International Paper Reports 28% Increase in Net Sales but Faces $105 Million Loss in Q1 2025

International Paper Company reported a significant increase in net sales for the first quarter of 2025, reaching $5.9 billion, up 28% from $4.6 billion in the same period last year. However, the company experienced a net loss of $105 million, or $0.24 per diluted share, compared to a profit of $56 million, or $0.16 per diluted share, in the first quarter of 2024. The loss was attributed to higher costs associated with the recent acquisition of DS Smith, which was completed on January 31, 2025, and restructuring charges related to the closure of the Red River containerboard mill in Louisiana.

The company's cost of products sold rose to $4.3 billion, a 24% increase from $3.4 billion in the prior year, driven by the integration of DS Smith's operations and increased operational costs. Selling and administrative expenses also increased significantly, totaling $530 million, compared to $358 million in the first quarter of 2024. The company recorded restructuring charges of $83 million, primarily related to the mill closure, which further impacted profitability.

International Paper's acquisition of DS Smith marked a strategic expansion, with the company issuing approximately 178 million new shares, resulting in DS Smith shareholders owning about 34.1% of the combined entity. The acquisition is expected to enhance the company's market position in the packaging sector, particularly in North America and Europe. Following the acquisition, the company has restructured its reporting segments to include Packaging Solutions North America, Packaging Solutions EMEA, and Global Cellulose Fibers, reflecting the integration of DS Smith's operations.

Operationally, the company reported a decline in customer demand in North America, attributed to increased uncertainty regarding tariffs and market conditions. The Packaging Solutions North America segment generated $3.7 billion in sales, while the EMEA segment contributed $1.6 billion. The Global Cellulose Fibers segment reported sales of $643 million. The company anticipates that demand will stabilize in the second quarter of 2025, with expectations of improved sales volumes as the agricultural season approaches.

Looking ahead, International Paper aims to drive cost efficiencies and improve productivity while navigating a challenging economic landscape. The company plans to focus on integrating DS Smith's operations and optimizing its product offerings to enhance profitability. Despite the current challenges, management remains optimistic about the potential for earnings improvement throughout the year, supported by ongoing strategic initiatives and a commitment to operational excellence.