DS Smith capital markets day: 29 box plants close as International Paper's spin-off targets mid-teens margins

How the DS Smith spin-off from International Paper works

DS Smith was a London-listed box maker until IP bought it in January 2025, as SPI reported in its story on the sale talks. Inside IP it became Packaging Solutions EMEA, and on 29 January 2026 IP said it would separate the business into an independent listed company. That company will be DS Smith plc.

The RNS sets out the listing route. Shares will sit in the Equity Shares (Commercial Companies) category of the FCA Official List and trade on the London Stock Exchange Main Market, and a Level II American depositary receipt programme will list on the New York Stock Exchange¹. The Form 20-F filed on 28 October is the US registration document for those ADRs.

The business described on 3 November has revenue of about EUR 8 billion, 14 paper mills and about 180 packaging sites in 29 countries, according to the RNS. The presentation adds about 30,000 employees and more than 30,000 customers². It spent about EUR 1.1 billion on capex over the last two years, and the RNS says mill upgrades are largely complete.

The market it sells into is large and slow. Slide 13 of the presentation puts European corrugated demand at about EUR 45 billion a year, citing Smithers for 2025, and expects demand of about 56 billion square metres in 2029. It forecasts industry growth of 1% to 2% a year over the medium term from 2027, which is why the plan leans on cost rather than volume².

IP has already written the business down twice. It booked EMEA goodwill impairments of USD 2,467 million as of 31 December 2025 and USD 1,377 million in the third quarter of 2026, as SPI’s IP Q3 story reported, and it stopped giving EMEA guidance on 28 October. The capital markets day therefore gave the first forward view of the unit since then.

The capital markets day page lists the hosts as the future chief executive and future chief financial officer of DS Smith plc, and the event ran from 13:00 to 17:00 GMT³.

What was announced at the DS Smith capital markets day

Timing. The RNS says the separation remains on track within or ahead of the 12 to 15 month timeline set on 29 January 2026, which runs to about late April 2027 at the outer end, by SPI’s reading. The presentation is more precise. Its glossary on slide 105 says the prospectus is due in late November or early December and admission of the shares and ADRs is targeted for early to mid December².

Who will own it. Slide 93 says IP’s retained 19.9% shareholding is agreed and the relationship agreement is well progressed, and slide 94 says that stake will be held through ordinary shares admitted in London. The board-in-waiting is in place, standalone systems are running, and the FCA and London Stock Exchange processes are well progressed, according to the same slide.

2026 guidance. Adjusted EBITDA is guided to EUR 730 million to EUR 780 million, a 9.0% to 9.7% margin. The RNS ties the range to Dutch TTF gas prices: the low end assumes about EUR 110 per MWh for the rest of 2026 and the high end about EUR 70¹. The presentation says about half of the remaining 2026 energy exposure is hedged.

Cash and debt. Capex is guided to EUR 550 million to EUR 570 million and one-off cash costs to EUR 120 million to EUR 130 million. Net debt is guided at about 2.3 to 2.5 times adjusted EBITDA, after IFRS 16 leases.

Cost-out. The RNS puts annualised initial savings at about EUR 480 million, about 14% of operating costs, mostly at run-rate by the end of 2027. About EUR 200 million is expected in 2026, and slide 81 of the presentation leaves about EUR 280 million still to come.

Footprint. About 15% of packaging sites are announced for closure, with volume expected to be largely maintained, the RNS says. The presentation counts 29 packaging sites, 1 mill, 2 recycling depots and 4 offices, and about 3,100 fewer roles, about 10% of the 2025 workforce².

Service. On-time-in-full delivery ran at 96% to 97% in the year to September 2026, and the presentation puts quality at about 250 defective parts per million delivered. Slide 19 adds that more than 90% of the top 100 customers have dealt with the business for at least 10 years, and more than half of them are served in at least three of its seven sub-regions.

