International Paper (IP) Citigroup 2025 Basic Materials Conference summary

Strategic transformation and operational changes

• Undertook radical decentralization, leadership changes, and mill closures to reshape the business footprint in North America and Europe.

• Closed the DS Smith transaction in February, focusing on integrating and optimizing European assets.

• Ongoing transformation includes cost-out initiatives, commercial improvements, and asset investments, especially in mills and box plants.

• Shifted organizational culture to prioritize customer-facing operations and align mill and box plant systems.

• Continued rollout of the Lighthouse initiative to improve productivity and efficiency in box plants.

Financial performance and outlook

• 2025 EBITDA guidance revised downward to ~$3 billion due to weaker demand and pricing pressure, especially in Europe.

• Market-driven pressures in both regions resulted in over $500 million EBITDA impact.

• Run-rate benefits from cost-out and pricing initiatives expected to reach $3.6 billion EBITDA by 2026.

• 2027 EBITDA target reset to $5 billion, reflecting a lost year and challenging market conditions.

• Free cash flow expected to increase significantly post-2026 as transformation investments wind down.

Asset optimization and investment plans

• Major mill system changes largely complete; focus now on improving mill performance and reliability.

• Riverdale paper machine project to begin in Q3 2025, ramping through 2027, with full benefits in 2028.

• Box plant system continues to be assessed for quality upgrades and optimization, with some closures and trade-ups expected.

• Lighthouse initiative has delivered 20-25% productivity gains in some clusters, with 10-12% in others.

• European asset integration and optimization ongoing, with focus on applying successful North American strategies.