International Paper Company reported first‑quarter 2026 results that were a mix of highlights and headwinds. Net sales rose 1.2% year‑over‑year to $5.97 billion, while non‑GAAP adjusted earnings per share reached $0.15, beating the consensus estimate of $0.14 by $0.01 (a 7.1% beat). Adjusted EBITDA for the quarter was $677 million, a slight decline from $689 million in Q1 2025, reflecting higher input costs and the impact of a severe winter storm on operations.
Revenue fell short of the $6.01 billion consensus estimate by $40 million, a miss of 0.7%. The shortfall was driven by softer demand in the EMEA region, where higher operating costs and a weaker market environment reduced sales, and by the winter storm’s disruption of North American production. The storm forced temporary shutdowns and reduced throughput, which, combined with elevated freight and energy costs, weighed on overall sales.
Adjusted EBITDA margins contracted to 11.3% from 12.6% sequentially and 13.1% year‑over‑year. The compression was largely due to rising raw‑material and freight costs, the operational impact of the winter storm, and a shift in the product mix toward lower‑margin items. Despite the margin squeeze, the company maintained a strong operating leverage in its North American packaging solutions business, which helped cushion the overall impact.
Management revised its full‑year 2026 guidance, lowering the adjusted EBITDA target to $3.2 billion–$3.5 billion from the previous $3.5 billion–$3.7 billion range. The downgrade reflects concerns about macroeconomic uncertainty, continued input‑price inflation, and the lingering effects of the winter storm. Guidance for the North American Packaging Solutions segment was cut to $2.35 billion–$2.5 billion from $2.5 billion–$2.6 billion, while EMEA guidance was reduced to $900 million–$1.0 billion from $1.0 billion–$1.1 billion.
Segment performance highlighted a 2.5% year‑over‑year increase in North American box volumes, underscoring the company’s competitive strength in that market. In contrast, EMEA sales lagged due to softer demand and higher operating costs, a trend that has been exacerbated by the recent DS Smith acquisition, which has yet to deliver accretive synergies. The planned separation of the North American and EMEA businesses is intended to unlock value by allowing each entity to pursue region‑specific strategies.
Management emphasized the mixed outlook. CEO Andy Silvernail noted, "January in the U.S. was really strong… And now we're kind of seeing the market in the U.S. is basically flat." He added, "we are temporarily short paper in North America ahead of the Riverdale conversion," highlighting a short‑term headwind with expected long‑term benefits. In a broader outlook statement, he said, "we have updated our full‑year 2026 outlook for both businesses. In North America, we expect to deliver $2.35 billion to $2.5 billion of adjusted EBITDA. In EMEA, we are targeting $900 million to $1.0 billion of adjusted EBITDA. At the enterprise level, including corporate, that translates to $3.2 billion to $3.5 billion of adjusted EBITDA." Investors reacted negatively, citing the revenue miss, lower guidance, and margin compression as key concerns.
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