Capital allocation. The RNS lists continued investment first, then a progressive dividend growing to a payout of 30% to 50% of adjusted earnings, then selective bolt-on acquisitions over the medium term, and returns of surplus capital last. The presentation sets the first dividend payment for the second half of 2027, paid in two instalments a year².

The RNS makes no mention of a sale or of bidders. Its forward-looking statements say only that, after an evaluation of strategic alternatives, the separation may take a different form from the one first planned¹.

The DS Smith footprint plan in detail

The presentation shows where the closures fall only in part. Slide 45 covers East EMEA, where the network falls from 18 sites to 13. The closed sites named there are Vogošća, in the deck’s Croatia and Bosnia and Herzegovina sub-region, Brestanica in Slovenia, and Székesfehérvár, Tiszaújváros and Sárvár in Hungary².

In Spain, slide 44 shows the Griñón plant near Madrid exited, with its volume moved to the Villalbilla and Torrejón plants. No slide lists all 29 packaging closures by country, so SPI has not yet confirmed where the other 23 sit.

Germany carries an older round. IP said in an RNS of 12 November 2025 that it proposed to close five German sites and partly close a sixth, affecting about 500 roles by the end of 2026, under its post-offer intention statements for DS Smith⁵. SPI has not yet confirmed whether those sites are inside the 29.

Volume is moving faster than the sites are closing. Slide 43 shows about 60% of targeted volumes already transferred, against 75% by the end of 2026 and 100% by the end of 2027. Slide 46 adds one managerial layer removed and sub-regions cut from 13 to 7, and slide 79 a cut of about 20% in procurement suppliers.

The mill side is smaller. The RNS counts 14 paper mills after one closure, and the presentation names Viana in Portugal, Lucca in Italy, Rouen in France and Kemsley in the UK among them. It does not name the mill that closes, and SPI has not yet confirmed its location or capacity in tonnes.

SPI calculation (site count): slide 11 shows DS Smith with 178 packaging sites before 2025 and IP adding 18, after 5 were sold for antitrust approval. That is 196 sites, and 29 closures are 14.8% of them, which matches the RNS’s figure of about 15%. The remaining 167 do not match the RNS figure of about 180 sites, and SPI has not yet confirmed how DS Smith counts sites still in closure.

Who gains and who pays as DS Smith cuts costs

Fresh and processed food buyers. Food is the largest customer group at 44% of 2025 revenue, slide 7 of the presentation shows. These buyers carry most of the volume moving between plants, and their packs, often shelf-ready trays and chilled-chain cases, need line trials when the supplying plant changes.

Industrial buyers. At 29% of revenue, industrial customers are the second group. Their heavy-duty boxes depend on kraft-based grades, where DS Smith covers only about 38% of its own needs from its mills².

Box buyers in Spain, Hungary, Slovenia and the Balkans. These are the markets the presentation names. A buyer served from Griñón or one of the five East EMEA sites now receives from a different plant, with new lead times, delivery points and, in some cases, new board specifications.

Third-party paper sellers. DS Smith runs a short paper model. The glossary says it is structurally a net buyer of containerboard, buying about 1.8 million tonnes a year, so outside mills keep a large customer. Slide 34 shows 2025 supply of about 3.8 million tonnes of recycled containerboard and 1.3 million tonnes of kraft. Slide 33 puts integration at about 75% of recycled containerboard needs and about 38% of kraft needs, while the glossary gives about 60% of testliner demand, a different basis that the deck does not reconcile.

Employees and suppliers. About 3,100 roles go, about 10% of the 2025 workforce, and the procurement supplier base is about 20% smaller².

IP shareholders. IP keeps 19.9% of DS Smith plc, so it shares in any margin gain. It also carried the EMEA losses: its PS EMEA segment lost USD 73 million at operating level in the third quarter, as SPI’s IP Q3 story reported.

