filings.toolsItem 8. Financial Statements and Supplementary Data
212K characters. Original on sec.gov · Markdown
Item 8. Financial Statements and Supplementary Data
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
SMURFIT WESTROCK PLC
| Page | |
| Report of Independent Registered Public Accounting Firm (Auditor Name KPMG, Auditor Location: Dublin, Ireland, PCAOB ID: 1116) | 69 |
| Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024 | 71 |
| Consolidated Statements of Operations for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 | 72 |
| Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 | 73 |
| Consolidated Statements of Cash Flows for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 | 74 |
| Consolidated Statements of Changes in Equity for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 | 75 |
| Notes to Consolidated Financial Statements | 76 |
Repo****rt of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Smurfit Westrock Public Limited Company:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Smurfit Westrock Public Limited Company and subsidiaries (‘the
Company’) as of December, 31, 2025, and December 31, 2024, the related consolidated statements of operations, comprehensive
income (loss), cash flows and changes in equity for each of the years in the three-year period ended December 31, 2025, and the
related notes collectively, the consolidated financial statements. We also have audited the Company’s internal control over financial
reporting as of December, 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December, 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2025 in conformity with U.S. generally accepted accounting principles. Also in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
Repo****rt of Independent Registered Public Accounting Firm
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Evaluation of the qualitative goodwill impairment indicator assessment
As described in Note 10 to the consolidated financial statements, the Company’s goodwill balance as of December 31, 2025 was
$7,218 million. The Company reviews the carrying value of its goodwill annually during the fourth quarter, or more often if events or
changes in circumstances indicate that the carrying amount may exceed fair value. During the fourth quarter of fiscal 2025, the
Company performed a qualitative impairment test at the reporting unit level.
We identified the selection and evaluation of qualitative goodwill impairment indicators, or qualitative factors, for the (i) North
America (including US and Canada) and (ii) Europe, MEA and APAC reporting units as a critical audit matter. Key qualitative factors
included projected gross domestic product, inflation, compound annual growth rates, recovered fiber, energy costs and the Company’s
forecasted financial performance. The key qualitative factors could have had a significant effect on the Company’s qualitative
assessment and the potential for the need to perform a quantitative goodwill impairment test. Subjective auditor judgment was
required to evaluate the key qualitative factors.
The following are the primary procedures we performed to address this critical audit matter:
- We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s goodwill
impairment assessment process, including controls related to the selection and analysis of potential qualitative factors.
- We evaluated the relevance and reliability of key qualitative factors, specifically, projected gross domestic product, inflation,
compound annual growth rate, recovered fiber and energy costs selected by the Company and assessed the reasonableness of
these qualitative factors against publicly available economic, industry and market data or actual costs as appropriate.
- We evaluated the reasonableness of the Company’s forecasted financial performance by comparing this to actual historical
financial performance reported by the respective reporting units. We challenged the key underlying assumptions (projected
revenue, energy and recovered fiber cost factors) by performing a sensitivity analysis on the Company’s forecasted financial
performance.
/s/ KPMG
We have served as the Company’s auditor since 2018.
Dublin, Ireland
February 27, 2026
Smurfit Westrock plc
Consolidated Balance Sheets
(in millions, except share and per share dat**a)
| December 31, 2025 | December 31, 2024 | ||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents (amounts related to consolidated variable interest entities of $3 million and $2 million at December 31, 2025 and December 31, 2024, respectively) | $892 | $855 | |
| Accounts receivable, net (amounts related to consolidated variable interest entities of $876 million and $767 million at December 31, 2025 and December 31, 2024, respectively) | 4,268 | 4,117 | |
| Inventories | 3,693 | 3,550 | |
| Other current assets | 1,586 | 1,533 | |
| Total current assets | 10,439 | 10,055 | |
| Property, plant and equipment, net | 23,232 | 22,675 | |
| Goodwill | 7,218 | 6,822 | |
| Intangibles, net | 1,059 | 1,117 | |
| Prepaid pension asset | 616 | 635 | |
| Other non-current assets (amounts related to consolidated variable interest entities of $393 million and $389 million at December 31, 2025 and December 31, 2024, respectively) | 2,593 | 2,455 | |
| Total assets | $45,157 | $43,759 | |
| Liabilities and Equity | |||
| Current liabilities: | |||
| Accounts payable | $3,597 | $3,290 | |
| Accrued expenses | 601 | 715 | |
| Accrued compensation and benefits | 997 | 882 | |
| Current portion of debt | 346 | 1,053 | |
| Other current liabilities | 1,523 | 1,393 | |
| Total current liabilities | 7,064 | 7,333 | |
| Non-current debt due after one year (amounts related to consolidated variable interest entities of $376 million and $8 million at December 31, 2025 and December 31, 2024, respectively) | 13,427 | 12,542 | |
| Deferred tax liabilities | 3,297 | 3,600 | |
| Pension liabilities and other postretirement benefits, net of current portion | 697 | 706 | |
| Other non-current liabilities (amounts related to consolidated variable interest entities of $335 million and $335 million at December 31, 2025 and December 31, 2024, respectively) | 2,318 | 2,191 | |
| Total liabilities | 26,803 | 26,372 | |
| Commitments and Contingencies (Note 21) | |||
| Equity: | |||
| Preferred stock, $0.001 par value; 500,000,000 shares authorized; 10,000 shares outstanding | — | — | |
| Common stock, $0.001 par value; 9,500,000,000 shares authorized; 522,310,486 and 520,444,261 shares outstanding at December 31, 2025 and December 31, 2024, respectively | 1 | 1 | |
| Deferred shares, €1 par value; 25,000 shares authorized; Nil and 25,000 shares outstanding at December 31, 2025 and December 31, 2024, respectively | — | — | |
| Treasury stock, at cost; 1,449,320 and 2,037,589 common stock at December 31, 2025 and December 31, 2024, respectively | (64) | (93) | |
| Capital in excess of par value | 16,083 | 15,948 | |
| Accumulated other comprehensive loss | (348) | (1,446) | |
| Retained earnings | 2,655 | 2,950 | |
| Total shareholders’ equity | 18,327 | 17,360 | |
| Noncontrolling interests | 27 | 27 | |
| Total equity | 18,354 | 17,387 | |
| Total liabilities and equity | $45,157 | $43,759 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
Smurfit Westrock plc
Consolidated Statements of Operations
(in millions, except per share data)
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Net sales | $31,179 | $21,109 | $12,093 | ||
| Cost of goods sold | (25,136) | (16,914) | (9,039) | ||
| Gross profit | 6,043 | 4,195 | 3,054 | ||
| Selling, general and administrative expenses | (3,819) | (2,737) | (1,572) | ||
| Impairment and restructuring costs | (385) | (56) | (32) | ||
| Transaction and integration-related expenses associated with the Combination | (120) | (395) | (78) | ||
| Operating profit | 1,719 | 1,007 | 1,372 | ||
| Interest expense, net | (729) | (398) | (139) | ||
| Pension and other postretirement non-service income (expense), net | 30 | (24) | (49) | ||
| Other expense, net | (61) | (25) | (46) | ||
| Income before income taxes | 959 | 560 | 1,138 | ||
| Income tax expense | (260) | (241) | (312) | ||
| Net income | 699 | 319 | 826 | ||
| Net income attributable to noncontrolling interests | — | — | (1) | ||
| Net income attributable to common shareholders | $699 | $319 | $825 | ||
| Basic earnings per share attributable to common shareholders | $1.34 | $0.83 | $3.19 | ||
| Diluted earnings per share attributable to common shareholders | $1.33 | $0.82 | $3.17 | ||
| The accompanying notes are an integral part of these Consolidated Financial Statements. |
Smurfit Westrock plc
Consolidated Statements of Comprehensive Income (Loss)
(in millions)
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Net income | $699 | $319 | $826 | ||
| Other comprehensive income (loss), net of tax: | |||||
| Foreign currency translation gain (loss) | 1,219 | (895) | 410 | ||
| Defined benefit pension and other postretirement benefit plans | (120) | 87 | (53) | ||
| Net (loss) gain on cash flow hedges | (1) | — | 5 | ||
| Other comprehensive income (loss), net of tax | 1,098 | (808) | 362 | ||
| Comprehensive income (loss) | 1,797 | (489) | 1,188 | ||
| Comprehensive income attributable to noncontrolling interests | — | — | (1) | ||
| Comprehensive income (loss) attributable to common shareholders | $1,797 | $(489) | $1,187 | ||
| The accompanying notes are an integral part of these Consolidated Financial Statements. |
Smurfit Westrock plc
Consolidated Statements of Cash Flows
(in millions*)*
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Operating activities: | |||||
| Net income | $699 | $319 | $826 | ||
| Adjustments to reconcile consolidated net income to net cash provided by operating activities: | |||||
| Depreciation, depletion and amortization | 2,550 | 1,464 | 580 | ||
| Cash surrender value increase in excess of premiums paid | (44) | (17) | — | ||
| Impairment charges | 246 | 24 | 5 | ||
| Share-based compensation expense | 139 | 206 | 66 | ||
| Deferred income tax benefit | (190) | (137) | (28) | ||
| Pension and other postretirement funding more than cost | (111) | (55) | (39) | ||
| Other | 32 | 28 | (10) | ||
| Change in operating assets and liabilities, net of acquisitions and divestitures: | |||||
| Accounts receivable | 164 | (144) | 245 | ||
| Inventories | 35 | 62 | 220 | ||
| Other assets | (2) | (31) | 43 | ||
| Accounts payable | (23) | (273) | (260) | ||
| Income taxes | (71) | (5) | (99) | ||
| Accrued liabilities and other | (32) | 42 | 10 | ||
| Net cash provided by operating activities | 3,392 | 1,483 | 1,559 | ||
| Investing activities: | |||||
| Capital expenditures | (2,192) | (1,466) | (929) | ||
| Cash paid for purchase of businesses, net of cash acquired | (6) | (719) | (29) | ||
| Proceeds from corporate owned life insurance | 26 | 5 | — | ||
| Proceeds from sale of property, plant and equipment | 12 | 61 | 17 | ||
| Other | 17 | 5 | 10 | ||
| Net cash used for investing activities | (2,143) | (2,114) | (931) | ||
| Financing activities: | |||||
| Additions to debt | 1,989 | 5,707 | 88 | ||
| Repayments of debt | (1,841) | (4,321) | (136) | ||
| Debt issuance costs | (20) | (63) | — | ||
| Changes in commercial paper, net | (391) | 1 | — | ||
| Other debt (repayments) additions, net | (18) | 2 | (4) | ||
| Repayments of finance lease liabilities | (43) | (22) | (3) | ||
| Tax paid in connection with shares withheld from employees | (69) | (26) | — | ||
| Purchases of treasury stock | — | (27) | (30) | ||
| Cash dividends paid to shareholders | (900) | (650) | (391) | ||
| Other | (5) | 6 | (3) | ||
| Net cash (used for) provided by financing activities | (1,298) | 607 | (479) | ||
| Effect of exchange rate changes on cash and cash equivalents | 86 | (121) | 10 | ||
| Increase (decrease) in cash and cash equivalents | 37 | (145) | 159 | ||
| Cash and cash equivalents at January 1 | 855 | 1,000 | 841 | ||
| Cash and cash equivalents at December 31 | $892 | $855 | $1,000 |
The accompanying notes are an integral part of these Consolidated Financial Statements.
Smurfit Westrock plc
Consolidated Statements of Changes in Equity
(in millions, except per share data)
| Shares of Common Stock | Common Stock | Capital in Excess of Par Value | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders' Equity | Noncontrolling Interest (“NCI”) | Total | |
| Balance at December 31, 2022**(1)** | 259 | $— | $3,528 | $(78) | $3,087 | $(1,209) | $5,328 | $15 | $5,343 |
| Net income | — | — | — | — | 825 | — | 825 | 1 | 826 |
| Other comprehensive income, net of tax | — | — | — | — | — | 362 | 362 | — | 362 |
| Share-based compensation | — | — | 64 | — | — | — | 64 | — | 64 |
| Issuance of common stock | 1 | — | — | — | — | — | — | — | — |
| Purchases of treasury stock | — | — | — | (30) | — | — | (30) | — | (30) |
| Shares distributed by Smurfit Kappa Employee Trust | — | — | (17) | 17 | — | — | — | — | — |
| Dividends declared ($1.50 per share) | — | — | — | — | (391) | — | (391) | — | (391) |
| Balance at December 31, 2023 | 260 | — | 3,575 | (91) | 3,521 | (847) | 6,158 | 16 | 6,174 |
| Net income | — | — | — | — | 319 | — | 319 | — | 319 |
| Other comprehensive loss, net of tax | — | — | — | — | — | (808) | (808) | — | (808) |
| Share-based compensation | — | — | 200 | — | — | — | 200 | — | 200 |
| Shares distributed by Smurfit Kappa Employee Trust | — | — | (25) | 25 | — | — | — | — | — |
| Purchases of treasury stock | — | — | — | (27) | — | — | (27) | — | (27) |
| Shares of Smurfit Westrock common stock issued to WestRock shareholders and NCI assumed as a result of the Merger | 258 | 1 | 12,098 | — | — | — | 12,099 | 11 | 12,110 |
| Converted WestRock RSUs and Options attributable to pre- Combination services | — | — | 91 | — | — | — | 91 | — | 91 |
| Issuance of common stock net of tax paid in connection with shares withheld from employees | 2 | — | 4 | — | (26) | — | (22) | — | (22) |
| Reclassification from retained earnings to accumulated other comprehensive loss | — | — | — | — | (209) | 209 | — | — | — |
| Dividends declared ($1.89 per share)(2) | — | — | 5 | — | (655) | — | (650) | — | (650) |
| Balance at December 31, 2024 | 520 | 1 | 15,948 | (93) | 2,950 | (1,446) | 17,360 | 27 | 17,387 |
| Net income | — | — | — | — | 699 | — | 699 | — | 699 |
| Other comprehensive income, net of tax | — | — | — | — | — | 1,098 | 1,098 | — | 1,098 |
| Share-based compensation | — | — | 137 | — | — | — | 137 | — | 137 |
| Shares distributed by Smurfit Kappa Employee Trust | — | — | (18) | 18 | — | — | — | — | — |
| Issuance of common stock net of tax paid in connection with shares withheld from employees | 2 | — | 2 | — | (69) | — | (67) | — | (67) |
| Cancellation of deferred shares by Smurfit Kappa Employee Trust | — | — | — | 11 | (11) | — | — | — | — |
| Dividends declared ($1.72 per share)(2) | — | — | 14 | — | (914) | — | (900) | — | (900) |
| Balance at December 31, 2025 | 522 | $1 | $16,083 | $(64) | $2,655 | $(348) | $18,327 | $27 | $18,354 |
(1) Pursuant to the Transaction Agreement, on July 5, 2024 each issued ordinary share, par value €0.001 per share, of Smurfit Kappa (a “Smurfit Kappa Share”) was exchanged for one ordinary share, par value $0.001 per
share, of Smurfit Westrock (a “Smurfit Westrock Share”). The exchange of shares is reflected retroactively to the earliest period presented.
