Smurfit Westrock plc (SW)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of Smurfit Westrock’s financial condition and results of operations should be read in

conjunction with Smurfit Westrock’s Unaudited Condensed Consolidated Financial Statements and their related notes included

elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and their related notes for the

year ended December 31, 2025, as well as the information under the heading “Management’s Discussion and Analysis of the

Financial Condition and Results of Operations” that were disclosed in the Form 10-K for the year ended December 31, 2025, as filed

with the U.S. Securities and Exchange Commission (the “SEC”) on February 27, 2026 (the “2025 Form 10-K”). This discussion

contains forward-looking statements that involve risks and uncertainties. Smurfit Westrock’s future results could differ materially

from the results discussed below. More information regarding these risks and uncertainties and other important factors that could

cause actual results to differ materially from those in the forward-looking statements is set forth under the heading “Risk Factors” in

Part I, Item 1A. in the 2025 Form 10-K, and as may be updated in this and other subsequent Quarterly Reports on Form 10-Q. Please

also refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements” for additional information.

Unless the context otherwise requires, or unless indicated otherwise, “we”, “us”, “our”, “Smurfit Westrock” and “the Company”

refer to the business of Smurfit Westrock plc, its wholly-owned subsidiaries and its partially-owned consolidated subsidiaries.

OVERVIEW

Smurfit Westrock is one of the world's largest integrated manufacturers of paper-based packaging products in terms of volumes and

sales, with operations in North America, South America, Europe, Asia, Africa, and Australia. Smurfit Westrock partners with its

customers to provide differentiated, sustainable paper and packaging solutions that enhance its customers’ prospects of success in their

markets. For additional information, see “Part I, Item 1. Business” included in the Company’s Annual Report on Form 10-K.

EXECUTIVE SUMMARY

Smurfit Westrock’s net sales increased by $91 million, to $8,031 million in the three months ended June 30, 2026, from

$7,940 million in the three months ended June 30, 2025. The increase was primarily due to a net positive foreign currency impact that

was partially offset by a lower selling price mix. Smurfit Westrock’s net sales increased by $147 million, to $15,743 million in the six

months ended June 30, 2026, from $15,596 million in the six months ended June 30, 2025. The increase was primarily due to a net

positive foreign currency impact that was largely offset by a negative volume impact and a lower selling price mix.

Net income (loss) attributable to common shareholders increased by $117 million in the three months ended June 30, 2026 and

decreased by $202 million in the six months ended June 30, 2026. In addition to the increase in net sales, net income (loss)

attributable to common shareholders in the three months ended June 30, 2026 was primarily impacted by lower impairment and

restructuring costs, decreased raw material costs, lower downtime and lower transaction and integration-related expenses associated

with the Combination that were partially offset by an increase in freight costs, higher depreciation, depletion and amortization

expense and increased energy costs compared to the prior year quarter. Net income (loss) attributable to common shareholders

decreased by $202 million in the six months ended June 30, 2026 was primarily impacted by higher cost of goods sold, including

increased freight costs, higher depreciation, depletion and amortization expense, higher downtime and increased energy costs, as well

as the impact of accelerated depreciation for machine closures and adverse weather incurred in the first quarter of 2026, partially

offset by the increase in net sales. These increases were partially offset by lower impairment and restructuring costs, decreased raw

material costs and lower transaction and integration-related expenses associated with the Combination compared to the prior year

period.

Net cash provided by operating activities decreased by $95 million, to $969 million in the six months ended June 30, 2026, from

$1,064 million in the six months ended June 30, 2025, primarily due to a $106 million decrease in net income adjusted for non-cash

items, primarily including depreciation, depletion and amortization, impairment of assets, cash surrender value increase in excess of

premiums paid, share-based compensation expense, deferred income tax benefit, and pension and other postretirement funding more

than cost. Changes in operating assets and liabilities were a benefit of $11 million compared to the prior year period. During the six

months ended June 30, 2026, Smurfit Westrock invested $1,089 million in capital expenditures. The Company’s net cash inflow from

changes in debt was $439 million, and it paid $474 million of cash dividends to shareholders. See the section entitled “Liquidity and

Capital Resources” below for additional information.

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Refer to “Results of Operations” and “Segment Information” for a detailed review of Smurfit Westrock’s performance.

