International Paper Highlights Strategic Shift with Segment Realignment and Robust Cash Flow Amid Q3 Loss

Q3 Losses Heavily Impacted by One-Time Charges, But Cash Flow and Adjusted EBITDA Show Strength

International Paper’s latest results present a company deep in transformation. For the third quarter of 2025, International Paper (NYSE: IP; LSE: IPC) reported a loss from continuing operations of $426 million and a net loss of $1.10 billion—numbers significantly shaped by $675 million in accelerated depreciation linked to mill closures and its 80/20 strategic restructuring. Despite these headwinds, underlying operational trends show momentum and resilience, especially in cash generation and adjusted EBITDA growth.

Segment Realignment Following DS Smith Acquisition Reshapes Performance Reporting

The quarter was marked by a strategic refocus following the acquisition of DS Smith and a definitive agreement to sell the Global Cellulose Fibers business. Now organized under Packaging Solutions North America (PS NA) and Packaging Solutions EMEA (PS EMEA), the company’s performance tracking better reflects its operational priorities in the high-growth packaging space across North America and EMEA.

Chairman and CEO Andy Silvernail commented, “Our third quarter results reflect substantial progress on our transformation journey... We delivered 28% sequential adjusted EBITDA improvement across both Packaging Solutions businesses, driven by price realization, cost management and lower fiber costs.”

Adjusted EBITDA and Cash Flow Paint a Resilient Picture

While GAAP losses were sizable, non-GAAP adjusted EBITDA from continuing operations reached $859 million, up substantially from a year ago. Free cash flow, although down from last year’s quarter, came in at $150 million, underscoring effective cash management even amid transformation costs and capital investments.

Business Segments: Resilience Amid Operational Turbulence

North America saw a jump in box sales, partially offset by higher accelerated depreciation and ongoing mill closures. EMEA revenues edged higher thanks to improved pricing, but both regions continued to wrestle with subdued demand and temporary shutdown costs. Still, lower fiber and operating costs offer evidence of structural cost improvements.

Strategic Actions, Discontinued Operations, and Outlook

Results this quarter include major impacts from asset sales and discontinued operations—most notably the planned $1.5 billion sale of the Global Cellulose Fibers business. The divestiture drove a $1 billion impairment, which is a one-time event not expected to repeat in future quarters.

On a positive note, both packaging businesses delivered improved sequential EBITDA, reflecting disciplined price and cost actions. Free cash flow remains robust, supporting continued investment, dividends, and deleveraging.

Key Takeaways: One-Time Costs Set the Stage for Operational Improvement

• Operational progress is visible through improved cash flow and EBITDA, despite headline losses driven by non-recurring charges.
• Segment reporting now better reflects International Paper’s focus on Packaging Solutions, post-DS Smith acquisition and cellulose divestiture.
• Liquidity remains strong, positioning the company to execute its transformation and drive future growth.
• Investors will watch future quarters closely, as the one-time effects fade and underlying business momentum becomes clearer.

The full transformation isn’t complete, but the core business metrics suggest International Paper is laying the groundwork for more stable—and potentially more profitable—operations going forward. For stakeholders and industry watchers, the question now is how quickly the underlying profitability can recover as special charges diminish and cost actions gain traction.

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