(2) Includes cash dividends and dividend equivalent units declared on certain unvested share-based payment awards.
The accompanying notes are an integral part of these Consolidated Financial Statements.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
1. Description of Business and Summary of Significant Accounting Policies
1.1. Description of Business
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.
Smurfit Westrock plc is a company limited by shares that is incorporated in Ireland. We are a multinational provider of sustainable
fiber-based paper and packaging solutions. We partner with our customers to provide differentiated, sustainable paper and packaging
solutions that enhance our customers’ prospects of success in their markets. Our team members support customers around the world
from our operating and business locations in North America, South America, Europe, Asia, Africa, and Australia.
Pursuant to a transaction agreement dated as of September 12, 2023 (the “Transaction Agreement”), among Smurfit Westrock, Smurfit
Kappa Group plc (re-registered as Smurfit Kappa Group Limited) (“Smurfit Kappa”), WestRock Company (“WestRock”) and Sun
Merger Sub, LLC (“Merger Sub”) the following was completed (i) Smurfit Westrock acquired Smurfit Kappa by means of a scheme
of arrangement under the Irish Companies Act (the “Smurfit Kappa Share Exchange”) and (ii) Merger Sub merged with and into
WestRock, with WestRock continuing as the surviving entity (the “Merger” and, together with the Smurfit Kappa Share Exchange, the
“Combination”). The Combination closed on July 5, 2024 (the “Closing Date”). Upon the completion of the Combination, Smurfit
Kappa and WestRock each became wholly-owned subsidiaries of Smurfit Westrock.
1.2. Basis of Presentation and Principles of Consolidation
Other than activities related to its formation and in anticipation of the Combination, Smurfit Westrock did not conduct any operations
from its incorporation until completion of the Combination. Given the non-operational nature of Smurfit Westrock prior to the
Combination, the Smurfit Kappa Share Exchange is not considered a business combination and does not give rise to any goodwill or
adjustments to accounting basis.
The Consolidated Financial Statements of Smurfit Westrock following the Smurfit Kappa Share Exchange are a continuation of the
financial statements of Smurfit Kappa. The comparative financial information presented in these Consolidated Financial Statements
reflect the pre-Combination carrying values of Smurfit Kappa with the legal share capital retroactively adjusted to reflect the legal
capital of Smurfit Westrock as the successor after giving effect to the Smurfit Kappa Share Exchange.
The Merger is recognized as a business combination under Accounting Standards Codification (“ASC”) 805, “Business
Combinations” (“ASC 805”). Smurfit Kappa was determined to be the accounting acquirer of WestRock. Accordingly, the financial
statements reflected in these Consolidated Financial Statements include WestRock's financial position and results of operations for the
period subsequent to the completion of the Combination on July 5, 2024.
Refer to “Note 2. Acquisitions” for additional information related to the accounting for the Combination.
The Consolidated Financial Statements have been derived from the historical accounting records of the Company and were prepared in
accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The Company’s fiscal year end is
December 31. The reporting currency is the United States dollar (“the U.S. dollar”).
The Consolidated Financial Statements include the accounts of Smurfit Westrock plc, and our wholly and partially owned subsidiaries
for which we have a controlling financial interest, including variable interest entities for which we are the primary beneficiary. We
have eliminated all intercompany accounts and transactions.
The Company consolidates entities in which it has a controlling financial interest based on either the Variable Interest Entity (“VIE”)
or voting interest model.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
The Company consolidates entities that are VIEs when the Company determines it is the primary beneficiary. Generally, the primary
beneficiary of a VIE is a reporting entity that has (a) the power to direct the activities that most significantly affect the VIE’s economic
performance, and (b) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be
significant to the VIE.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may
not precisely reflect the absolute figures.
1.3. Reclassifications and Adjustments
During the year ended December 31, 2025, we changed the presentation of our debt footnote to present the unamortized fair value
adjustments, debt discounts and premiums as a single line, alongside debt issuance costs. Previously, these items were included within
the carrying amounts of each facility. Prior year amounts in “Note 15. Debt” have been reclassified to conform to the current period
presentation. This change affected presentation only and had no impact on total assets, liabilities, stockholders’ equity, net income, or
cash flows.
1.4. Use of Estimates
The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the
reported amounts of revenues and expenses during the reporting period. These estimates and the underlying assumptions affect the
amounts of assets and liabilities reported, disclosures about gain contingencies and contingent liabilities and reported amounts of
revenues and expenses, including income taxes. Such estimates include the fair value of assets acquired and assumed liabilities in a
business combination, determining goodwill and measuring impairment, income taxes and pension and other postretirement benefits.
These estimates and assumptions are based on management’s judgment. Actual results may differ from those estimates, and the
differences could be material.
We base our estimates on the current information available, our experiences and various other assumptions believed to be reasonable
under the circumstances. The process of determining significant estimates is fact specific and takes into account factors such as
historical experience, current and expected economic conditions, product mix, and in some cases, actuarial techniques. We regularly
evaluate these significant factors and make adjustments in the Consolidated Financial Statements where facts and circumstances
dictate.
1.5. Revenue Recognition
Generally, we recognize revenue on a point-in-time basis when the customer takes title to the goods and assumes the risks and rewards
for the goods, which coincides with the transfer of control of our goods to the customer upon delivery. Additionally, we manufacture
certain customized products that have no alternative use to us (since they are made to specific customer specifications), and we believe
that for certain customers we have a legally enforceable right to payment for performance completed to date on these products,
including a reasonable profit. For products that meet these two criteria, we recognize revenue over time. This results in revenue
recognition prior to the date of shipment or title transfer for these products and results in the recognition of a contract asset (unbilled
receivables) with a corresponding reduction in finished goods inventory on our Consolidated Balance Sheets.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods and is derived primarily
from fixed consideration. Certain contracts may also include variable consideration, typically in the form of volume-based rebates and
early settlement discounts. If a contract with a customer includes variable consideration, we estimate the expected impact based on
historical experience and net the provisions for volume-based rebates, early settlement discounts and other adjustments against our
gross sales. We concluded this method is consistent with the most likely amount method under ASC 606, “Revenue from Contracts
with Customers” (“ASC 606”) and allows us to make the best estimate of the consideration we will be entitled to from customers.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
As permitted by ASC 606, we have elected to treat costs associated with obtaining new contracts as expenses when incurred if the
amortization period of the asset we would recognize is one year or less. We do not record interest income when the difference in
timing of control transfer and customer payment is one year or less. No element of financing is deemed present as the sales are made
with credit terms consistent with market practice and are in line with normal credit terms in the entities’ country of operation.
We also account for sales and other taxes that are imposed on and concurrent with individual revenue-producing transactions between
a customer and us on a net basis which excludes the taxes from our net sales.
1.6. Shipping and Handling Costs
We account for shipping and handling activities as fulfillment costs. Accordingly, we classify shipping and handling costs, such as
freight to our customers’ destinations, as a component of cost of goods sold while amounts billed to customers are classified as a
component of net sales.
1.7. Cash and Cash Equivalents
We consider all highly liquid investments that mature three months or less from the date of purchase to be cash equivalents. The
carrying amounts of our cash and cash equivalents approximate fair market values.
1.8. Accounts Receivable and Allowances
Our accounts receivable balance arises from a diverse and varied customer base, across the Company’s operations and as such there is
no significant concentration of credit risk. Credit evaluations are performed on all customers over certain thresholds and all customers
are subject to continued monitoring. Credit limits are reviewed on a regular basis.
We perform an evaluation of the current expected credit losses inherent in our accounts receivable at each balance sheet date. Such an
evaluation includes consideration of historical loss experience, trends in customer payment frequency, present economic conditions
and judgment about the future financial health of our customers. Generally, credit terms associated with our receivables collection are
approximately 30 to 90 days.
We state accounts receivable at the amount owed by the customer, net of allowances for estimated credit impairment losses, returns,
early settlement discounts and rebates (when netting conditions are met). We do not discount accounts receivable because we
generally collect accounts receivable over a relatively short time. We write off receivables when they are no longer determined to be
collectible.
See “Note 7. Accounts Receivable, net” for additional information on accounts receivable and allowances. See “Note 14. Fair Value
Measurement” and “Note 15. Debt” for additional information on receivables securitization facilities.
1.9. Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is determined on a first-in, first-out basis
and includes expenditure incurred in acquiring the inventories and bringing them to their present location and condition.
Raw materials are valued on the basis of purchase cost on a first-in, first-out basis. For finished goods and work-in-progress, cost
includes direct materials, direct labor and attributable overheads based on normal operating capacity and excludes borrowing costs.
Net realizable value is the estimated proceeds of sale less costs to completion and any costs to be incurred in selling and distribution.
We include the cost of wood harvested from forestlands in the carrying values of raw materials.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Full provision is made for all damaged, deteriorated and unusable material. The Company regularly reviews inventory quantities on-
hand for excess and obsolete inventory and, when circumstances indicate, records charges to write-down inventories to their estimated
net realizable value. Any write-down of inventory to net realizable value creates a new cost basis for that inventory. Materials and
other supplies held for use in the production of inventories are not written down below cost if the finished goods, in which they will be
incorporated, are expected to be sold at or above cost. See “Note 8. Inventories” for additional information.
1.10. Leased Assets
We lease various real estate, including certain operating facilities, warehouses, office space and land. We also lease equipment and
vehicles.
At inception of a contract, we assess whether a contract is, or contains, a lease. A contract is, or contains, a lease, if the contract
conveys a right to control the use of an identified asset for a period of time in exchange for consideration. We recognize a right-of-use
(“ROU”) asset and a lease liability at the lease commencement date which is the date at which the asset is made available for our use.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease
payments arising from the lease. We categorize leases with contractual terms longer than 12 months as either operating or finance.
Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets
acquired under finance leases are recorded in “Property, plant and equipment, net.” All other leases are categorized as operating
leases.
For operating and finance leases, the lease liability is initially measured at the present value of the future lease payments at the lease
commencement date. The lease liability is subsequently measured at amortized cost using the effective-interest method. Our leases
may include options to extend or terminate the lease. These options to extend are included in the lease term when it is reasonably
certain that we will exercise that option. As the implicit rate is generally not readily determinable for our leases, we apply a portfolio
approach using an estimated incremental borrowing rate to determine the initial present value of lease payments over the lease terms
on a collateralized basis over a similar term, which is based on market and company specific information.
We use the unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate, and apply the rate based on the
currency of the lease.
While some leases provide for variable payments, they are not included in the ROU assets and liabilities because they are not based on
an index or rate. Variable payments for real estate leases primarily relate to common area maintenance, insurance, taxes and utilities.
Variable payments for equipment, vehicles and leases within supply agreements primarily relate to usage, repairs, and maintenance.
We have made an accounting policy election to not recognize an ROU asset and liability for leases with a term of 12 months or less
unless the lease includes an option to renew or purchase the underlying asset that we are reasonably certain to exercise. In addition, the
Company has applied the practical expedient to account for the lease and non-lease components as a single lease component for all of
the Company's leases. See “Note 13. Leases” for additional information.
1.11. Property, Plant and Equipment
We record property, plant and equipment at cost less accumulated depreciation and impairment charges. Cost includes major
expenditures for improvements and replacements that extend useful lives, increase capacity, increase revenues or reduce costs, while
normal maintenance and repairs are expensed as incurred. For financial reporting purposes, we provide depreciation and amortization
primarily on a straight-line method generally over the estimated useful lives of the assets as follows:
Buildings and Building Improvements 10 - 40 years
Plant and Equipment 3 - 25 years
Leasehold improvements are depreciated over the shorter of the asset life or the lease term, generally between 3 and 15 years.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
The estimated residual value and the useful lives of assets are reviewed at each reporting date. The useful lives of assets could be
reduced by climate-related factors, for example, because of physical risks, obsolescence or legal restrictions. Capital expenditures will
continue to be required for ongoing projects in order to meet our climate change targets and the useful lives of future capital
expenditure may differ from current assumptions, however there are no significant changes in the estimates of useful lives during the
current financial year. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are
included in the Consolidated Statements of Operations.
