International Paper's North American profit doubled to $427 million as a $1,377 million EMEA goodwill charge drove a net loss

How IP's two box businesses report

IP is now a corrugated packaging company in two halves. Packaging Solutions North America makes containerboard, the liner and fluting papers that form corrugated board, and converts most of it into boxes in its own plants. Packaging Solutions EMEA is the former DS Smith, the UK box maker IP bought in January 2025 for about $9.9 billion in shares.

The company reports each segment’s net sales and operating profit every quarter. Operating profit is after depreciation, so closures and machine conversions, which bring forward depreciation, move it sharply. Group adjusted EBITDA, IP’s main non-GAAP profit measure, adds depreciation back and excludes items IP treats as special, such as impairments and separation costs¹.

Goodwill is the part of a purchase price that is not matched by identifiable assets. Under US accounting rules a company tests it against the fair value of the business it relates to, and writes it down when the carrying value is higher. The charge is non-cash: it lowers reported earnings and equity but does not move cash.

IP has now done that twice for EMEA. It recorded $2,467 million of goodwill impairment for the EMEA reporting unit as of 31 December 2025, as SPI reported on 15 October, and adds $1,377 million in the third quarter of 2026. The Q3 release says management measured the current fair value of the segment relative to its carrying value to reach the new figure¹.

The chief executive’s statement in the release linked the quarter to the plan for Europe in one line.

What has changed since IP confirmed sale talks on 15 October

14 October: a name and a listing route. IP said the EMEA business would be separated by a spin-off with a London Stock Exchange listing and a Level II American depositary receipt programme on the New York Stock Exchange, according to its Capital Markets Day release. It set the event for 3 November in London, from 13:00 to 17:00 GMT⁵.

15 October: a parallel sale process. A day later IP’s statement on a possible sale said it was evaluating unsolicited inbound inquiries for the EMEA Packaging Business and was in talks with potential bidders. It called the process early stage and said there was no certainty of a sale⁴.

28 October: separation only. The Q3 release does not mention a sale or the inquiries. It says IP has made significant progress preparing to separate the EMEA business into an independent company to be known as DS Smith plc. Its forward-looking statements keep the door open, citing the possibility that, after an evaluation of strategic alternatives, the separation could take a different form¹.

28 October: a second write-down. The $1,377 million pre-tax goodwill impairment came with no tax benefit, so it cost $1,377 million after tax as well. By SPI’s calculation, IP has now written down $3,844 million of EMEA goodwill in nine months, against $4,048 million of provisional goodwill it recorded on DS Smith in the first quarter of 2025; the final purchase accounting figure may differ from the provisional one.

28 October: no more EMEA guidance. IP says it is no longer including Packaging Solutions EMEA financial guidance, citing the planned separation and UK regulatory requirements, and does not expect to provide it in future. A London listing needs a prospectus approved by the UK Financial Conduct Authority, and IP’s 14 October release named that as one of the conditions⁵.

28 October: the Capital Markets Day stands. The release repeats that the EMEA leadership team will hold a Capital Markets Day in London on 3 November. IP’s investor page promotes the DS Smith Capital Markets Day and describes the plan as a separation into an independent, publicly traded company, subject to customary conditions⁶.

What IP reported on 28 October

The filing. IP furnished its results under Item 2.02 of a Form 8-K dated 28 October, with the release as Exhibit 99.1. It calls the figures preliminary and unaudited, held a webcast at 10 a.m. Eastern Time, and expects to file its Form 10-Q on or about 4 November².

Group sales. Net sales were $6,197 million against $6,222 million a year earlier and $6,004 million in the second quarter. Over nine months they rose to $18,172 million from $17,628 million, the release shows; the 2025 period includes DS Smith from February only.

Group profit. The loss from continuing operations was $1,097 million, or $2.07 a diluted share, against $426 million a year earlier and $12 million in the second quarter. Discontinued operations, the Global Cellulose Fibers business sold on 23 January 2026, cost a further $29 million, for a net loss of $1,126 million¹.