SIGNIFICANT FACTORS AND TRENDS AFFECTING SMURFIT WESTROCK’S RESULTS

Smurfit Westrock’s operations have been, and will continue to be, affected by many factors, some of which are beyond the Company’s

control. Smurfit Westrock’s net sales are primarily derived from the sale of containerboard, corrugated containers, paperboard,

consumer packaging, and other paper-based packaging products. As such, Smurfit Westrock’s net sales during any period are largely

influenced by volumes, prices and costs of the corrugated containers and consumer packaging products that Smurfit Westrock sells

during that period.

Volumes

In general, demand for corrugated containers and consumer packaging is closely correlated with overall economic growth and activity.

It also directionally correlates with levels of industrial production and is impacted by the trends affecting the choice of medium (paper,

plastic, glass, metal, or wood) used in the packaging of these products. As a result, demand is driven by the need for: (i) packaging

products for consumer and industrial goods, (ii) higher value-added corrugated products used for point-of-sale displays and consumer

and shelf-ready packaging, and (iii) packaging of pharmaceutical products and the growth of related industries. Normal patterns of

demand growth can be disrupted by other macroeconomic trends, including inflation, pandemics (such as the COVID-19 pandemic

and related lockdowns), and global economic factors such as a recession and geopolitical developments (including tariffs or other

trade restrictions), among others.

Consumer patterns also play a significant role in demand for corrugated packaging and consumer packaging. In recent years, shifting

consumer behaviors have accelerated, particularly with the rise of e-commerce and increased awareness of unsustainable packaging

solutions. These trends have, to date, been beneficial for paper-based packaging, which is typically made from renewable, recyclable

materials. Changing demographics can also influence demand trends in the pharmaceutical industry, a major user of consumer

packaging.

Our volumes may also be impacted in certain periods by scheduled or unscheduled maintenance, particularly in our mill system, as

well as economic downtime as we match our supply with customer demand.

Prices and Costs

Prices of corrugated containers and consumer packaging are primarily a function of the cyclical nature of Smurfit Westrock’s industry,

capacity and competition in the markets it operates in, prevailing raw material prices, and other operating costs, such as energy,

chemicals, and transportation, overlaying supply and demand balances.

As paper costs generally represent a large portion of the cash cost of production for corrugated containers or consumer packaging,

containerboard price movements tend to impact the prices of corrugated containers, and paperboard price movements tend to impact

the prices of consumer packaging. In turn, the cost of paper is influenced by movements in the price of its major raw materials—wood

or recycled paper—along with other supply and demand factors. Smurfit Westrock’s production processes are energy-intensive,

making production costs also sensitive to the price of energy (primarily gas and electricity), which have historically been volatile.

Other key cost drivers include employee benefit expenses, largely determined by workforce size, and shipping and handling costs,

which are generally affected by fuel prices and overall labor inflation.

While many of Smurfit Westrock’s customer contracts include price adjustment clauses that allow cost increases to be passed on to

customers, these clauses may not in all cases be effective to offset rising costs. Additionally, for corrugated and consumer packaging

products, even when Smurfit Westrock is able to implement price increases, there is typically a three- to six-month lag between raw

material price hikes and the realization of higher pricing from customers.

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Foreign Currency Effects

Smurfit Westrock operates in multiple countries across North America, South America, Europe, Asia, Africa, and Australia. As a

result, currency fluctuations can have both direct and indirect impacts on its financial statements, which are presented in U.S. dollars.

Refer to “Results of Operations” and “Segment Information” for information on the impact of foreign currency.

RESULTS OF OPERATIONS

The following table summarizes Smurfit Westrock’s consolidated results for the periods presented ($ in millions):

Results of operations for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025

Net Sales

Net sales increased by $91 million, to $8,031 million in the three months ended June 30, 2026, from $7,940 million in the three

months ended June 30, 2025. This increase was primarily due to a $146 million net positive foreign currency impact that was partially

offset by a lower selling price mix of $60 million.

Net sales increased by $147 million, to $15,743 million in the six months ended June 30, 2026, from $15,596 million in the six months

ended June 30, 2025. This increase was primarily due to a $462 million net positive fo

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF

OPERATIONS OF SMURFIT WESTROCK

The following discussion and analysis of Smurfit Westrock’s financial condition and results of operations should be read in

conjunction with Smurfit Westrock’s audited Consolidated Financial Statements and their related notes for the year ended

December 31, 2025 and our audited Consolidated Financial Statements and their related notes for the year ended December 31,

2024. This discussion contains forward-looking statements that involve risks and uncertainties. Smurfit Westrock’s future results could

differ materially from the results discussed below. Factors that could cause or contribute to such differences include, but are not

limited to, those identified below and those discussed in the Item 1A. Risk Factors. Please refer to the section above entitled

“Cautionary Note Regarding Forward-Looking Statements" for additional information.