Capitalization of costs in respect of constructing an asset commences when it is probable that future economic benefits associated with
the asset will flow to the Company and the cost of the asset can be measured reliably. Cost includes expenditures that are directly
attributable to the construction of the asset. Construction in progress is not depreciated and is assessed for impairment when there is an
indicator of impairment. When these assets are available for use, they are transferred out of construction in progress to the applicable
heading under property, plant and equipment.
Forestlands consist of standing timber. Timber is stated at cost less depletion. Depletion refers to the carrying value of timber that is
harvested. Costs related to acquiring, planting and growing timber and expenditure directly attributable to the timber are capitalized.
At the time of harvest, the cost of the wood harvested is included in inventories.
1.12. Goodwill and Non-current Assets
The amount of goodwill acquired in a business combination that is assigned to one or more reporting units as of the acquisition date is
the excess of the purchase price of the acquired businesses (or portion thereof) included in the reporting unit, over the fair value
assigned to the individual assets acquired or liabilities assumed from a market participant perspective. Goodwill is assigned to the
reporting unit(s) expected to benefit from the synergies of the combination even though other assets or liabilities of the acquired entity
may not be assigned to that reporting unit. We determine recoverability by comparing the estimated fair value of the reporting unit to
which the goodwill applies to the carrying value, including goodwill, of that reporting unit.
In accordance with ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”), we review the carrying value of our goodwill
annually in the fourth quarter or more often if events or changes in circumstances indicate that the carrying amount may exceed fair
value. We test goodwill for impairment at the reporting unit level, which is an operating segment or one level below an operating
segment, referred to as a component. A component of an operating segment is a reporting unit if the component constitutes a business
for which discrete financial information is available and segment management regularly reviews the operating results of that
component. However, two or more components of an operating segment are aggregated and deemed a single reporting unit if the
components have similar economic characteristics. We determine the fair value of each reporting unit using the discounted cash flow
method or, as appropriate, a combination of the discounted cash flow method and the guideline public company method.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
ASC 350 allows an optional qualitative assessment, prior to a quantitative assessment test, to determine whether it is “more likely than
not” that the fair value of a reporting unit exceeds its carrying amount. We evaluate goodwill for impairment by first performing a
qualitative assessment to determine whether a quantitative goodwill test is necessary. If the Company determines, based on qualitative
factors, that the fair value of each reporting unit more likely than not exceeds its carrying value, no further assessment is necessary. If
based on qualitative factors, the fair value of the reporting unit may more likely than not be less than its carrying amount, a
quantitative goodwill impairment test would be required. For reporting units where the Company performs the quantitative goodwill
impairment test, an impairment loss is recorded to the extent that the reporting unit’s carrying amount exceeds the reporting unit’s fair
value. As part of the quantitative test, we utilize the present value of expected cash flows or, as appropriate, a combination of the
present value of expected cash flows and the guideline public company method to determine the estimated fair value of our reporting
units. This present value model requires management to estimate future cash flows, the timing of these cash flows, and a discount rate
(based on a weighted average cost of capital), which represents the time value of money and the inherent risk and uncertainty of the
future cash flows. Factors that management must estimate when performing this step in the process include, among other items, sales
volume, sales prices, inflation, discount rates, exchange rates, tax rates, anticipated synergies and productivity improvements resulting
from past acquisitions, capital expenditures and continuous improvement projects. The assumptions we use to estimate future cash
flows are consistent with the assumptions that the reporting units use for internal planning purposes, which we believe would be
generally consistent with that of a market participant. If we determine that the estimated fair value of the reporting unit exceeds its
carrying amount, goodwill of the reporting unit is not impaired. If we determine that the carrying amount of the reporting unit exceeds
its estimated fair value, we measure the goodwill impairment charge based on the excess of a reporting unit’s carrying amount over its
fair value, but not in excess of the total amount of goodwill allocated to the respective reporting unit, as required under ASU 2017-04
“Simplifying the Test for Goodwill Impairment”.
The Company has capitalized certain contractual or separable intangible assets, primarily customer relationships, trade names and
trademarks, developed technology, software assets and land use rights. These intangible assets are amortized based on the expected
pattern in which the economic benefits are consumed or straight-line if the pattern was not reliably determinable. The useful lives of
intangible assets other than goodwill are finite and range from two to twenty-two years. Amortization is recognized as an expense
within “Selling, general and administrative expenses” and “Cost of goods sold” in the Consolidated Statements of Operations.
We follow the provisions included in ASC 360, “Property, Plant, and Equipment” in determining whether the carrying value of any of
our non-current assets, including ROU assets and amortizable intangibles other than goodwill, is impaired. We determine whether
indicators of impairment are present. We review non-current assets for impairment when events or changes in circumstances indicate
that the carrying amount of the non-current asset might not be recoverable. If we determine that indicators of impairment are present,
we determine whether the estimated undiscounted cash flows for the potentially impaired assets are less than the carrying value.
This requires management to estimate future cash flows through operations over the remaining useful life of the asset and its ultimate
disposition. The assumptions we use to estimate future cash flows are consistent with the assumptions we use for internal planning
purposes, updated to reflect current expectations. If our estimated undiscounted cash flows do not exceed the carrying value, we
estimate the fair value of the asset and record an impairment charge if the carrying value is greater than the fair value of the asset. We
estimate fair value using discounted cash flows, observable prices for similar assets, or other valuation techniques.
Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational
performance. Future events could cause us to conclude that impairment indicators exist and that assets associated with a particular
operation are impaired. Evaluating impairment also requires us to estimate future operating results and cash flows, which also require
judgment by management. Any resulting impairment loss could have a material adverse impact on our financial condition and results
of operations.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
1.13. Business Combinations
In accordance with ASC 805, we recognize the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in
an acquiree at their fair values as of the date of acquisition. We measure goodwill as the excess of consideration transferred, which we
also measure at fair value, over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. The
acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements
of a business combination as of the date of acquisition, including the fair values of identifiable property, plant and equipment,
intangible assets, deferred tax asset valuation allowances, liabilities including those related to debt, pensions and other postretirement
plans, unrecognized tax benefits, contingent consideration and contingencies. Significant estimates and assumptions include subjective
and/or complex judgments regarding items such as discount rates, customer attrition rates, economic lives and other factors, including
estimating future cash flows that we expect to generate from the acquired assets.
The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to
reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have
affected the measurement of the amounts recognized as of that date. If we are required to adjust provisional amounts that we have
recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on
our financial condition and results of operations. If the subsequent actual results and updated projections of the underlying business
activity change compared with the assumptions and projections used to develop these values, we could record future impairment
charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation
and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could be increased or
decreased, or the acquired asset could be impaired. Acquisition related costs are expensed as incurred.
In a business combination achieved in stages, the cost includes the acquisition date fair value of any pre-existing equity interest in the
subsidiary. When settlement of all or part of a business combination is deferred, the fair value of the deferred component is determined
by discounting the amounts payable to their present value at the date of exchange. Where a business combination agreement provides
for an adjustment to the purchase consideration which is contingent on future events, the contingent consideration is measured at fair
value. Any subsequent remeasurement of the contingent amount is recognized in the Consolidated Statements of Operations if it is
identified as a financial liability.
1.14. Impairment and Restructuring Costs
When we close a facility, if necessary, we recognize a write-down to reduce the carrying value of related property, plant and
equipment and lease ROU assets to their fair value and record charges for severance and other employee-related costs.
For termination costs associated with employees covered by a written or substantive plan, a liability is recorded when it is probable
that employees will be entitled to benefits and the amount can be reasonably estimated. For termination costs associated with
employees not covered by a written and broadly communicated policy covering involuntary termination benefits (severance plan), a
liability is recorded for costs to terminate employees (one-time termination benefits) when the termination plan has been approved and
committed to by management, the employees to be terminated have been identified, the termination plan benefit terms are
communicated, the employees identified in the plan have been notified and actions required to complete the plan indicate that it is
unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The timing and amount of an accrual is
dependent upon the type of benefits granted, the timing of communication and other provisions that may be provided in the benefit
plan.
If property, plant and equipment become impaired as a result of the Company’s restructuring efforts, these assets are written down to
their fair value less costs to sell, as the Company commits to dispose of them, and they are no longer in use. Depreciation is
accelerated on property, plant and equipment for the period of time the asset continues to be used until the asset ceases to be used.
For facility closures, we also generally expect to record costs for equipment and inventory relocation, facility carrying costs and costs
to terminate a lease or contract before the end of its term.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Identifying and calculating the cost to exit operations requires certain assumptions to be made, the most significant of which are
anticipated future liabilities, including severance costs, contractual obligations, and the adjustments of property, plant and equipment
and lease ROU assets to their fair value. Our estimates are reasonable, considering our knowledge of the industry we operate in,
previous experience in exiting activities and valuations we may obtain from independent third parties.
1.15. Fair Value of Financial Instruments and Nonfinancial Assets and Liabilities
We estimate fair values in accordance with ASC 820 “Fair Value Measurement” (“ASC 820”). ASC 820 provides a framework for
measuring fair value and expands disclosures required about fair value measurements. Specifically, ASC 820 sets forth a definition of
fair value and a hierarchy prioritizing the inputs to valuation techniques. ASC 820 defines fair value as the price that would be
received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the measurement date. Additionally, ASC 820 defines levels within the
hierarchy based on the availability of quoted prices for identical items in active markets, similar items in active or inactive markets and
valuation techniques using observable and unobservable inputs. We incorporate credit valuation adjustments to reflect both our own
nonperformance risk and the respective counterparty’s nonperformance risk in our fair value measurements.
The hierarchy consists of:
- Level 1: fair value measurements represent exchange-traded securities, which are valued at quoted prices (unadjusted) in
active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date;
- Level 2: fair value measurements are determined using input prices that are directly observable for the asset or liability or
indirectly observable through corroboration with observable market data; and
- Level 3: fair value measurements are determined using unobservable inputs, such as internally developed pricing models for
the asset or liability due to little or no market activity for the asset or liability.
Financial instruments not recognized at fair value on a recurring or non-recurring basis include cash and cash equivalents, accounts
receivable, certain other current assets, short-term debt, accounts payable, certain other current liabilities and non-current debt. With
the exception of debt with fixed interest rates, the carrying amounts of these financial instruments approximate their fair values due to
either their variable interest rates or short maturities. The fair value of debt such as debentures and various notes are based on quoted
market prices as of the balance sheet date. The fair value of the revolving credit facility approximates its carrying value due to the
nature of the repricing and interest based on variable rates. We measure the fair value of our mutual fund investments based on quoted
prices in active markets. Additionally, we measure our derivative contracts, if any, based on observable inputs such as interest rates,
yield curves, spot and future commodity prices, and spot and future exchange rates.
We discuss fair values in more detail in “Note 14. Fair Value Measurement” and our pension and postretirement assets and liabilities
in “Note 19. Retirement Plans and Deferred Compensation Arrangements”.
1.16. Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax
assets and liabilities are determined based on the differences between the financial statement carrying amount and the tax basis of
assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a
change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The tax
effects of accumulated other comprehensive income are eliminated when the circumstances upon which it is premised cease to exist.
Where applicable, the portfolio approach is utilized. All deferred tax assets and liabilities are classified as non-current in our
Consolidated Balance Sheets.
We reduce deferred tax assets with a valuation allowance to the amount we believe is more-likely than-not to be realized. In making
such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary
differences, projected future taxable income, tax-planning strategies, recent financial operations and carry back availability, if any. In
the event we were to determine that we would be able to realize or not realize our deferred tax assets in the future at their net recorded
amount, we would make an adjustment to the valuation allowance, which would reduce or increase income tax expense, respectively.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Certain provisions of ASC 740, “Income Taxes” (“ASC 740”) provide that a “tax position that meets the more-likely-than-not
recognition threshold shall initially and subsequently be measured as the largest amount of tax benefit that is greater than 50 percent
likely of being realized upon settlement with a taxing authority that has full knowledge of all relevant information.” We use significant
judgment in (i) determining whether a tax position, based solely on its technical merits, is more-likely- than-not to be sustained upon
examination and (ii) measuring the tax benefit as the largest amount of benefit that is greater than 50-percent likely of being realized
upon settlement. We do not record any benefit for the tax positions where we do not meet the initial recognition threshold. Income tax
positions must meet the ASC 740 recognition criteria as of the reporting date to be recognized. We recognize interest related to tax
positions in “Income tax expense” in the Consolidated Statements of Operations. We recognize penalties related to tax positions in
“Income tax expense” in the Consolidated Statements of Operations. Resolutions of tax positions could have a material adverse effect
on our cash flows or materially benefit our results of operations in future periods upon their resolution.
The Company has made an accounting policy election to account for the income tax effect(s) of U.S. Global Intangible Low-Taxed
Income (GILTI) as a period cost. The Company had made an accounting policy election to account for the income tax effect(s) of
investment tax credits under the flow-through method.
