Smurfit Westrock's Q2 10-Q: Revenue Soars Amid Costly Integration

Following the landmark combination of Smurfit Kappa and WestRock, the newly formed packaging powerhouse, Smurfit Westrock plc, has released its financial results for the second quarter of 2025. This first 10-Q filing as a combined entity provides a detailed look into the financial workings of the transatlantic giant, revealing a company of immense scale grappling with the significant costs of integration.

A New Scale, A New Mix

The most immediate takeaway from the report is the sheer size of the new company. Net sales for the second quarter of 2025 soared to $7.94 billion, a dramatic increase from the $2.97 billion reported in the same quarter of 2024. This leap is almost entirely attributable to the acquisition of WestRock, which contributed approximately $4.84 billion to the quarterly revenue.

The merger has fundamentally reshaped the company's geographic and product mix. The North America segment is now the largest, generating $4.76 billion in sales. This is complemented by a strong presence in Europe, MEA and APAC ($2.78 billion) and LATAM ($0.52 billion). This massive revenue base is built on two core product categories: Packaging, which includes corrugated and consumer packaging products and brought in $6.42 billion, and Paper, which accounted for $1.52 billion.

The High Cost of Transformation

Despite the impressive revenue growth, Smurfit Westrock posted a net loss of $28 million for the quarter, a stark contrast to the $132 million net income from the prior year. The flow diagram below visualizes the company's income and expenses for the three months ended June 30, 2025, illustrating how a substantial top line was eroded by significant costs.

Two key items weighed heavily on profitability:

• Impairment and Restructuring Costs: The company recorded $280 million in these charges during the quarter. According to the filing notes, these costs are tied to strategic decisions to optimize the combined company's manufacturing footprint. This includes permanently closing a mill in St. Paul, Minnesota, ceasing production at a mill in Forney, Texas, and shutting down two facilities in Germany. These are difficult but often necessary steps in a merger of this size, aimed at creating a more efficient long-term operation.
• Increased Operating and Financing Costs: With a larger-scale operation come higher expenses. Selling, general, and administrative (SG&A) costs more than doubled to $963 million. Furthermore, net interest expense surged to $182 million from just $33 million a year ago, reflecting the debt used to finance the combination.

Adjusted EBITDA: A Glimpse of Underlying Strength

To provide a different view of its performance, management highlights a non-GAAP metric called Adjusted EBITDA. This figure adjusts for items like restructuring costs, merger expenses, depreciation, and interest, aiming to show the core operational earning power of the business.

For Q2 2025, Adjusted EBITDA was $1.21 billion, more than doubling from $480 million in Q2 2024. This suggests that once the one-time integration costs are stripped out, the underlying business is generating significant cash flow. The new North American segment was the primary driver, contributing $752 million to the total Adjusted EBITDA.

Navigating the Path Forward

Smurfit Westrock's first quarterly report reveals a company in the midst of a massive transformation. The WestRock acquisition has created a global packaging powerhouse with an unparalleled scale and geographic reach. However, the short-term financial picture is clouded by the heavy costs of integration.

Adding another layer of complexity, the company disclosed a new class-action lawsuit filed in July 2025, alleging antitrust violations related to containerboard pricing in the United States. While the company intends to "vigorously defend" itself, such legal challenges can create uncertainty.

The central task for Smurfit Westrock's management is to navigate this post-merger period effectively, delivering on the promised synergies and translating its formidable scale and strong underlying EBITDA into consistent, reported profits. Investors and industry watchers will be keenly observing whether the current restructuring pain paves the way for sustained, long-term gain in the competitive global packaging market.