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International Paper (NYSE:IP) released its second quarter 2025 earnings presentation on July 31, showing mixed results with declining earnings per share despite revenue growth. The company’s stock fell 5.58% in pre-market trading to $50.64, reflecting investor disappointment with the results.
Quarterly Performance Highlights
International Paper reported second quarter 2025 adjusted operating earnings per share of $0.20, down from $0.23 in the first quarter and significantly below the $0.55 reported in the same quarter last year. Revenue increased to $6.78 billion, up from $5.9 billion in Q1, driven primarily by the full-quarter inclusion of DS Smith and sales price increases.
The company’s adjusted EBITDA reached $733 million with a margin of 10.8%, showing mixed performance across business segments. While sales increased, profitability metrics declined sequentially.
As shown in the following chart of quarterly financial performance:
By segment, Packaging (NYSE:PKG) Solutions North America (PS NA) delivered sales of $3.86 billion, up from $3.70 billion in Q1, but adjusted EBITDA margin decreased from 15.7% to 13.9%. The company cited strong sales price realization and seasonally higher box volumes, though U.S. box shipments were down 5.0% year-over-year on a per-day basis.
Packaging Solutions EMEA showed significant revenue growth to $2.29 billion (from $1.55 billion in Q1) due to the additional month of DS Smith results, but adjusted EBIT turned negative at -$1 million. The segment faced soft demand and fiber cost headwinds, with box shipments slowing sequentially by approximately 1% from Q1 to Q2.
Global Cellulose Fibers continued to struggle with sales of $628 million (down from $643 million in Q1) and adjusted EBIT of -$4 million (down from $17 million). The segment was impacted by increased outage costs that partially offset higher sales price realization.
Strategic Initiatives
Despite the mixed financial results, International Paper emphasized its progress on strategic transformation initiatives aimed at long-term improvement. The company is targeting 2027 revenue of $27.0 billion and adjusted EBITDA of $5.5-6.0 billion through its transformation journey.
As illustrated in the company’s transformation framework:
The company reported that its commercial excellence actions are exceeding expectations, with year-to-date actions taken representing approximately $650 million in adjusted EBITDA run rate benefit, already surpassing the original 2025 target of $600 million. These actions include improved on-time delivery in North America (from 95% to 97%), strategic customer wins worth approximately $60 million in recurring revenue in NA and $30 million in EMEA, and reduced gap to market by an additional 200 basis points in North America.
The following chart shows progress on commercial excellence initiatives:
Similarly, cost-out actions are on track with expectations, with year-to-date actions representing approximately $550 million in adjusted EBITDA run rate benefit. These include announcing the closure of two box plants, one sheet plant, and one recycling plant in North America (approximately $20 million run rate benefit), proposing to close five UK plants (approximately $25 million estimated run rate benefit), and identifying procurement savings of approximately $40 million in NA and $25 million in EMEA.
The cost reduction progress is illustrated here:
Forward-Looking Statements
Looking ahead to the third quarter of 2025, International Paper expects stronger earnings driven by higher volume and lower costs across all business segments. For PS NA, the company forecasts EBIT to improve from $277 million in Q2 to $404 million in Q3, driven by operations and costs improvements, lower maintenance outages, and stable volume. PS EMEA is expected to return to positive EBIT of $54 million, benefiting from higher volume, improved price/mix, and operational improvements. Global Cellulose Fibers is projected to improve but remain challenged with negative price/mix impact.
The company maintains its focus on achieving $3.0 billion in targeted adjusted EBITDA improvement by 2027, with commercial excellence contributing $1.1 billion and cost-out actions delivering $1.9 billion. Management expects to achieve a run rate of approximately $1.5 billion by the second half of 2025.
As shown in this strategic actions chart:
Market Context and Challenges
International Paper’s presentation comes amid continued macroeconomic uncertainty and soft demand in key markets. The company is working to close its gap to market in North America, currently at -4%, with plans to eliminate this gap by Q4 2025. In EMEA, there are early signs of recovery with June and early Q3 volumes showing modest improvement.
The company faces significant challenges in maintaining momentum while addressing declining margins. The gap between the optimistic tone of the presentation and the actual financial results is reflected in the negative pre-market stock reaction, with shares trading closer to the 52-week low of $43.27 than the high of $60.36.
International Paper’s transformation journey continues to progress, but investors appear concerned about the company’s ability to deliver improved financial performance in the near term while navigating a challenging macroeconomic environment. The company’s ability to execute on its strategic initiatives while improving operational performance will be crucial for restoring investor confidence in the coming quarters.
Full presentation:
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