1.17. Pension and Other Postretirement Benefits
We sponsor pension and other postretirement benefits in the U.S. and most of the other countries in which we operate. We use a
December 31 measurement date for these plans. We measure our plan assets at fair value and the obligations at the present value of the
estimated payments to plan participants. We measure the vested benefit obligation as the actuarial present value of the vested benefits
to which the employee is currently entitled but based on the employee's expected date of separation of retirement. We recognize the
net funded position of our plans as assets or liabilities in our Consolidated Balance Sheets. Estimated future payments are determined
based on assumptions. Actuarial gains and losses occur when actual experience differs from the estimates used to determine the
components of net periodic pension cost including differences between actual and expected returns on plan assets, plan remeasurement
and when certain assumptions used to determine the projected benefit obligation are updated, such as but not limited to, changes in the
discount rate and the change in the rate of compensation.
The amount of unrecognized actuarial gains and losses recognized in the current year’s operations is based on amortizing the
unrecognized gains or losses for each plan that exceed the larger of 10% of the projected benefit obligation or the fair value of plan
assets, also known as “the corridor”. The amount of unrecognized gain or loss that exceeds the corridor is amortized over the average
future service of the plan participants or the average life expectancy of inactive plan participants for plans where all or almost all the
plan participants are inactive.
1.18. Share-based Compensation
We recognize an expense for share-based compensation plans based on the estimated fair value of the related awards. We measure
share-based compensation awards using fair value-based measurement methods determined at the grant date. The compensation
expense is recognized using the straight-line method over the requisite service period for time-based awards. For awards vesting based
on market conditions, a compensation expense is recognized whether or not the market condition is met, as long as the service
condition is met. For awards vesting based on performance conditions, compensation expense is recognized over the requisite service
period only if it is probable that the performance condition will be achieved. The Company reassesses the probability of vesting at
each reporting period and adjusts the compensation expense based on its probability assessment. The Company issues new shares of
common stock to satisfy the vesting of stock-based awards, other than for the deferred bonus plan for which treasury stock is used.
Forfeitures are estimated based on historical experience.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
1.19. Foreign Currency
The Consolidated Financial Statements are presented in the U.S. dollar, which is the reporting currency of the Company. We translate
the assets and liabilities of our foreign operations to U.S. dollars using end-of-period exchange rates. Changes in the carrying value of
these assets and liabilities attributable to fluctuations in exchange rates are recognized in “Foreign currency translation gain (loss)”, a
component of “Other comprehensive income (loss), net of tax”. We translate income statement activity of our foreign operations to
U.S. dollar using the average exchange rate prevailing during the period. On disposal of a foreign operation, accumulated currency
translation differences are reclassified to profit or loss as part of the overall gain or loss on disposal.
Monetary assets and liabilities denominated in foreign currencies are translated into functional currency at the foreign exchange rate at
the reporting date. Non-monetary assets and liabilities carried at cost are not subsequently retranslated. Non-monetary assets carried at
fair value are subsequently remeasured at the exchange rate at the date of valuation. Gains or losses arising on foreign currency
remeasurements are recorded within “Other expense, net” in the Consolidated Statements of Operations with the exception of
differences on foreign currency borrowings that qualify as a hedge of the Company’s net investment in foreign operations. The portion
of exchange gains or losses on foreign currency borrowings used to provide a hedge against a net investment in a foreign operation
and that is determined to be an effective hedge is recognized in “Other comprehensive income (loss), net of tax”.
We recorded a loss on foreign currency transactions of $33 million, $22 million and $52 million in the years ended December 31,
2025, 2024 and 2023, respectively.
1.20. Supplier Finance Program Obligations
We maintain supplier finance programs whereby we have entered into payment processing agreements with certain financial
institutions. These agreements allow participating suppliers to track payment obligations from Smurfit Westrock, and if voluntarily
elected by the supplier, to sell payment obligations from Smurfit Westrock to financial institutions at a discounted price. We are not a
party to the agreements between the participating financial institutions and the suppliers in connection with the program, and we do
not reimburse suppliers for any costs they incur for participation in the program. We have not pledged any assets as security or
provided any guarantees as part of the programs. We have no economic interest in our suppliers’ decisions to participate in the
programs. Our responsibility is limited to making payment in full to the respective financial institution according to the terms
originally negotiated with the supplier, which generally do not exceed 120 days. Smurfit Westrock or the financial institutions may
terminate the agreements upon 30 or 90 days’ notice. These obligations are classified as accounts payable within the Consolidated
Balance Sheets.
The Company's outstanding payment obligations to financial institutions for the years ended December 31, 2025 and December 31,
2024 were as follows:
| 2025 | 2024 | ||
| Outstanding payment obligations at January 1 | $450 | $— | |
| Assumed as part of the Combination | — | 440 | |
| Amounts added during the period | 1,408 | 792 | |
| Amounts settled during the period | (1,497) | (782) | |
| Outstanding payment obligations at December 31 | $361 | $450 |
1.21. Repair and Maintenance Costs
We expense routine repair and maintenance costs as we incur them. We defer certain expenses we incur during planned major
maintenance activities and recognize the expenses ratably over the shorter of the estimated interval until the next major maintenance
activity or the life of the deferred item. This maintenance is generally performed every 12 to 24 months and has a significant impact on
our results of operations in the period performed primarily due to lost production during the maintenance period. The deferred planned
major maintenance costs are recorded as assets within “Other non-current assets” on the Consolidated Balance Sheets.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except share and per share data)
1.22. New Accounting Standards Recently Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This
ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate
reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting
periods beginning after December 15, 2024. Adoption is either with a prospective method or a retrospective method of transition.
Early adoption is permitted. The Company adopted this ASU in these Consolidated Financial Statements by including the required
applicable disclosures on a prospective basis. See “Note 18. Income Taxes“ for more information.
1.23. New Accounting Standards Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). This ASU requires new financial
statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. ASU 2024-03
will be effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027.
Adoption is either with a prospective method or a retrospective method of transition. Early adoption is permitted. The Company is
currently evaluating the impact of this standard on its disclosures in the Consolidated Financial Statements.
2. Acquisitions
2024 Acquisitions
As referred to in “Note 1. Description of Business and Summary of Significant Accounting Policies”, the Combination (consisting of
the Merger with WestRock and the Smurfit Kappa Share Exchange) closed on July 5, 2024. The Combination created a global
leadership position for the Company in sustainable packaging, characterized by quality, product, and geographic diversity.
Merger Consideration
The following table summarizes the components of the aggregate consideration for the Merger. The amounts are calculated by
reference to Smurfit Kappa’s share price of £36.56 on the Closing Date, translated to U.S. dollars using the closing exchange rate as of
that date.
| Cash paid for outstanding WestRock Stock(1) | $1,291 |
| Smurfit Westrock Shares issued to WestRock Shareholders(2) | 12,098 |
| Converted WestRock Options and WestRock RSU Awards attributable to pre-Combination service(3) | 101 |
| Settlement of pre-existing relationships, trade and other payable and receivable balances with WestRock(4) | (29) |
| Aggregate Merger Consideration | $13,461 |
(1) The cash component of the aggregate Merger Consideration is based on 258,228,403 shares of WestRock Stock multiplied by the Cash Consideration of $5.00 per
WestRock share.
(2) Value of Smurfit Westrock Shares issued is based on 258,228,403 shares of outstanding WestRock Stock resulting in the issue of 258,228,403 Smurfit Westrock
Shares at the closing share price of £36.56 on July 5, 2024, translated to U.S. dollars using the closing exchange rate of £1 to $1.2815 as of that date.
(3) Consideration for WestRock Options and WestRock restricted stock unit (“RSU”) Awards replaced with Smurfit Westrock equity awards with similar terms, and the
amount represents the consideration for their replacement. A portion of the fair value of Smurfit Westrock equity awards issued represents consideration transferred,
while the remaining portion represents the post-Combination compensation expense based on the vesting terms of the converted awards. Also included, is the
Merger Consideration in respect of WestRock Director RSU Awards, settled options held by former WestRock employees and vested and unreleased RSU awards
all of which converted into WestRock Stock immediately prior to the Closing Date.
(4) Component of Merger Consideration in respect of the settlement for no gain or loss of trade and other receivable and payable balances with WestRock as of the date
of the Merger. The Merger Consideration has been increased by the amount of the settled Smurfit Kappa receivable of $3 million in respect of sales to WestRock
and has been reduced to account for the effective settlement of accounts payable of $32 million in respect of trade and other purchases from WestRock. The
WestRock receivable and payable in respect of these inter-company transactions were not recognized as an acquired asset or assumed liability.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Purchase Price Allocation
Smurfit Westrock management determined that Smurfit Kappa is the accounting acquirer in the Merger, which was accounted for
under the acquisition method of accounting for business combinations in accordance with ASC 805.
During the third quarter of 2025, based on the finalization of valuation and internal reviews, we completed the purchase price
allocation. The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill.
The following table summarizes the purchase price allocation to the fair value of the assets acquired and liabilities assumed:
| Preliminary Allocation | Measurement Period Adjustments | Final Allocation | |||
| Identifiable net assets: | |||||
| Cash and cash equivalents | $603 | $— | $603 | ||
| Accounts receivable | 2,374 | — | 2,374 | ||
| Inventories | 2,504 | 29 | 2,533 | ||
| Other current assets | 825 | (29) | 796 | ||
| Property, plant and equipment | 17,567 | 35 | 17,602 | ||
| Intangibles | 922 | 41 | 963 | ||
| Prepaid pension asset | 558 | — | 558 | ||
| Other non-current assets | 1,765 | 76 | 1,841 | ||
| Accounts payable | (2,018) | — | (2,018) | ||
| Accrued compensation and benefits | (447) | — | (447) | ||
| Current portion of debt | (1,285) | — | (1,285) | ||
| Other current liabilities | (1,123) | (42) | (1,165) | ||
| Non-current debt due after one year | (7,438) | (2) | (7,440) | ||
| Deferred tax liabilities | (3,523) | 94 | (3,429) | ||
| Pension liabilities and other postretirement benefits, net of current portion | (299) | — | (299) | ||
| Other non-current liabilities | (1,872) | (76) | (1,948) | ||
| Noncontrolling interests | (11) | — | (11) | ||
| Identifiable net assets acquired as of July 5, 2024 | 9,102 | 126 | 9,228 | ||
| Goodwill arising on Merger | 4,359 | (126) | 4,233 | ||
| Aggregate Merger Consideration | $13,461 | $— | $13,461 |
Measurement period adjustments primarily related to the adjustments in the fair values of the acquired property, plant and equipment
and other intangible assets from the third-party valuation and related impact on deferred income taxes. The measurement period
adjustments are based on facts and circumstances that existed, but were not known, as of the acquisition date.
The goodwill arising from the Merger is attributable to the workforce of the acquired business and the significant synergies expected
to arise after the Merger. Of the total goodwill recognized on the Merger, $3,949 million was allocated to the North American
segment, $203 million was allocated to the LATAM segment and $81 million was allocated to the Europe, MEA and APAC segment.
Of the total goodwill recognized, $187 million is estimated to be deductible for tax purposes.
The fair value of the assets acquired included accounts receivable of $2,374 million that were not purchased financial assets with
credit deterioration. The gross amount due under contracts was $2,429 million of which $55 million was expected to be uncollectible.
The fair value of acquired property, plant and equipment was determined primarily using the cost approach method. Due to the
specialized industrial nature of our plant and machinery assets, we have primarily applied the depreciated replacement cost method to
determine their acquisition date fair value. These valuations resulted in Level 3 non-recurring fair value measurements.
The preliminary fair values of intangible assets were generally determined using income-based methods, including the multi-period
excess earnings method, the relief from royalty method and cost saving approach.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
The identifiable intangible assets acquired are presented in the following table:
| Fair Value | Weighted Average Useful Lives (in years) | ||
| Customer relationships | $459 | 14 | |
| Trade names and trademarks | 228 | 10 | |
| Developed technology | 179 | 12 | |
| Software assets | 93 | 5 | |
| Land use rights | 4 | 22 | |
| Intangible assets acquired | $963 | 12 |
The Company incurred transaction-related (reversals) expenses associated with the Combination of $(2) million, $202 million and
$78 million for the years ended December 31, 2025, 2024 and 2023, respectively. These costs were associated primarily with legal and
other professional services and were recorded in transaction and integration-related expenses associated with the Combination.
Following the Combination, Smurfit Kappa funded the prepayment and cancellation of WestRock’s credit agreement with an
outstanding amount of $750 million. Waivers from lenders removing change in control provisions had previously been received for
this loan facility. The outstanding balance of the facility as of July 5, 2024 was recognized as an assumed liability. The repayment did
not form part of Merger Consideration. The repayment of the principal ($750 million) was presented as a financing cash outflow with
the payment of accrued interest ($1 million) reflected within operating activities, each in the Consolidated Statement of Cash Flows
for the year ended December 31, 2024.
Unaudited Pro Forma Combined Financial Information
The following unaudited pro forma combined financial information presents the combined results of operations for the years ended
December 31, 2024 and 2023, as if the Merger had occurred on January 1, 2023.
| Years ended December 31, | |||
| 2024 | 2023 | ||
| Net sales | $30,919 | $32,511 | |
| Net income (loss) attributable to common shareholders | $650 | $(1,410) |
The unaudited pro forma combined financial information above is based on the historical financial statements of Smurfit Kappa,
WestRock, and Smurfit Westrock, and is not indicative of the results of operations that would have been achieved if the Merger had
occurred on January 1, 2023, nor is it indicative of future results. The unaudited pro forma combined financial information has been
prepared by applying the accounting policies of Smurfit Westrock and includes, where applicable, adjustments for factually
supportable items or transactions, directly attributable to the Merger.
