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On Wednesday, Georgia-Pacific, a private company, announced its decision to shut down the Cedar Springs mill in Georgia by August 1. The facility is known for producing approximately 800,000 tons of linerboard and 200,000 tons of medium annually. This move follows a series of similar actions within the industry, including the closure of International Paper’s (NYSE:IP) Red River mill in the first quarter of the year and Smurfit Westrock’s (NYSE:SW) Forney mill, which occurred earlier this month. According to InvestingPro data, International Paper, currently trading slightly above its Fair Value, has shown resilience with a 9% gain over the past week and maintains an impressive 55-year streak of consecutive dividend payments.
Analysts at Bank of America (BofA) have observed that these closures have met or even surpassed initial industry expectations. They were anticipated to happen over the next few years, but have instead unfolded more rapidly. BofA notes that the current trend of mill closures is indicative of a broader issue: a noticeable dip in demand in 2025. The data shows a decline in consumption by roughly 1% and a decrease in box shipments by approximately 2%. InvestingPro analysis reveals IP’s revenue growth forecast for 2025 stands at 0.43%, with 8 analysts recently revising their earnings expectations downward.
The impact of these closures is felt across companies that are involved with containerboard, including Greif (NYSE:GEF), Packaging Corp (NYSE:PKG), and Smurfit (NYSE:SW), all of which are currently rated as ’Buy’. International Paper (NYSE:IP), on the other hand, maintains a ’Neutral’ rating, with analyst targets ranging from $39.90 to $62.00. Discover more detailed analysis and 10+ additional ProTips for IP with a subscription to InvestingPro.
The Cedar Springs mill’s shutdown is a significant event, given its substantial production capacity. The cumulative effect of the closures within this sector suggests a notable shift in the paper and packaging industry, reflecting the challenges faced by these companies in the current economic climate.
As the market processes this news, stakeholders in the affected companies and industry observers will be watching closely to see how these adjustments will influence the containerboard market and the broader paper and packaging industry as the year progresses.
In other recent news, International Paper has announced quarterly dividends for its shareholders, with common stockholders receiving $0.4625 per share and preferred stockholders receiving $1.00 per share. The dividends, covering the period from April 1, 2025, to June 30, 2025, reflect the company’s commitment to returning value to investors. Additionally, the company has made strategic adjustments to its pension plan to support a business divestiture, ensuring continued pension accruals for certain executives post-divestiture. In terms of operations, International Paper is restructuring its Rio Grande Valley facilities, converting its Edinburg, Texas plant into a warehouse and upgrading its McAllen, Texas facility. Meanwhile, Wells Fargo (NYSE:WFC) has downgraded International Paper’s stock rating to Underweight, citing concerns over deteriorating market fundamentals and the company’s ability to meet its financial guidance for 2025. The firm has also reduced its price target for International Paper to $40, reflecting a cautious outlook on the company’s financial performance. Additionally, the closure of Georgia-Pacific’s containerboard mill is expected to impact the North American containerboard market, potentially affecting International Paper’s pricing power. These developments highlight the dynamic changes International Paper is navigating in the current market landscape.
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