Smurfit Westrock Q3 2026: Adjusted EBITDA fell 7.5% to $1.2B as costs outran prices; 2026 outlook cut to $4.7B

Smurfit Westrock, the world's largest maker of paper-based packaging (cardboard boxes, containerboard and consumer cartons), reported a third quarter (three months to September 30, 2026) in which sales grew but profit fell, and it cut its full-year outlook. Net sales rose 2.0% to $8,161 million, while net income fell 10.6% to $219 million and diluted EPS fell from $0.47 to $0.42. The company's preferred profit measure, Adjusted EBITDA (earnings before interest, tax, depreciation and amortization, with restructuring and other items the company considers one-off stripped out), fell 7.5% to $1,205 million. That was about $95 million below the "approximately $1.3 billion" management had guided for this quarter in July. Full-year Adjusted EBITDA guidance is now about $4.7 billion, down from $4.9–5.1 billion.

This report is written from the earnings release and results presentation filed with the SEC on October 28, 2026 (8-K, Exhibits 99.1 and 99.2). The full 10-Q isn't filed yet, so there's no management discussion of the quarter beyond the release, the CEO's comments and the presentation's profit bridges.

Results

Gross margin is the share of sales left after the direct cost of making the product; operating margin is what's left after overheads and restructuring charges, before interest and tax. Cost of goods sold rose 4.5% ($6,721 million against $6,434 million) while sales rose 2.0%. That gap explains most of the lower profit. Overheads (selling, general and administrative costs) fell 3.7% to $927 million, which helped a little.

What moved Adjusted EBITDA

The presentation includes a "bridge" that splits the $97 million fall in Adjusted EBITDA into its causes:

The company names the main items in the "other" column: at group level energy −$88 million and freight −$88 million; in North America freight −$62 million and raw materials −$62 million; in EMEA & APAC energy −$70 million. The segment figures add up to $1,265 million. The $60 million gap to the group's $1,205 million is unallocated corporate cost.

By region

"Corrugated volume" means boxes shipped, adjusted for the number of working days.

• North America (58% of sales). Selling prices finally added to profit (+$95 million), and management says its mills are "sold out in all containerboard grades, and most consumer grades", with more linerboard price increases in September. But box shipments fell 3.4%, and freight and raw-material inflation cost $124 million. The presentation calls that "near term margin contraction". The volume line is still positive (+$18 million) even though box shipments fell. The release doesn't explain why; mill output (containerboard sold to others) is the likely source, but that's our inference, not the company's.
• EMEA & APAC (Europe, the Middle East, Africa and Asia-Pacific). Sales were flat, and energy costs alone took $70 million off EBITDA, more than the $28 million that volume and price added together. Management says containerboard price increases "are being passed on with the normal time lag" and expects them to be fully recovered in the first half of 2027.
• Latin America grew EBITDA by $10 million, but currency gave $12 million. Without the exchange-rate tailwind, profit in the region would have dipped slightly, as volume and price were both negative. In the quarter the company also agreed to buy CMPC's containerboard assets in Chile; the release gives no price or closing date.

Takeaway: The quarter's problem isn't demand or pricing power: prices added $111 million. The problem is that energy, freight and raw-material costs rose faster, and the company now says it won't catch up until 2027. The guidance cut from $4.9–5.1 billion to $4.7 billion is the clearest sign that the second-half recovery we flagged as a stretch in Q2 isn't arriving in 2026.

What the headline numbers hide

• GAAP profit looks better than the business. Impairment and restructuring costs fell to $26 million from $65 million, and costs tied to the Smurfit Kappa–WestRock merger (the "Combination") dropped to zero from $15 million. Add those back and pre-tax profit fell about 18% ($340 million against $416 million), against the reported 6.5% (to $314 million). That's why adjusted EPS fell 22% while GAAP EPS fell 11%.
• The tax rate went the other way. Tax took 30.3% of pre-tax profit, against 27.1% a year ago ($95 million on $314 million vs $91 million on $336 million). That makes GAAP net income look a bit worse, but it's smaller than the lower charges.
• Merger integration costs are finished. Only $1 million in nine months, against $72 million a year earlier. The release doesn't update synergy figures.
• Working capital is using cash. Operating cash flow fell 23% to $874 million. Inventory absorbed $173 million in the quarter, against $4 million a year ago. Over nine months receivables (money owed by customers) absorbed $711 million, against $249 million a year earlier, and stood at $4,946 million at September 30, up 16% since December, while nine-month sales rose only 1.3%. Some of that is seasonal and some reflects higher prices. Still, it's money customers owe that hasn't come in yet.
• The dividend is covered this quarter, not this year. Q3 free cash flow (operating cash flow minus $514 million of capital spending) was about $360 million, against $238 million of dividends. Over nine months free cash flow was about $240 million, against $712 million of dividends. Commercial paper (short-term borrowing) rose by $363 million in the same period. Total debt was $14,049 million at September 30 ($842 million current plus $13,207 million long-term), with $723 million of cash. Net debt was about $13.3 billion, down slightly from about $13.5 billion in June.
• Buybacks play no role. The cash flow statement shows no share repurchases, and shares outstanding rose slightly to 524.5 million from 522.3 million at December. EPS movements come from operations and charges, not share count.
• Guidance went down, not up. Full-year Adjusted EBITDA is now about $4.7 billion, against $4.9–5.1 billion in July, and Q3 came in about $95 million below July's guide.

On balance the quarter is flattered: GAAP EPS fell 11%, but adjusted EPS fell 22%, because $54 million less in restructuring and merger charges than last year cushioned the reported figure.

Did last time's read hold up?

Our Q2 2026 report said the full-year guidance "only works if Q4 is by far the strongest quarter of the year" and named three things to watch:

1. North American selling prices: they did turn positive, from a −$46 million impact in Q2 to +$95 million in Q3. That part held up.
2. Freight: it didn't ease. It cost $88 million at group level in Q3, against $90 million in Q2, and management expects $130 million more freight cost in Q4 than a year earlier.
3. Dividend coverage: covered in Q3 ($360 million of free cash flow against $238 million), but not over nine months, and borrowing rose.

The skepticism about the guidance was right: the company missed its own Q3 guide and cut the full year.

Outlook

Management's updated guidance for 2026 (from the presentation):

The CEO says the company has "implemented significant pricing initiatives across most paper grades" that "should more than offset input costs as these increases are passed through", with "the full benefits of which we expect to realize into 2027."

Our read: Nine-month Adjusted EBITDA was $3,421 million, so $4.7 billion implies about $1.28 billion in Q4. That's in line with the Q4 guide and only slightly above Q3's $1,205 million, so the bar is now much lower than in July. Two figures matter more. First, Q4 energy costs are expected to rise $230 million year on year, against $88 million in Q3, so price increases have to accelerate just to keep the margin flat. Second, capital spending of ~$2.3 billion for the year leaves about $700 million for Q4 alone (nine months: $1,603 million), the highest of the year, which will squeeze Q4 free cash flow just as the dividend takes another ~$238 million. What to watch in the Q4 report: whether the price line in the EBITDA bridge grows faster than the "other" cost line, whether North American box shipments stop falling, and whether receivables come back down at year-end.