The unaudited pro forma combined financial information reflects pro forma adjustments for the following material non-recurring
expenses directly attributable to the Merger, each reflected as of the beginning of the earliest pro forma comparative period presented:
(i) 2024 and 2023 transaction-related costs of both Smurfit Kappa and WestRock amounting to $448 million, including retention-
related bonuses; and (ii) 2024 amortization of the fair value adjustment to acquired inventories of $224 million.
These pro forma adjustments are based on available information as of the date hereof and upon assumptions that the Company
believes are reasonable to reflect the impact of the Merger on the Company’s historical financial information on a supplemental pro
forma basis. Adjustments do not include costs related to integration activities, cost savings or synergies that have been or may be
achieved by the combined business.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
3. Segment Information
The chief operating decision maker (“CODM”) is determined to be the executive management team, comprising the Group Chief
Executive Officer and Group Chief Financial Officer. The CODM is responsible for assessing performance, allocating resources and
making strategic decisions.
We have identified three operating segments, which are also our reportable segments, as follows:
i.North America, which includes operations in the U.S., Canada and Mexico.
ii.Europe, the Middle East and Africa (“MEA”) and Asia-Pacific (“APAC”).
iii.Latin America (“LATAM”), which includes operations in Central America and Caribbean, Argentina, Brazil, Chile, Colombia,
Ecuador and Peru.
Our operating segments are consistent with our internal management structure and no operating segments have been aggregated for
disclosure purposes.
In the identification of the operating and reportable segments, we considered the level of integration of our different businesses as well
as our objective to develop long-term customer relationships by providing customers with differentiated packaging solutions that
enhance the customer’s prospects of success in their end markets.
The North America, Europe, MEA and APAC and LATAM segments are each highly integrated within the segment and there are
many interdependencies within these operations. They each include a system of mills and plants that primarily produce a number of
grades of containerboard that is converted into corrugated containers within each segment, or is sold to third parties.
In addition, the North America segment also produces paperboard, kraft paper and market pulp; other paper-based packaging, such as
folding cartons, inserts, labels and displays and also engages in the assembly of displays as well as the distribution of packaging
products.
The Europe, MEA and APAC segment also produces other types of paper, such as solidboard, graphic board, sack kraft paper and
machine glazed paper (together known as kraft paper) and graphic paper; and other paper-based packaging, such as honeycomb,
solidboard packaging, folding cartons, inserts and labels; and bag-in-box packaging (the latter with operations located in Europe,
Argentina, Canada, Mexico and the U.S., but managed under the Europe, MEA and APAC segment).
The LATAM segment also comprises forestry; other types of paper, such as paperboard and kraft paper; and paper-based packaging,
such as folding cartons and paper sacks.
Inter-segment transfers or transactions are entered into under normal commercial terms and conditions on an arm’s length basis.
The accounting policies of the reportable segments are the same as those described in “Note 1. Description of Business and Summary
of Significant Accounting Policies.”
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
We operate in 40 countries worldwide. The table below reflects financial data of our operations for each of the past three years:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Net sales (unaffiliated customers) | |||||
| Ireland (country of domicile) | $226 | $172 | $128 | ||
| U.S. | 14,467 | 7,311 | 303 | ||
| Mexico | 2,521 | 1,960 | 1,343 | ||
| Germany | 1,873 | 1,711 | 1,694 | ||
| France | 1,546 | 1,427 | 1,492 | ||
| Other Americas | 3,381 | 2,330 | 1,322 | ||
| Other Europe, MEA and APAC | 7,165 | 6,198 | 5,811 | ||
| Total | $31,179 | $21,109 | $12,093 |
Our net sales are derived almost entirely from the sale of goods and are disclosed based on the location of production.
No one customer represents greater than 10% of our net sales.
| December 31, | |||
| 2025 | 2024 | ||
| Long-lived assets**(1)** | |||
| Ireland (country of domicile) | $113 | $62 | |
| U.S. | 14,224 | 14,841 | |
| Other Americas | 4,482 | 4,013 | |
| Other Europe, MEA and APAC | 5,464 | 4,745 | |
| Total | $24,283 | $23,661 |
(1) Long-lived assets include “Operating lease right-of-use assets” and “Property, plant and equipment, net” and are disclosed based on their location.
Segment profitability is measured based on Adjusted EBITDA, defined as income before income taxes, unallocated corporate costs,
depreciation, depletion and amortization, interest expense, net, pension and other postretirement non-service income (expense), net,
share-based compensation expense, other expense, net, impairment and restructuring costs, transaction and integration-related
expenses associated with the Combination, amortization of fair value step up on inventory and other specific items that management
believes are not indicative of the ongoing operating results of the business.
The CODM uses Adjusted EBITDA for each segment predominantly: to forecast and assess the performance of the segments,
individually and comparatively; to set pricing strategies for the segments; and to make decisions about the allocation of operating and
capital resources to each segment strategically, in the annual budget and in the quarterly forecasting process. The CODM considers
budget, or forecast, -to-actual variances on a quarterly and annual basis for segment Adjusted EBITDA to inform these decisions.
Significant segment expenses are segment cost of goods sold and segment selling, general and administrative expenses. Segment cost
of goods sold primarily include raw materials, direct labor and plant overhead costs. Segment selling, general and administrative
expenses primarily include compensation and benefits, external professional fees and other operating costs. Both segment cost of
goods sold and segment selling, general and administrative expenses exclude certain adjustments that management believes are not
indicative of the operating results of the business.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
The following tables show selected financial data for our segments:
| Year ended December 31, 2025 | North America | Europe, MEA and APAC | LATAM | Total | |||
| Net sales (unaffiliated customers) | $18,220 | $10,860 | $2,099 | $31,179 | |||
| Add net sales (intersegment) | 357 | 33 | 14 | 404 | |||
| Net sales (aggregate) | 18,577 | 10,893 | 2,113 | 31,583 | |||
| Less segment expenses: | |||||||
| Segment cost of goods sold | (13,711) | (8,009) | (1,463) | ||||
| Segment selling, general and administrative expenses | (1,868) | (1,266) | (165) | ||||
| (15,579) | (9,275) | (1,628) | (26,482) | ||||
| Segment Adjusted EBITDA | $2,998 | $1,618 | $485 | $5,101 | |||
| Unallocated corporate costs | (162) | ||||||
| Depreciation, depletion and amortization | (2,550) | ||||||
| Impairment and restructuring costs | (385) | ||||||
| Transaction and integration-related expenses associated with the Combination | (120) | ||||||
| Interest expense, net | (729) | ||||||
| Pension and other postretirement non-service income, net | 30 | ||||||
| Share-based compensation expense | (139) | ||||||
| Other expense, net | (61) | ||||||
| Other adjustments | (26) | ||||||
| Income before income taxes | $959 |
Other adjustments in the table above include losses at closed facilities of $26 million.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
| Year ended December 31, 2024 | North America | Europe, MEA and APAC | LATAM | Total | |||
| Net sales (unaffiliated customers) | $9,901 | $9,556 | $1,652 | $21,109 | |||
| Add net sales (intersegment) | 191 | 21 | 59 | 271 | |||
| Net sales (aggregate) | 10,092 | 9,577 | 1,711 | 21,380 | |||
| Less segment expenses: | |||||||
| Segment cost of goods sold | (7,450) | (6,948) | (1,192) | ||||
| Segment selling, general and administrative expenses | (1,032) | (1,100) | (141) | ||||
| (8,482) | (8,048) | (1,333) | (17,863) | ||||
| Segment Adjusted EBITDA | $1,610 | $1,529 | $378 | $3,517 | |||
| Unallocated corporate costs | (131) | ||||||
| Depreciation, depletion and amortization | (1,464) | ||||||
| Impairment and restructuring costs | (56) | ||||||
| Transaction and integration-related expenses associated with the Combination | (395) | ||||||
| Amortization of fair value step up on inventory | (224) | ||||||
| Interest expense, net | (398) | ||||||
| Pension and other postretirement non-service expense, net | (24) | ||||||
| Share-based compensation expense | (206) | ||||||
| Other expense, net | (25) | ||||||
| Other adjustments | (34) | ||||||
| Income before income taxes | $560 |
Other adjustments in the table above include a non-recurring, non-cash currency translation adjustment in Argentina of $42 million
and losses at closed facilities of $10 million partially offset by a reimbursement of a fine from the Italian Competition Authority of
$18 million.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
| Year ended December 31, 2023 | North America | Europe, MEA and APAC | LATAM | Total | |||
| Net sales (unaffiliated customers) | $1,623 | $9,184 | $1,286 | $12,093 | |||
| Add net sales (intersegment) | 1 | 9 | 58 | 68 | |||
| Net sales (aggregate) | 1,624 | 9,193 | 1,344 | 12,161 | |||
| Less segment expenses: | |||||||
| Segment cost of goods sold | (1,165) | (6,498) | (939) | ||||
| Segment selling, general and administrative expenses | (178) | (1,011) | (131) | ||||
| (1,343) | (7,509) | (1,070) | (9,922) | ||||
| Segment Adjusted EBITDA | $281 | $1,684 | $274 | $2,239 | |||
| Unallocated corporate costs | (111) | ||||||
| Depreciation, depletion and amortization | (580) | ||||||
| Impairment and restructuring costs | (32) | ||||||
| Transaction and integration-related expenses associated with the Combination | (78) | ||||||
| Interest expense, net | (139) | ||||||
| Pension and other postretirement non-service expense, net | (49) | ||||||
| Share-based compensation expense | (66) | ||||||
| Other expense, net | (46) | ||||||
| Income before income taxes | $1,138 |
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Capital expenditures: | |||||
| North America | $1,224 | $723 | $135 | ||
| Europe, MEA and APAC | 723 | 503 | 594 | ||
| LATAM | 208 | 216 | 194 | ||
| Total per reportable segments | 2,155 | 1,442 | 923 | ||
| Corporate | 37 | 24 | 6 | ||
| Total capital expenditures | $2,192 | $1,466 | $929 |
| December 31, | |||
| 2025 | 2024 | ||
| Assets: | |||
| North America | $28,597 | $29,078 | |
| Europe, MEA and APAC | 12,238 | 10,723 | |
| LATAM | 3,652 | 3,180 | |
| Total reportable segments | 44,487 | 42,981 | |
| Corporate(1) | 670 | 778 | |
| Total assets | $45,157 | $43,759 |
(1) Corporate assets are composed primarily of Cash and cash equivalents and Recoverable or refundable income taxes.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
4. Revenue Recognition
Disaggregated Revenue
ASC 606 requires that we disaggregate revenue from contracts with customers into categories that depict how the nature, amount,
timing and uncertainty of revenue and cash flows are affected by economic factors.
The following tables summarize our disaggregated revenue with unaffiliated customers by product type and segment for the years
ended December 31, 2025, 2024 and 2023. Net sales are attributed to segments based on the location of production.
| Year ended December 31, 2025 | |||||||
| North America | Europe, MEA and APAC | LATAM | Total | ||||
| Revenue by product: | |||||||
| Paper | $4,386 | $1,552 | $192 | $6,130 | |||
| Packaging | 13,834 | 9,308 | 1,907 | 25,049 | |||
| Total | $18,220 | $10,860 | $2,099 | $31,179 |
| Year ended December 31, 2024 | |||||||
| North America | Europe, MEA and APAC | LATAM | Total | ||||
| Revenue by product: | |||||||
| Paper | $2,271 | $1,468 | $117 | $3,856 | |||
| Packaging | 7,630 | 8,088 | 1,535 | 17,253 | |||
| Total | $9,901 | $9,556 | $1,652 | $21,109 |
| Year ended December 31, 2023 | |||||||
| North America | Europe, MEA and APAC | LATAM | Total | ||||
| Revenue by product: | |||||||
| Paper | $106 | $1,380 | $53 | $1,539 | |||
| Packaging | 1,517 | 7,804 | 1,233 | 10,554 | |||
| Total | $1,623 | $9,184 | $1,286 | $12,093 |
Packaging revenue is derived mainly from the sale of corrugated and consumer packaging products. The remainder of packaging
revenue is composed of bag-in-box, packaging solutions and other paper-based packaging products.
Revenue Contract Balances
Contract assets relate to the manufacture of certain products that have no alternative use to us, with right to payment for performance
completed to date on these products, including a reasonable profit. Contract assets are reduced when the customer takes title to the
goods and assumes the risks and rewards for the goods. Contract liabilities represent obligations to transfer goods or services to a
customer for which we have received consideration and are reduced once control of the goods is transferred to the customer.
On the Consolidated Balance Sheets, contract assets reported within “Other current assets” were $170 million and $197 million at
December 31, 2025 and December 31, 2024, respectively, and contract liabilities reported within “Other current liabilities” were
$6 million and $5 million at December 31, 2025 and December 31, 2024, respectively.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
5. Impairment and Restructuring Costs
The components of impairment and restructuring costs are as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Impairment charges | $246 | $24 | $5 | ||
| Restructuring costs | 139 | 32 | 27 | ||
| Impairment and restructuring costs | $385 | $56 | $32 |
Impairment Charges
The components of impairment charges are as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Impairment of property, plant and equipment | $210 | $24 | $5 | ||
| Impairment of other assets | 36 | — | — | ||
| Total impairment charges | $246 | $24 | $5 |
These impairment charges are recognized in the Consolidated Statements of Operations caption “Impairment and restructuring costs”.
