International Paper's Q3: DS Smith Acquisition Drives Sales to $6.22B Amidst $1.1B Loss

International Paper (IP), a global leader in fiber-based packaging, recently completed its transformative acquisition of European packaging giant DS Smith. The company has just released its third-quarter 10-Q report, providing the first detailed look at the financial impact of this massive deal. Let's dig into the numbers to see how the company is navigating this integration.

A New Look: Revenue Jumps, but Costs Follow

At first glance, the top-line growth is staggering. International Paper reported Net Sales of $6.22 billion for the third quarter of 2025, a massive 56% increase from the $3.98 billion recorded in the same quarter last year.

This surge is almost entirely due to the DS Smith acquisition, which has been organized into a new "Packaging Solutions EMEA" (Europe, Middle East, and Africa) segment. This new division alone contributed $2.31 billion in revenue, fundamentally reshaping IP's geographic footprint and market presence.

The following flow diagram visualizes the company's revenue and expenses for the third quarter, illustrating how sales are distributed across various cost categories to arrive at the final net earnings.

In the chart, the unallocated "Corporate & Intersegment" line primarily reflects sales between the company's different divisions. These are removed from the final consolidated figures to avoid double-counting revenue.

The Price of Transformation

While revenue soared, the bottom line tells a different story. The company posted a Net Loss of $1.10 billion, a dramatic reversal from the $150 million profit in Q3 2024. This isn't a sign of operational collapse, but rather the heavy, one-time costs associated with its strategic overhaul. Three key items drive this loss:

• Discontinued Operations: IP is in the process of selling its Global Cellulose Fibers business. This division is now classified as "discontinued operations," meaning its financial results are separated from the core business. In Q3, this segment generated a significant loss of $676 million, primarily due to an impairment charge related to the sale.
• Restructuring Charges: The company recorded $342 million in restructuring charges this quarter. These costs are linked to strategic actions, including the closure of mills in Savannah and Riceboro, as IP realigns its resources for a new operational reality.
• Acquisition-Related Expenses: Integrating a company the size of DS Smith comes with hefty accounting consequences. Depreciation and amortization expense ballooned to $1,099 million for the quarter, up from just $208 million a year ago. This increase is largely due to the amortization of newly acquired intangible assets, such as customer relationships and trademarks, which are written down over their useful lives.

Stripping out these special items and others, the company's "adjusted operating earnings" were a loss of $224 million, highlighting the ongoing pressures even beyond the one-time charges.

Looking Ahead

International Paper's third-quarter results paint a clear picture of a company in deep transformation. The acquisition of DS Smith has created a packaging powerhouse with a significantly expanded global reach. However, the short-term financial results are clouded by substantial, but largely expected, costs related to the integration, restructuring, and the divestiture of its cellulose fibers unit.

The key challenge for IP now is execution. Investors will be watching closely to see if the company can smoothly integrate DS Smith's operations, achieve the anticipated cost savings, and leverage its new scale in a competitive global market. The current losses are the cost of a bold strategic bet; the coming quarters will begin to reveal if that bet will pay off.