Adjusted figures. Adjusted operating earnings were $197 million, or $0.37 a share, against a loss of $224 million, or $0.43, a year earlier and $18 million, or $0.04, in the second quarter. Adjusted EBITDA from continuing operations was $843 million against $859 million and $587 million, and $13 million above the top of July’s guidance range, by SPI’s calculation.

Special items. Net special items cost $1,430 million before tax and $1,305 million after tax, or $2.46 a share. Besides the impairment they include $65 million of EMEA separation costs, $9 million of severance and $2 million of NORPAC deal costs, offset by a $30 million pre-tax gain on asset sales at the closed Compton, California box plant and $116 million of tax benefits.

Cash. Operating cash flow was $339 million against $605 million, and capital spending $606 million against $455 million, for free cash flow of minus $267 million, a negative figure IP reports in brackets as $(267) million. Over nine months free cash flow was a negative $180 million against a negative $414 million¹.

The balance sheet. Goodwill fell to $3,910 million on 30 September from $5,326 million at the end of 2025. Cash was $815 million against notes payable and current debt of $1,963 million and long-term debt of $7,728 million, which leaves net debt of about $8,876 million, by SPI’s calculation; the release does not state a net debt figure.

Inside the two segments

North America: price did the work. PS North America’s sales rose to $3,880 million from $3,688 million in the second quarter, and its operating margin to about 11.0% from 5.5%, by SPI’s calculation. The release lists higher sales prices first, partly offset by lower volumes as demand softened. Lower planned maintenance outage costs, better mill performance and the absence of the Riverdale paper machine conversion cost also helped¹.

North America: the costs. Against those gains the release sets higher recovered fibre, energy and fuel costs, higher distribution freight and higher depreciation. Depreciation rose because the quarter carried two more months of the NORPAC mill bought in the second quarter and new investment in box plants. The quarter also included a full three months of NORPAC earnings, against one month in the second quarter.

North America: Pine Hill. The release says suspended operations at Pine Hill weighed on results, without giving an amount. In July IP’s second-quarter release described a temporary mill closure at Pine Hill, Alabama, and built an $85 million negative impact into its third-quarter guidance³. SPI has not yet confirmed when, or whether, the mill restarts.

North America: the year-ago loss. The comparison with a $166 million loss in the third quarter of 2025 is flattered by that quarter’s charges. Group depreciation was $1,099 million then, against $526 million now, and the 2025 quarter carried $675 million of accelerated depreciation tied to mill closures and strategic actions, though the release does not split it by segment.

EMEA: volumes and lagging box prices. PS EMEA sales were $2,280 million against $2,287 million in the second quarter. Higher paper prices were more than offset by lower volumes in what IP calls a soft market, and box prices lagged the higher paper prices. Cost-out actions and lower volumes reduced costs, offset in part by higher energy, and accelerated depreciation from cost-out actions rose¹.

EMEA: four quarters of losses. The segment’s operating losses in the four quarters to September were $223 million, $51 million, $80 million and $73 million, a total of $427 million on sales of $9,190 million, an operating margin of minus 4.6%, by SPI’s calculation. Separation costs, which sit outside segment profit, reached $119 million in nine months: $54 million in the first half and $65 million in the third quarter.

SPI calculation (implied nine months): IP’s full-year PS North America adjusted EBITDA guidance of $2,270 million to $2,310 million, less its fourth-quarter range of $700 million to $740 million, leaves about $1,570 million for January to September at the midpoints. IP does not publish segment adjusted EBITDA for past quarters, so this is arithmetic, not a reported figure.

Who gains and who pays after IP's third quarter

IP’s North American box customers. They are paying the price increases that lifted segment profit. The release credits higher sales prices as the main driver of the rise to $427 million, while volumes fell. IP’s fourth-quarter guidance of $460 million to $500 million suggests it expects more of the same.