The segmental split of the impairment charges recognized for property, plant and equipment for the years ended December 31, 2025,
2024 and 2023 is as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| North America | $170 | $23 | $— | ||
| Europe, MEA and APAC | 39 | 1 | 5 | ||
| LATAM | 1 | — | — | ||
| Total impairment charges recognized for property, plant and equipment | $210 | $24 | $5 |
Of the total impairment charges, $177 million for the year ended December 31, 2025, were triggered by the announcement on April
30, 2025, that the Company would permanently close its coated recycled board mill in St. Paul, Minnesota, U.S. and discontinue
production at its containerboard mill in Forney, Texas, U.S. (the “Mill Closures”). We stopped production at these two U.S. mills in
June 2025 and May 2025, respectively. Additionally, the Company announced it had initiated consultations with local works councils
in Germany with a view to permanently closing two converting facilities there (together with the Mill Closures, the “April 2025
Announced Closures”). In the third quarter of 2025, we reached agreements with the local work councils in Germany and ceased
production at those two converting facilities in the fourth quarter of 2025.
Following our decision to permanently close the above facilities, the Company assessed the recoverability of the associated long-lived
assets being property, plant and equipment in accordance with ASC 360. The fair value of the property, plant and equipment assets
was determined based on their estimated selling price in an orderly transaction between market participants at the measurement date.
As a result of this assessment, $160 million for the year ended December 31, 2025 was recognized for impairment charges of the
property, plant and equipment of the facilities affected by the April 2025 announcement. The remainder of the impairment charges
recognized related to spare parts included in inventories in these facilities.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Restructuring Costs
The segmental split of the restructuring costs shown in the table above is as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| North America | $74 | $13 | $9 | ||
| Europe, MEA and APAC | 62 | 13 | 14 | ||
| LATAM | 3 | 6 | 4 | ||
| Total restructuring costs | $139 | $32 | $27 |
The table below sets forth restructuring costs by type incurred:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Severance charges | $82 | $16 | $12 | ||
| Other costs | 57 | 16 | 15 | ||
| Total restructuring costs | $139 | $32 | $27 |
Of the total restructuring costs, $65 million for the year ended December 31, 2025 relates to the April 2025 Announced Closures.
The following table sets forth the activity in the restructuring accrual related to the April 2025 Announced Closures included in "Other
current liabilities" in the Company's Consolidated Balance Sheets:
| Severance charges | Other costs | Total | |||
| Balance at December 31, 2024 | $— | $— | $— | ||
| Charges for the period | 39 | 26 | 65 | ||
| Payments | (16) | (21) | (37) | ||
| Balance at December 31, 2025 | $23 | $5 | $28 |
The majority of these charges will be paid within 12 months of the reporting date. The Company expects to recognize future additional
charges of $34 million associated with the April 2025 Announced Closures through 2026.
The remaining restructuring costs and related restructuring accruals relate to individual restructuring actions which are individually
and cumulatively immaterial.
6. Transaction and Integration-related Expenses Associated with the Combination
The following table summarizes the transaction and integration expenses associated with the Combination:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Transaction-related reversals (expenses) associated with the Combination | $2 | $(202) | $(78) | ||
| Integration-related (expenses) associated with the Combination | (122) | (193) | — | ||
| Total transaction and integration-related expenses associated with the Combination | $(120) | $(395) | $(78) |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Transaction-related Expenses Associated with the Combination
Transaction-related expenses associated with the Combination comprise of banking and financing related expenses as well as legal and
other professional services which are directly attributable to the Combination and retention payments that are contractually committed
to and associated with the successful completion of the Combination.
Integration-related Expenses Associated with the Combination
We incur integration expenses post-acquisition that reflect work performed to facilitate merger and acquisition integration and
primarily consist of professional services and personnel and related expenses, such as work associated with information systems.
7. Accounts Receivable, net
Accounts receivable consists of the following:
| December 31, | |||
| 2025 | 2024 | ||
| Gross accounts receivable | $4,506 | $4,339 | |
| Less: Allowances | (238) | (222) | |
| Accounts receivable | $4,268 | $4,117 |
The following table represents a summary of the changes in allowances for the years ended December 31, 2025, 2024 and 2023:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Balance at January 1 | $222 | $170 | $160 | ||
| Charges to net sales and selling, general and administrative expenses | 383 | 380 | 196 | ||
| Deductions | (355) | (318) | (185) | ||
| Write offs | (12) | (10) | (1) | ||
| Balance at December 31 | $238 | $222 | $170 |
Allowances include the reserves for allowance for estimated credit impairment losses, returns, early settlement discounts and rebates
(where netting requirements are met).
8. Inventories
Inventories are as follows:
| December 31, | |||
| 2025 | 2024 | ||
| Finished goods | $1,432 | $1,374 | |
| Work-in-progress | 192 | 206 | |
| Raw materials | 1,287 | 1,288 | |
| Consumables and spare parts | 782 | 682 | |
| Inventories | $3,693 | $3,550 |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
9. Property, Plant and Equipment, net
Property, plant and equipment consists of the following:
| December 31, | |||
| 2025 | 2024 | ||
| Land and buildings | $5,939 | $5,337 | |
| Plant and equipment | 25,118 | 22,306 | |
| Construction-in-progress | 1,705 | 1,517 | |
| Finance lease right-of-use assets | 472 | 419 | |
| Property, plant and equipment at cost, excluding forestlands | 33,234 | 29,579 | |
| Less: Accumulated depreciation and impairment | (10,295) | (7,155) | |
| Property, plant and equipment, net, excluding forestlands | 22,939 | 22,424 | |
| Forestlands, net of depletion | 293 | 251 | |
| Property, plant and equipment, net | $23,232 | $22,675 |
Depreciation and depletion expense for the years ended December 31, 2025, 2024 and 2023 was $2,402 million, $1,363 million and
$528 million, respectively and is recognized within “Cost of goods sold” and “Selling, general and administrative expenses” in the
Consolidated Statements of Operations.
Non-cash additions to property, plant and equipment included within accounts payable were $518 million, $384 million and
$235 million at December 31, 2025, 2024 and 2023, respectively.
Refer to “Note 5. Impairment and Restructuring Costs” for details of the impairment charges recognized for property, plant and
equipment.
10. Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2025 and December 31, 2024 are as follows:
| North America | Europe, MEA and APAC | LATAM | Total | ||||
| Balance as of December 31, 2023 | $264 | $2,444 | $134 | $2,842 | |||
| Acquisitions and acquisitions adjustments | 3,882 | 94 | 206 | 4,182 | |||
| Translation adjustment | (23) | (141) | (38) | (202) | |||
| Balance as of December 31, 2024 | 4,123 | 2,397 | 302 | 6,822 | |||
| Acquisitions and acquisitions adjustments | 67 | (13) | (3) | 51 | |||
| Translation adjustment | 15 | 296 | 34 | 345 | |||
| Balance as of December 31, 2025 | $4,205 | $2,680 | $333 | $7,218 |
Further information on acquisitions is included in “Note 2. Acquisitions”.
During the fourth quarter of 2025 and 2024, the Company performed qualitative impairment tests and determined it was more likely
than not that the fair value of all reporting units was greater than their carrying amount. Accordingly, the Company concluded that a
quantitative impairment test was not necessary, and that goodwill was not impaired.
Accumulated goodwill impairment losses at December 31, 2025 amount to $274 million comprising $222 million in Europe, MEA
and APAC and $52 million in LATAM. At December 31, 2024, the accumulated goodwill impairment losses were $242 million
comprising $198 million in Europe, MEA and APAC and $44 million in LATAM. At December 31, 2023, the accumulated goodwill
impairment losses were $264 million comprising $209 million in Europe, MEA and APAC and $55 million in LATAM. Movements
in the period relate to foreign currency translation adjustments.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
11. Other Intangible Assets
The gross carrying amount and accumulated amortization relating to intangible assets, excluding goodwill, are as follows:
| December 31, | |||||||
| 2025 | 2024 | ||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||
| Customer relationships | $865 | $(378) | $839 | $(292) | |||
| Trade names and trademarks | 266 | (68) | 252 | (37) | |||
| Developed technology | 180 | (16) | 170 | (7) | |||
| Software assets | 503 | (296) | 424 | (235) | |||
| Land use rights | 3 | — | 3 | — | |||
| Total | $1,817 | $(758) | $1,688 | $(571) |
Intangible asset amortization expense was $148 million, $101 million and $52 million during the years ended December 31, 2025,
2024 and 2023, respectively.
Estimated other intangible asset amortization expense for the succeeding five years is as follows:
| Year ended December 31, | Total | |
| 2026 | $143 | |
| 2027 | 129 | |
| 2028 | 119 | |
| 2029 | 105 | |
| 2030 | 89 |
12. Interest
The components of interest expense, net is as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Interest expense | $(840) | $(525) | $(170) | ||
| Interest income | 111 | 127 | 31 | ||
| Interest expense, net | $(729) | $(398) | $(139) |
Total cash paid for interest, net of interest received was $701 million, $396 million and $146 million for the years ended December 31,
2025, 2024 and 2023, respectively. Of this, capitalized interest paid was $24 million, $22 million and $10 million for the years ended
December 31, 2025, 2024 and 2023, respectively.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
13. Leases
Components of Lease Costs
The following table presents certain information related to the lease costs for finance and operating leases:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Operating lease costs | $(391) | $(264) | $(118) | ||
| Variable and short-term lease costs | (144) | (123) | (47) | ||
| Finance lease cost: | |||||
| Amortization of lease assets | (54) | (26) | (3) | ||
| Interest on lease liabilities | (20) | (14) | (1) | ||
| Total lease costs | $(609) | $(427) | $(169) |
Supplemental Consolidated Balance Sheets Information Related to Leases
| Balance Sheet Location | December 31, | ||||
| 2025 | 2024 | ||||
| Operating leases: | |||||
| Operating lease right-of-use assets | Other non-current assets | $1,051 | $986 | ||
| Current operating lease liabilities | Other current liabilities | $321 | $309 | ||
| Non-current operating lease liabilities | Other non-current liabilities | 774 | 710 | ||
| Total operating lease liabilities | $1,095 | $1,019 | |||
| Finance leases: | |||||
| Property, plant and equipment | Property, plant and equipment, net | $472 | $419 | ||
| Accumulated amortization | (84) | (36) | |||
| Property, plant and equipment, net | $388 | $383 | |||
| Current finance lease liabilities | Current portion of debt | $43 | $33 | ||
| Non-current finance lease liabilities | Non-current debt due after one year | 507 | 506 | ||
| Total finance lease liabilities | $550 | $539 |
Lease Term and Discount Rate
| December 31, | |||
| 2025 | 2024 | ||
| Weighted average remaining lease term: | |||
| Operating leases | 6.5 years | 5.1 years | |
| Finance leases | 11.9 years | 13.1 years | |
| Weighted average discount rate: | |||
| Operating leases | 5.0% | 4.9% | |
| Finance leases | 5.8% | 5.8% |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Supplemental Cash Flow Information Related to Leases
The following table presents supplemental cash flow information related to leases:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||
| Operating cash flows related to operating leases | $384 | $265 | $118 | ||
| Operating cash flows related to finance leases | 20 | 14 | 1 | ||
| Financing cash flows related to finance leases | 43 | 22 | 3 | ||
| Leased assets obtained in exchange for lease liabilities: | |||||
| Operating leases | $390 | $213 | $133 | ||
| Finance leases | $50 | $7 | $— |
Maturity of Lease Liabilities
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating
lease liabilities and finance lease liabilities recorded on the Consolidated Balance Sheets at December 31, 2025:
| Year ended December 31, | Operating Leases | Finance Leases | Total | |||
| 2026 | $379 | $66 | $445 | |||
| 2027 | 289 | 144 | 433 | |||
| 2028 | 196 | 48 | 244 | |||
| 2029 | 133 | 42 | 175 | |||
| 2030 | 85 | 44 | 129 | |||
| Thereafter | 324 | 454 | 778 | |||
| Total lease payments | $1,406 | $798 | $2,204 | |||
| Less: Interest | (311) | (248) | (559) | |||
| Present value of future lease payments | $1,095 | $550 | $1,645 |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
14. Fair Value Measurement
The fair values of the Company's financial assets and financial liabilities listed below reflect the amounts that would be received to sell
the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price).
The Company's non-derivative financial instruments primarily include cash and cash equivalents, trade and other receivables, certain
other current assets, trade and other payables, certain other current liabilities, short-term debt and non-current debt, all of whose
carrying values approximates fair value (with the exception of debt with fixed interest rates). Fair value disclosures are classified
based on the fair value hierarchy. See “Note 1. Description of Business and Summary of Significant Accounting Policies,” for
information about the Company's fair value hierarchy.
The carrying values, net of deferred debt issuance costs, and estimated fair values of debt with fixed interest rates (classified as Level
2 in the fair value hierarchy) were as follows:
| December 31, | |||||||
| 2025 | 2024 | ||||||
| Book Value | Fair Value | Book Value | Fair Value | ||||
| Debt with fixed interest rates | $11,492 | $11,616 | $11,370 | $11,289 |
The fair value of the Company's debt with fixed interest rates is based on quoted market prices. With the exception of debt with fixed
interest rates, the carrying amounts of all other debt instruments approximate their fair values. The variable nature and repricing dates
of the receivables securitization facilities and the revolving credit facility result in carrying values approximating their fair values.
Both the revolving credit facility and the receivables securitization facilities are classified as Level 2 in the fair value hierarchy.