Smurfit Kappa was determined to be the accounting acquirer in the Combination; therefore, the historical consolidated financial

statements of Smurfit Kappa for periods prior to the Combination were also considered to be the historical financial statements of the

Company. Unless otherwise specified or the context otherwise requires, all references to the “Company” and “Smurfit Kappa” refer

to Smurfit Kappa Group plc and its subsidiaries and their operations when referring to periods prior to the closing of the

Combination, and references to the “Company” and “Smurfit Westrock” refer to the combined company, Smurfit Westrock and its

subsidiaries, including, among others, Smurfit Kappa and WestRock, when referring to periods after the Combination.

OVERVIEW

Smurfit Westrock is one of the world's largest integrated manufacturers of paper-based packaging products in terms of volumes and

sales, with operations in North America, South America, Europe, Asia, Africa, and Australia. Smurfit Westrock partners with its

customers to provide differentiated, sustainable paper and packaging solutions that enhance its customers’ prospects of success in their

markets.

Transaction Agreement and Combination with WestRock

Smurfit Westrock was created in July 2024 as a strategic combination between Smurfit Kappa Group plc (re-registered as Smurfit

Kappa Group Limited) (“Smurfit Kappa”) and WestRock Company (“WestRock”). The Combination closed on July 5, 2024. Upon

completion of the Combination, Smurfit Kappa and WestRock each became wholly-owned subsidiaries of Smurfit Westrock. As noted

above, Smurfit Kappa was determined to be the accounting acquirer of WestRock. Accordingly, the financial statements reflected in

these Consolidated Financial Statements and the discussions below include WestRock's financial position and results of operations for

the period subsequent to the completion of the Combination on July 5, 2024. Consequently, the results reported for the twelve months

ended December 31, 2024 do not include WestRock’s financial results for the first five days of July or any prior periods. Therefore, in

fiscal 2025 acquired WestRock operations were included for an incremental six months and five days compared to fiscal 2024.

Refer to “Note 2. Acquisitions” of the Consolidated Financial Statements for additional information related to the Combination and

the accounting for the Combination.

Following the completion of the Combination, Smurfit Westrock reassessed the Company’s reportable segments due to changes in

organizational structure and how the Company’s chief operating decision maker (“CODM”) makes key operating decisions, allocates

resources and assesses the performance of the business. Accordingly, Smurfit Westrock began to manage the combined business as

three reportable segments: (1) North America, (2) Europe, MEA and APAC, and (3) LATAM. Refer to “Note 3. Segment

Information” of the Consolidated Financial Statements for further discussion of the Company’s segment reporting structure.

A detailed discussion of the fiscal 2025 year-over-year changes can be found below and a detailed discussion of fiscal 2024 year-over-

year changes can be found in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in

our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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EXECUTIVE SUMMARY

Smurfit Westrock’s net sales increased by $10,070 million, to $31,179 million in the year ended December 31, 2025, from

$21,109 million in the year ended December 31, 2024. This increase was primarily due to the impact of $9,845 million related to the

acquisition of WestRock. Excluding the impact of this acquisition, net sales increased by $225 million primarily resulting from a

$487 million positive impact due to a higher selling price mix and a $452 million net positive foreign currency impact, partially offset

by a negative volume impact of $716 million. See “Segment Information” below for more detail on Smurfit Westrock’s segment

results.

Net income attributable to common shareholders increased by $380 million, to $699 million in the year ended December 31, 2025,

from $319 million in the year ended December 31, 2024. The increase was primarily due to the operations acquired in the

Combination. In the year ended December 31, 2025, the positive impact of the acquired operations was partially offset by increased

interest expense, net, post Combination, and we incurred increased impairment and restructuring costs. In the year ended

December 31, 2024, we incurred higher transaction and integration-related expenses associated with the Combination and a charge of

$224 million for the amortization of the fair value step up on inventory recognized on WestRock’s inventory acquired. See “Note 5.

Impairment and Restructuring Costs” and “Note 6. Transaction and Integration-related Expenses Associated with the Combination” of

the Consolidated Financial Statements for additional information. Refer to “Results of Operations” and “Segment Information” for a

detailed review of Smurfit Westrock’s performance.