IP shareholders. They carry the write-down. The $1,377 million impairment was the main reason for a $1,126 million net loss, and free cash flow was negative $267 million in the quarter as capital spending of $606 million exceeded operating cash flow. Nine-month dividends paid were $735 million¹.

Future DS Smith plc shareholders. A lower goodwill balance means the business enters any listing with less acquisition value on its books. The segment’s losses, $73 million in the third quarter, are what the 3 November outlook must address.

Potential bidders. The parties IP said it was talking to on 15 October now face a unit that IP itself carries at a lower value, after a fair value test, but they have no new forecast from IP. SPI has not yet confirmed whether talks continue.

European box buyers. IP says EMEA box prices lagged paper prices. If the business closes that gap under any owner, box invoices in Europe rise.

Recovered fibre, energy and freight suppliers. IP names higher recovered fibre, energy, fuel and freight costs in North America and higher energy in EMEA, so these suppliers are taking a larger share of each box’s cost.

Compton and Pine Hill sites. The Compton box plant is closed, and IP booked a $30 million pre-tax gain on selling its assets. Pine Hill’s operations are suspended.

The pinch point: an EMEA business with no forecast before its listing

IP has taken away the one number investors and buyers had for the European business: its guidance. The release links that to UK regulatory requirements around the planned separation, and it leaves the 3 November Capital Markets Day as the first forward view from the business that will be DS Smith plc¹.

That event now carries more weight. The segment has posted operating losses in five straight quarters, and IP’s two impairments total $3,844 million, by SPI’s calculation. A fair value low enough to trigger a second write-down in nine months is a signal about what IP thinks the business is worth today, though the release gives no valuation.

The North American turnaround raises the stakes on the other side. A North American business guiding to $1.3 billion to $1.4 billion of 2026 operating profit is, on IP’s figures, carrying a European unit that lost $427 million over four quarters. The separation, whether by listing or sale, would leave IP reporting the North American business alone.

How IP compares with Smurfit Westrock and PCA

All three groups report in US dollars, but on different profit measures and segment scopes, so the figures sit side by side and are not ranked. IP gives segment operating profit; Smurfit Westrock gives segment adjusted EBITDA; PCA gives Packaging segment EBITDA excluding special items.

Smurfit Westrock’s North America segment earned adjusted EBITDA of $760 million in the third quarter, a 15.6% margin, against $810 million a year earlier, and its Europe, MEA and APAC segment $379 million, a 13.4% margin, against $419 million, according to SPI’s Smurfit Westrock story. Group adjusted EBITDA was $1,205 million¹².

PCA’s net sales were $2,601.7 million and its Packaging EBITDA excluding special items $577.7 million, against $491.8 million a year earlier. It guided fourth-quarter earnings to $2.81 a share excluding special items, as SPI’s PCA story reported¹³.

By SPI’s reading, the common thread in North America is price over volume: IP and PCA both describe rising prices with flat or lower demand. In Europe the picture splits. Smurfit Westrock’s European segment stayed profitable on its measure, while IP’s EMEA segment lost $73 million at operating level and said its box prices lagged paper.

What the PPWR means for the business becoming DS Smith plc

The EU Packaging and Packaging Waste Regulation (PPWR) has applied in every Member State since 12 August 2026, and SPI tracks its rules in the EU section of the SPI Regulation Tracker⁷. Two of its rules bear directly on a European corrugated network.

Under record PR-EU-009, operators filling grouped, transport or e-commerce packaging must keep the empty space ratio at or below 50%, from 1 January 2030 or three years after the implementing acts on the calculation method, whichever is later. Those acts are due before 12 February 2028⁸. Right-sized boxes use less board per shipment, which matters to a seller of board by the tonne.

Under record PR-EU-010, all packaging placed on the market must be recyclable, with design-for-recycling tests applying from 1 January 2030 or 24 months after the delegated acts, whichever is later⁹. Plain corrugated board faces fewer open questions than coated or laminated formats, and SPI has not yet confirmed how the delegated acts will grade boxes with barrier coatings.