Paper Packager WestRock misses quarterly sales estimates on waning demand

WestRock Co

09/11/2023 12:26

Nov 9 (Reuters) - WestRock  WRK.N  on Thursday missed
Wall Street expectations for fourth-quarter sales on softening
retail demand for its containerboard and paper packaging goods. 
    Major packaging firms like International Paper  IP.N  and
Packaging Corp of America  PKG.N  are seeing waning demand after
consumers prioritized spending on essentials over paper packaged
goods.
    This has hit companies like WestRock that saw a surge in
sales during the pandemic when e-commerce demand soared as
retail customers needed packaging products to ship.
    However, these companies now face customer destocking as
retailers who are seeing a distressed consumer start to control
inventory and cut back on orders.
    WestRock's revenue fell nearly 8% to $4.99 billion in the
July-to-September period, missing analysts' average estimates of
$5.11 billion, according to LSEG data.
    Europe's largest paper packaging producer Smurfit Kappa,
which agreed to buy WestRock in September, also said demand for
its boxes slowed further in the third quarter.
    Even peers, Packaging Corp of America  PKG.N  and Amcor
 AMCR.K  trimmed their revenue projections highlighting the
weakness in demand with the former expecting pricing to remain
soft particularly in packaging and paper segments.
    The slump in net sales was driven by a 29.2% decrease in
Global Paper segment sales, which was partially offset by a 5.8%
increase in corrugated packaging segment sales. 
    WestRock, however, reported an adjusted profit per share of
81 cents for the quarter ended Sept. 30, topping analysts'
estimates of 74 cents, as the company benefited from price hikes
on its corrugated boxes and cost controls.
    The company's shares edged up nearly 1% premarket.

 (Reporting by Annett Mary Manoj; Editing by Shailesh Kuber)
 ((AnnettMary.Manoj@thomsonreuters.com;))