Net cash provided by operating activities increased by $1,909 million, to $3,392 million in the year ended December 31, 2025, from

$1,483 million in the year ended December 31, 2024, primarily due to a $1,489 million increase in net income adjusted for non-cash

items, primarily including depreciation, depletion and amortization, impairment charges, cash surrender value increase in excess of

premiums paid, share-based compensation expense, deferred income tax benefit, and pension and other postretirement funding more

than cost. The increase in net cash provided by operating activities also included a $420 million decrease in the cash outflows from

changes in operating assets and liabilities. During the year ended December 31, 2025, Smurfit Westrock invested $2,192 million in

capital expenditures. The Company’s net cash outflow from changes in debt was $304 million, and it paid $900 million of cash

dividends to shareholders. See the section entitled “Liquidity and Capital Resources” below for additional information.

SIGNIFICANT FACTORS AND TRENDS AFFECTING SMURFIT WESTROCK’S RESULTS

Smurfit Westrock’s operations have been, and will continue to be, affected by many factors, some of which are beyond the Company’s

control. Smurfit Westrock’s net sales are primarily derived from the sale of containerboard, corrugated containers, paperboard,

consumer packaging, and other paper-based packaging products. As such, Smurfit Westrock’s net sales during any period are largely

influenced by volumes, prices and costs of the corrugated containers and consumer packaging products that Smurfit Westrock sells

during that period.

Volumes

In general, demand for corrugated containers and consumer packaging is closely correlated with overall economic growth and activity.

It also directionally correlates with levels of industrial production and is impacted by the trends affecting the choice of medium (paper,

plastic, glass, metal, or wood) used in the packaging of these products. As a result, demand is driven by the need for: (i) packaging

products for consumer and industrial goods, (ii) higher value-added corrugated products used for point-of-sale displays and consumer

and shelf-ready packaging, and (iii) packaging of pharmaceutical products and the growth of related industries. Normal patterns of

demand growth can be disrupted by other macroeconomic trends, including inflation, pandemics (such as the COVID-19 pandemic

and related lockdowns), and global economic factors such as a recession and geopolitical developments (including tariffs or other

trade restrictions), among others.

Consumer patterns also play a significant role in demand for corrugated packaging and consumer packaging. In recent years, shifting

consumer behaviors have accelerated, particularly with the rise of e-commerce and increased awareness of unsustainable packaging

solutions. These trends have, to date, been beneficial for paper-based packaging, which is typically made from renewable, recyclable

materials. Changing demographics can also influence demand trends in the pharmaceutical industry, a major user of consumer

packaging.

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Our volumes may also be impacted in certain periods by scheduled or unscheduled maintenance, particularly in our mill system, as

well as economic downtime as we match our supply with customer demand.

Prices and Costs

Prices of corrugated containers and consumer packaging are primarily a function of the cyclical nature of Smurfit Westrock’s industry,

capacity and competition in the markets it operates in, prevailing raw material prices, and other operating costs, such as energy,

chemicals, and transportation, overlaying supply and demand balances.

As paper costs generally represent a large portion of the cash cost of production for corrugated containers or consumer packaging,

containerboard price movements tend to impact the prices of corrugated containers, and paperboard price movements tend to impact

the prices of consumer packaging. In turn, the cost of paper is influenced by movements in the price of its major raw materials—wood

or recycled paper—along with other supply and demand factors. Smurfit Westrock’s production processes are energy-intensive,

making production costs also sensitive to the price of energy (primarily gas and electricity), which have historically been volatile.

Other key cost drivers include employee benefit expenses, largely determined by workforce size, and shipping and handling costs,

which are generally affected by fuel prices and overall labor inflation.

While many of Smurfit Westrock’s customer contracts include price adjustment clauses that allow cost increases to be passed on to

customers, these clauses may not in all cases be effective to offset rising costs. Additionally, for corrugated and consumer packaging

products, even when Smurfit Westrock is able to implement price increases, there is typically a three- to six-month lag between raw

material price hikes and the realization of higher pricing from customers.

Foreign Currency Effects

Smurfit Westrock operates in multiple countries across North America, South America, Europe, Asia, Africa, and Australia. As a

result, currency fluctuations can have both direct and indirect impacts on its financial statements, which are presented in U.S. dollars.

RESULTS OF OPERATIONS

The following table summarizes Smurfit Westrock’s consolidated results for the years ended December 31, 2025 and December 31,

2024 ($ in millions):

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