned separation. He added that there is still work to do to improve consistency and reliability, but the primary pressures this quarter came from a tougher macro environment, including ongoing inflation and the severe winter storm.

Last month, the company agreed to acquire North Pacific Paper Company from One Rock Capital Partners in a US$360 million transaction, adding containerboard capacity on the US West Coast.

The Separation Logic

North America delivered US$248 million in packaging profit. EMEA, despite a 50% revenue jump, lost US$51 million. 

That divergence makes the case for separation.

The two geographies operate under different economics, face different competitors, and reward different strategies. Investors are betting that unfettered, each can perform better than they do under one roof.

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