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
The Company measures and records certain assets and liabilities, including derivative instruments at fair value. The following table
summarizes the fair value of these instruments, which are measured at fair value on a recurring basis, by level, within the fair value
hierarchy:
| Level 1 | Level 2 | ||||||
| December 31, | December 31, | ||||||
| 2025 | 2024 | 2025 | 2024 | ||||
| Assets | |||||||
| Other Investments: | |||||||
| Listed | $2 | $2 | $— | $— | |||
| Unlisted | — | — | 11 | 10 | |||
| Derivatives in cash flow hedging relationships | — | — | 1 | 3 | |||
| Derivatives not designated as hedging instruments | — | — | 10 | 11 | |||
| Assets measured at fair value | $2 | $2 | $22 | $24 | |||
| Liabilities | |||||||
| Derivatives in cash flow hedging relationships | $— | $— | $1 | $1 | |||
| Derivatives not designated as hedging instruments | — | — | 1 | 13 | |||
| Liabilities measured at fair value | $— | $— | $2 | $14 |
There were no assets or liabilities, which are measured at fair value on a recurring basis, classified as Level 3 in the fair value
hierarchy for the periods presented.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
The fair value of listed financial assets is determined by reference to their bid price at the reporting date. Unlisted financial assets are
valued using recognized valuation techniques for the underlying security including discounted cash flows and similar unlisted equity
valuation models.
The fair value of foreign currency forwards, cross currency swaps and energy hedging contracts is based on their listed market price, if
available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual
forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on
government bonds).
The fair value of natural gas commodity derivatives is estimated based on observable inputs such as commodity future prices.
For derivative financial instruments that are not designated as accounting hedges, the entire change in fair value of the financial
instrument is reported immediately in current period earnings.
Assets and Liabilities Measured and Recorded at Fair Value on a Non-recurring Basis
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities
at fair value on a non-recurring basis. This includes assets acquired and liabilities assumed as a result of business combinations or non-
monetary exchanges, situations where events or changes in circumstances indicate the carrying value may not be recoverable, or when
they are deemed to be other than temporarily impaired. These assets include property, plant, and equipment, goodwill and other
intangible assets, assets and disposal groups held for sale and other non-current assets. The fair values of these assets are determined,
when applicable, based on valuation techniques using the best information available, and may include quoted market prices,
observable price for similar assets, market comparables, and discounted cash flow projections. These non-recurring fair value
measurements are considered to be Level 3 in the fair value hierarchy.
For more details on the measurement of assets acquired and liabilities assumed as part of business combinations refer to “Note 2.
Acquisitions”. For more details on the remeasurement of assets in connection to impairments recorded in the year refer to “Note 5.
Impairment and Restructuring Costs”.
Accounts Receivable Monetization Agreements
Available to the Company is a $700 million accounts receivable monetization facility to sell to a third-party financial institution all of
the short-term trade receivables generated from certain customer trade accounts. On September 12, 2025, we amended this agreement
to extend the maturity date by one year to September 15, 2026. This facility (the “Monetization Agreement”) has Coöperatieve
Rabobank U.A., New York Branch, as purchaser, (“Rabobank”). The terms of the Monetization Agreement limit the balance of
receivables sold to the amount available to fund such receivables sold, thereby eliminating the receivable for proceeds from the
financial institution at any transfer date. Transfers under the Monetization Agreement meet the requirements to be accounted for as
sales in accordance with guidance in ASC 860, “Transfers and Servicing” (“ASC 860”). We pay a monthly yield on investment to
Rabobank at a rate equal to adjusted Term SOFR plus a margin on the outstanding amount of Rabobank’s investment. The Company
also has a similar $100 million bilateral facility with Sumitomo Mitsui Banking Corporation, New York Branch as purchaser. On
December 4, 2025, we amended this agreement to extend the maturity date by one year to December 2026 and to reduce the facility
size from $110 million to $100 million.
The customers from these facilities are not included in the receivables securitization facilities, as discussed in more detail in “Note 15.
Debt” and “Note 22. Variable Interest Entities”.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
The following table presents a summary of these accounts receivable monetization agreements for the years ended December 31, 2025
and December 31, 2024:
| Years ended December 31, | |||
| 2025 | 2024 | ||
| Receivable from financial institutions at January 1 | $— | $— | |
| Receivables sold to the financial institutions and derecognized | (2,572) | (1,381) | |
| Receivables collected by financial institutions | 2,638 | 1,319 | |
| Cash (payments) proceeds (to) from financial institutions | (66) | 62 | |
| Receivable from financial institutions at December 31 | $— | $— |
The activity for the comparative year is for the period following the Combination. Receivables sold under these accounts receivable
monetization agreements as of the balance sheet date were $659 million (December 31, 2024: $725 million).
Cash proceeds or payments related to the receivables sold are included in “Net cash provided by operating activities” in the
Consolidated Statements of Cash Flows in the “Accounts receivable” line item. The expense related to the sale of receivables was
$38 million (December 31, 2024, for the post-Combination period: $23 million). The expense recorded may vary depending on current
rates and levels of receivables sold and is recorded in “Other expense, net” in the Consolidated Statements of Operations. Although the
sales are made without recourse, we maintain continuing involvement with the receivables sold as we provide collections services
related to the transferred assets. The associated servicing liability is not material given the high credit quality of the customers
underlying the receivables and the anticipated short collection period.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
15. Debt
The following were individual components of debt:
| December 31, | |||||||
| 2025 | 2024 | ||||||
| Amount | Weighted average interest rate | Amount | Weighted average interest rate | ||||
| $292 million senior debentures due 2025 | $— | —% | $292 | 7.5% | |||
| $700 million receivables securitization due 2027 | 550 | 5.0% | 435 | 5.7% | |||
| $500 million senior notes due 2027 | — | —% | 500 | 3.4% | |||
| €750 million senior notes due 2027 | — | —% | 781 | 1.5% | |||
| $600 million senior notes due 2028 | 600 | 4.0% | 600 | 4.0% | |||
| $500 million senior notes due 2028 | 500 | 3.9% | 500 | 3.9% | |||
| $750 million senior notes due 2029 | 750 | 4.9% | 750 | 4.9% | |||
| €500 million senior green notes due 2029 | 587 | 0.5% | 520 | 0.5% | |||
| €230 million receivables securitization due 2029 | 257 | 3.6% | 5 | 4.3% | |||
| €100 million receivables securitization due 2029 | 117 | 3.1% | — | —% | |||
| $400 million senior notes due 2030 | 400 | 8.2% | 400 | 8.2% | |||
| $750 million senior green notes due 2030 | 750 | 5.2% | 750 | 5.2% | |||
| $300 million senior notes due 2031 | 300 | 8.0% | 300 | 8.0% | |||
| €500 million senior green notes due 2031 | 587 | 3.5% | — | —% | |||
| $500 million senior notes due 2032 | 500 | 4.2% | 500 | 4.2% | |||
| $76 million senior notes due 2032 | 76 | 6.8% | 76 | 6.8% | |||
| €600 million senior green notes due 2032 | 704 | 3.5% | 624 | 3.5% | |||
| $600 million senior notes due 2033 | 600 | 3.0% | 600 | 3.0% | |||
| €500 million senior green notes due 2033 | 587 | 1.0% | 520 | 1.0% | |||
| $1,000 million senior green notes due 2034 | 1,000 | 5.4% | 1,000 | 5.4% | |||
| $850 million senior green notes due 2035 | 850 | 5.4% | 850 | 5.4% | |||
| $800 million senior green notes due 2036 | 800 | 5.2% | — | —% | |||
| €600 million senior green notes due 2036 | 704 | 3.8% | 624 | 3.8% | |||
| $3 million senior notes due 2037 | 3 | 6.8% | 3 | 6.8% | |||
| $150 million senior notes due 2047 | 150 | 7.6% | 150 | 7.6% | |||
| $1,000 million senior green notes due 2054 | 1,000 | 5.8% | 1,000 | 5.8% | |||
| Commercial paper | 155 | 4.0% | 546 | 4.8% | |||
| Vendor financing and commercial card programs | 99 | —% | 116 | —% | |||
| Farm credit facility | 600 | 5.5% | 600 | 6.1% | |||
| Other bank loans | 93 | 8.3% | 129 | 7.2% | |||
| Finance lease obligations | 548 | 5.8% | 536 | 5.8% | |||
| Total debt, excluding fair value adjustments, bond discounts and debt issuance costs | 13,867 | 13,707 | |||||
| Unamortized fair value adjustments, bond discounts and debt issuance costs | (94) | (112) | |||||
| Total debt | 13,773 | 13,595 | |||||
| Less: Current portion of debt | (346) | (1,053) | |||||
| Non-current debt due after one year | $13,427 | $12,542 |
As of December 31, 2025, we have senior notes in issuance with a total par value of $11,448 million (December 31, 2024:
$11,340 million), of which $3,169 million are denominated in euro (December 31, 2024: $3,069 million) and $8,279 million are
denominated in U.S. dollars (December 31, 2024: $8,271 million).
The weighted average interest rate for short-term debt was 3.3% and 5.1% as of December 31, 2025, and 2024, respectively.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
As of December 31, 2025, the aggregate maturities of debt, excluding finance lease obligations, for the succeeding five years and
thereafter are as follows:
| Year ended December 31, | Total | |
| 2026 | $312 | |
| 2027 | 583 | |
| 2028 | 1,101 | |
| 2029 | 2,312 | |
| 2030 | 1,150 | |
| 2031 and thereafter | 7,861 | |
| Unamortized fair value adjustments, bond discounts and debt issuance costs | (96) | |
| Total | $13,223 |
See “Note 13. Leases” for the aggregate maturities of finance lease obligations for the succeeding five years and thereafter.
The maturity profile of undrawn committed facilities are as follows:
| 2025 | 2024 | ||
| Within one year | $— | $— | |
| Between one and two years | 47 | — | |
| More than two years | 4,513 | 5,079 |
The undrawn commitments above pertain to the revolving credit facility and the receivables securitization facilities, which are further
explained below. The commitment fees on the revolving credit facility and receivables securitization facilities were immaterial for the
years ended December 31, 2025, and 2024.
During the years ended December 31, 2025, 2024 and 2023, amortization of debt issuance costs charged to interest expense were
$12 million, $10 million and $7 million, respectively.
At December 31, 2025 the borrowings which were designated as net investment hedges had a carrying value of $49 million
(December 31, 2024: $49 million). There has been no ineffectiveness recognized in relation to these hedges in the current or prior
financial years.
The carrying amount of our debt includes a fair value adjustment related to debt assumed through mergers and acquisitions. The value
of the debt assumed upon the Combination (inclusive of the adjustment) was $8,725 million. At December 31, 2025, the unamortized
fair value adjustment was $22 million, which will be amortized over a weighted average remaining life of 7 years.
At December 31, 2025, all of our debt was unsecured with the exception of our receivables securitization facilities and finance lease
obligations.
The senior notes are unsecured, unsubordinated obligations that rank equally in right of payment with all of our existing and future
unsecured, unsubordinated obligations. The senior notes are effectively subordinated to any of our existing and future secured debt to
the extent of the value of the assets securing such debt and to the obligations of our non-debtor/guarantor subsidiaries.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Senior Notes Issued and Redeemed
2025
On April 3, 2025, the Company and certain of its direct and indirect wholly-owned subsidiaries (the “Obligor Group”) filed with the
United States Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4, with respect to concurrent
offers to exchange up to $2,750 million principal amount of unregistered senior unsecured notes previously issued by Smurfit Kappa
Treasury Unlimited Company on April 3, 2024 and guaranteed by other members of the Obligor Group and up to $850 million
principal amount of unregistered senior unsecured notes previously issued by Smurfit Westrock Financing Designated Activity
Company on November 26, 2024 and guaranteed by the other members of the Obligor Group (collectively, the “Original Notes”), in
each case for registered notes of equal principal amount issued by the same obligors with the same interest and maturity dates and
coupons and guaranteed by the same members of the Obligor Group (the “New Notes”). The Form S-4 became effective on April 23,
2025 and the exchange offers commenced on that same date. The terms of the New Notes are identical in all material respects to the
Original Notes except that the New Notes do not have any transfer restrictions, registration rights or additional interest provisions. The
exchange offers expired at 5:00 p.m. New York City time, on May 21, 2025 (the “Expiration Date”) and resulted in approximately
$3,588 million aggregate principal amount of the Original Notes (99.66% of the original principal amount) being validly tendered and
not validly withdrawn, for exchange for the New Notes. The Obligor Group accepted all of the Original Notes which were validly
tendered and not validly withdrawn as of the Expiration Date and has issued a like principal amount of New Notes in exchange for
such Original Notes. No new proceeds were received by the Obligor Group in connection with the exchange offer.
On November 20, 2025 we redeemed the outstanding $292 million in aggregate principal amount of 7.500% senior debentures due
2025 in full at par. We funded this redemption using existing liquidity. No gain or loss on extinguishment of debt was recorded.
On November 21, 2025, Smurfit Westrock Financing Designated Activity Company (“SWF”), a designated activity company
incorporated under the laws of Ireland and a wholly-owned direct subsidiary of Smurfit Westrock plc (“Smurfit Westrock”), issued
$800 million aggregate principal amount of 5.185% senior green notes due 2036 (the “USD Notes”), with interest payable semi-
annually in arrears, beginning on July 15, 2026. On November 24, 2025, Smurfit Kappa Treasury Unlimited Company (“SKT” and,
together with SWF, the “Issuers”), a public unlimited company incorporated under the laws of Ireland and a wholly-owned indirect
subsidiary of Smurfit Westrock issued €500 million aggregate principal amount of 3.489% senior green notes due 2031 (the “EUR
Notes” and, together with the USD Notes, the “November 2025 Notes”), with interest payable annually in arrears. These November
2025 Notes can be redeemed, at par in whole or in part, within three months to their maturity, in accordance with the respective
indentures. The November 2025 Notes have been registered under the U.S. Securities Act of 1933, as amended, pursuant to a
registration statement (the “Registration Statement”) on Form S-3ASR (No. 333-291446) filed with the SEC on November 12, 2025.