The pinch point: savings against a price lag

The plan depends on keeping savings that a soft market could absorb. The presentation says announced paper price increases pass through to indexed packaging customers with a lag, and slide 81, an illustrative bridge, assumes minimal further pricing benefit over the medium term². The bridge runs from the 2026 margin through the remaining savings and lagged price increases, less typical cost inflation, to a mid-teens margin.

SPI calculation (the margin bridge): EUR 480 million at about 14% of operating costs implies an operating cost base of about EUR 3.4 billion. The 2026 guidance range also implies revenue of about EUR 8.0 billion to EUR 8.1 billion. Slide 81 counts about EUR 280 million of the savings as still to come. Added to the EUR 755 million midpoint, that gives about EUR 1,035 million, or about 12.9% of EUR 8 billion; adding the full EUR 480 million would count the roughly EUR 200 million expected in 2026 twice.

SPI calculation (debt and capex): net debt of 2.3 to 2.5 times guided EBITDA of EUR 730 million to EUR 780 million points to roughly EUR 1.7 billion to EUR 1.95 billion at the end of 2026. Capex at the 6% medium-term level would be about EUR 480 million on EUR 8 billion of revenue, against EUR 550 million to EUR 570 million guided for 2026, so lower spending is part of the cash plan. About 3,100 roles at about 10% of the workforce implies roughly 31,000 staff in 2025.

Energy is the other variable. The EUR 50 million spread in 2026 guidance turns on a gap of about EUR 40 per MWh in TTF gas, and only about half of the remaining 2026 exposure is hedged, the presentation says. Paper mills burn gas for steam and drying, so a cold winter can absorb savings as fast as the closures deliver them.

How DS Smith compares with Smurfit Westrock and Stora Enso

Three European box makers have now given numbers for 2026. Smurfit Westrock’s Europe, MEA and APAC segment earned adjusted EBITDA of USD 379 million in the third quarter, a 13.4% margin, as SPI’s Smurfit Westrock story reported. That segment reports in US dollars and includes Asia Pacific.

Stora Enso’s Integrated Packaging division, which combines containerboard and corrugated boxes, earned adjusted EBIT of EUR 16 million in the third quarter, a 2.7% margin, according to SPI’s Stora Enso story. Adjusted EBIT is struck after depreciation, so it sits below an EBITDA margin on the same business.

IP’s PS EMEA segment, the business becoming DS Smith plc, lost USD 73 million at operating level on sales of USD 2,280 million in the third quarter. DS Smith’s 2026 guidance of a 9.0% to 9.7% adjusted EBITDA margin is the first full-year forecast for the unit since IP withdrew EMEA guidance on 28 October⁹.

What EU rules add to the cost of a corrugated box

DS Smith’s customers also pay packaging fees on the boxes they put on the market. The rates differ widely across the euro schemes in SPI’s fee data, and they differ again by whether a box reaches households or stays in commercial flows⁷.

SPI calculation (fees on 1,000 tonnes of boxes): at 2026 rates, 1,000 tonnes of plain paper and board costs EUR 310,400 at SPV in Portugal’s urban flow and EUR 7,700 in its non-urban flow, EUR 258,100 at Citeo in France and EUR 17,000 at Verpact in the Netherlands. Austria’s ARA charges EUR 208,000 on household paper and EUR 70,000 on commercial paper.

Most corrugated shipping cases end up at retail back doors and warehouses, so the commercial line usually applies where a scheme has one. The gap is large: ARA’s commercial rate is about a third of its household rate, and SPV’s non-urban rate is about 2.5% of its urban rate, by SPI’s calculation.

The PPWR adds design duties from 2030. Record PR-EU-009 in the SPI Regulation Tracker for the EU caps empty space in grouped, transport and e-commerce packaging at 50%, from 1 January 2030 or three years after the measuring acts, whichever is later. Record PR-EU-006 sets a 40% reuse target for transport packaging from 2030, and recital 95 exempts cardboard boxes from a stricter rule for certain flows⁶.