The November 2025 Notes were sold pursuant to a base prospectus, dated November 12, 2025, forming a part of the Registration
Statement, and separate preliminary and final prospectus supplements with respect to the USD Notes, dated November 17, 2025, and
the EUR Notes, dated November 18, 2025.
We used the net proceeds of the above November 2025 Notes (i) to redeem the outstanding €750 million in aggregate principal
amount of 1.500% senior notes due 2027 issued by SKT (the “SKT 2027 Notes”) in full at the applicable redemption price set forth in
the indenture governing the SKT 2027 Notes, (ii) to redeem the outstanding $500 million in aggregate principal amount of 3.375%
senior notes due 2027 issued by WRKCo Inc. (the “WRKCo 2027 Notes”) in full at the applicable redemption price set forth in the
indenture governing the WRKCo 2027 Notes, and (iii) for general corporate purposes, including the repayment of indebtedness. We
also used an amount equivalent to the proceeds of the November 2025 Notes to finance or refinance a portfolio of eligible green
projects in accordance with our Green Finance Framework, which we may, in the future, update in line with developments in the
market.
We recorded a $2 million and $14 million loss on extinguishment upon repayment of the €750 million 1.500% senior notes due 2027
and the $500 million 3.375% senior notes due 2027, respectively.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
2024
On April 3, 2024, Smurfit Kappa Treasury (a wholly-owned subsidiary of Smurfit Westrock plc) completed an offering in the
aggregate principal amount of $2,750 million of senior unsecured green notes in three series, comprised of the following: $750 million
aggregate principal amount of 5.200% senior green notes due 2030 (the “2030 Notes”), $1,000 million aggregate principal amount of
5.438% senior green notes due 2034 (the “2034 Notes”) and $1,000 million aggregate principal amount of 5.777% senior green notes
due 2054 (the “2054 Notes” and, together with the 2030 Notes and 2034 Notes, the “Notes” or the “Financing”) (such offering, the
“April Notes Offering”).
The proceeds from the April Notes Offering have been used to fund the cash portion of the Combination consideration and related
fees, for general corporate purposes including repayment of indebtedness and to finance or refinance eligible green projects in
accordance with Smurfit Westrock's Green Finance Framework.
On August 12, 2024, we redeemed €250 million aggregate principal amount of our 2.750% senior notes due February 2025. We
funded this redemption by drawing on our receivables securitization facilities. No gain or loss on extinguishment of debt was
recorded.
On September 17, 2024, we discharged $600 million aggregate principal amount of our 3.750% senior notes due March 2025. We
funded this discharge using a portion of the proceeds from our April Notes Offering. We recorded a $4 million loss on extinguishment
of debt.
On November 26, 2024, we issued $850 million aggregate principal amount of 5.418% senior green notes due 2035, with interest
payable semi-annually in arrears, beginning on July 15, 2025. On November 27, 2024, we also issued €600 million aggregate principal
amount of 3.454% senior green notes due 2032 and €600 million aggregate principal amount of 3.807% senior green notes due 2036,
both with interest payable annually in arrears. These senior green notes (the “November 2024 Notes”) can be redeemed, at par in
whole or in part, within three months to their maturity, in accordance with the respective indentures.
We used the net proceeds of the above November 2024 Notes (i) to redeem the outstanding €1,000 million in aggregate principal
amount of 2.875% senior notes due 2026, in full at the applicable redemption price set forth in the applicable indenture, (ii) to redeem
the outstanding $750 million in aggregate principal amount of 4.650% senior notes due 2026, in full at the applicable redemption price
set forth in the applicable indenture, and (iii) for general corporate purposes, including the repayment of indebtedness. We used an
amount equivalent to the proceeds of these November 2024 Notes to finance or refinance a portfolio of eligible green projects in
accordance with our Green Finance Framework.
We recorded a $7 million and $2 million loss on extinguishment at repayment of the $750 million 4.650% senior notes due 2026 and
the €1,000 million 2.875% senior notes due 2026, respectively.
Revolving Credit Facility
The Company has a Revolving Credit Facility (“RCF”) with certain lenders and Wells Fargo Bank, National Association, as agent,
that provides for a multi-currency revolving loan facility in an aggregate principal amount of $4,500 million, including a swingline
sub-facility in an aggregate principal amount of $500 million.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Loans under the RCF may be drawn in U.S. dollars, euro, pounds sterling, Swiss francs, Japanese yen, Swedish kronor and Canadian
dollars, with a borrower (or the obligors’ agent on behalf of a borrower) selecting the currency of a loan under the RCF. Borrowings
under the RCF bear interest at rates based upon an underlying reference rate, plus a margin determined in accordance with a ratings-
based pricing grid. Reference rates include SOFR for U.S. dollars, EURIBOR for euro, SONIA for pounds sterling, STIBOR for
Swedish kronor and SARON for Swiss francs. Unused revolving commitments under the RCF will accrue a commitment fee equal to
a percentage of the applicable interest rate margin. The RCF also requires the payment of a utilization fee calculated on outstanding
revolving loans, based on the utilization rate of the RCF. The RCF had an initial term of five years from its commencement date (June
28, 2024), which may be extended on two occasions by up to an aggregate of two years. In June 2025, the Company exercised the first
extension option, extending the maturity date to June 28, 2030. The RCF is unsecured. The RCF includes customary terms and
conditions for investment grade borrowers. There are no financial covenants. As of December 31, 2025, there were no amounts
outstanding under the facility.
Farm Credit Facility
A credit agreement (the “Farm Credit Facility Agreement”) is in place with CoBank, ACB, as administrative agent. The Farm Credit
Facility Agreement provides for a senior unsecured term loan facility in an aggregate principal amount of $600 million and matures in
July 2029. The carrying value of this facility at December 31, 2025, was $600 million.
At our option, loans issued under the Farm Credit Facility Agreement will bear interest at either Term SOFR or an alternative base
rate, in each case plus an applicable interest rate margin that will fluctuate between 1.650% per annum and 2.275% per annum (for
Term SOFR loans) or between 0.650% per annum and 1.275% per annum (for alternative base rate loans), based upon the Company’s
corporate credit ratings (as defined in the Farm Credit Facility Agreement). In addition, Term SOFR loans will be subject to a credit
spread adjustment equal to 0.1% per annum.
Receivables Securitization Facilities
The Group’s liquidity facilities include two euro denominated trade receivables securitization programs of up to €330 million of
committed financings in aggregate which are due to mature in December 2029 and one U.S. dollar denominated trade receivables
securitization program of up to $700 million of committed financings which is due to mature in June 2027.
As of December 31, 2025, the gross amount of receivables collateralizing the euro denominated trade receivables programs was
€749 million (December 31, 2024: €739 million). At December 31, 2025, maximum available borrowings, when excluding amounts
drawn under these programs, were $13 million (December 31, 2024: $338 million).
As of December 31, 2025, the gross amount of receivables collateralizing the U.S. dollar denominated trade receivables program was
$1,043 million (December 31, 2024: $1,077 million). At December 31, 2025, maximum available borrowings, when excluding
amounts drawn under these programs, were $47 million (December 31, 2024: $241 million).
We have continuing involvement with the underlying receivables as we provide credit and collection services pursuant to the
underlying agreement.
Borrowing availability under these facilities is based on the eligible underlying accounts receivable and compliance with certain
covenants. The agreements governing the receivables securitization facilities contain restrictions, including, among others, on the
creation of certain liens on the underlying collateral. Interest rates are based on prevailing market rates plus a program fee.
The sale of the securitized receivables under our securitization programs does not meet the requirements for derecognition under ASC
- As a result, the securitized receivables continue to be shown on the face of the Consolidated Balance Sheets, and the notes issued
to fund the purchase of these receivables are shown as borrowings with attributable interest expense recognized over the life of the
related transaction.
Given the short-term nature of the securitized receivables and the variable floating rates, the carrying amount of the securitized
receivables and the associated liabilities reported on the Consolidated Balance Sheets is estimated to approximate fair value.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except p**er share data)
Commercial Paper
The Company, through its wholly-owned subsidiary WRKCo Inc. as the issuer, maintains an unsecured commercial paper program.
Under the program, we may issue senior short-term unsecured commercial paper notes in an aggregate principal amount at any time
not to exceed $1,000 million with up to 397-day maturities. The program has no expiration date and can be terminated by either the
agent or us with not less than 30 days’ notice. The $1,000 million commercial paper program is supported by the $4,500 million RCF
with a separate $500 million swingline sublimit which allows for same-day drawing in U.S. dollar. The amount of commercial paper
outstanding does not reduce available capacity under the RCF. Commercial paper borrowings may vary during the period, largely as a
result of fluctuations in funding requirements.
Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. At December 31, 2025,
$155 million was issued (December 31, 2024: $546 million). The weighted average interest rate pertaining to this facility was 4.0% as
of that date (December 31, 2024: 4.8%).
16. Shareholders’ Equity
Common Stock
Subject to the articles of association of the Company, the holders of ordinary shares are entitled to share in any dividends in proportion
to the number of shares held by them and are entitled to one vote for every share held by them.
Preferred Stock
The holders of the Series A Preferred Stock are entitled in priority to any payments of dividends on any other class of shares in the
Company to be paid annually on a fixed non-cumulative preferential dividend rate of 8% per annum. On a return of assets, whether on
liquidation or otherwise, the Series A Preferred Stock entitle the holder to repayment of the capital paid up on those shares (including
any share premium) in priority to any repayment of capital to the holders of any other shares. The holder of the Series A Preferred
Stock is not entitled to any further participation in the assets or profits of the Company and is not entitled to receive notice of, attend,
speak or vote at any general meeting of the Company.
Deferred Shares
Holders of deferred shares have no right to receive notice of, attend, speak, or vote at any general meetings of the Company. Deferred
shares do not carry the right to receive dividends. Any deferred shares that are issued will rank in priority below the ordinary shares
with respect to liquidation rights and such entitlement will be limited to the repayment of the amount paid up or credited as paid up on
the deferred shares.
Treasury Stock
This represents common stock assumed by the Smurfit Kappa Employee Trust under the terms of the Deferred Bonus Plan. For the
avoidance of doubt, ‘treasury stock’ shall not be construed to have the same meaning as treasury shares under section 109 of the Irish
Companies Act.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except share and per share data)
17. Share-based Compensation
Share-based compensation expense relates primarily to awards granted under the Deferred Bonus Plan (“DBP”) and the Performance
Share Plan (“PSP”) as well as Performance Share Units (“PSUs”) and Restricted Stock Units (“RSUs”). Share-based compensation
expense recognized in the Consolidated Statements of Operations is as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Deferred Bonus Plan | $15 | $24 | $29 | ||
| Performance Share Plan | 61 | 65 | 35 | ||
| Performance Share Units | 11 | 2 | — | ||
| Restricted Stock Units | 50 | 109 | — | ||
| Total share-based compensation expense | $137 | $200 | $64 | ||
| Income tax benefit related to share-based compensation expense | $12 | $15 | $— |
Social charges relating to equity settled share-based payments for the years ended December 31, 2025, 2024 and 2023, were
$2 million, $6 million and $2 million, respectively.
The following note disclosure details the legacy Smurfit Kappa plans (the Deferred Bonus Plan and the Performance Share Plan), the
conversion of the legacy Westrock RSU and PSU awards due to the Combination and also the Smurfit Westrock 2024 Long Term
Incentive Plan (“LTIP”).
Deferred Bonus Plan
The DBP is a legacy Smurfit Kappa plan. No new awards were issued under the DBP from 2025 onwards. The number of shares
awarded under the DBP during the years ended December 31, 2024 and 2023, were 651,648 and 764,182, respectively.
During the years ended December 31, 2025, 2024 and 2023, 586,113, 523,972, and 483,801 shares vested having a fair value of
$32 million, $21 million, and $18 million, respectively.
As of December 31, 2025, the unrecognized compensation expense related to the DBP was $12 million, which will be recognized over
the remaining weighted average vesting period of 1.2 years.
Performance Share Plan
The PSP is a legacy Smurfit Kappa plan. No new awards were issued under the PSP during 2025. The number of shares awarded
under the PSP during the years ended December 31, 2024 and 2023 were 1,700,922, and 2,003,416, respectively.
During the years ended December 31, 2025, 2024 and 2023, 1,414,298, 742,163 and 1,322,030 shares vested having a fair value of
$77 million, $30 million and $50 million, respectively.
As of December 31, 2025, the unrecognized compensation expense related to the PSP was $33 million, which will be recognized over
the remaining weighted average vesting period of 1.1 years.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except share and per share data)
Modification of Performance Share Plan Awards due to the Combination
In connection with the Combination, certain outstanding PSP awards were modified, including the conversion of Smurfit Kappa
awards into Smurfit Westrock awards and changes to performance and vesting conditions. As a result, modification accounting was
required for certain awards under ASC 718, “Compensation—Stock Compensation”. These modifications were accounted for as Type
1 probable-to-probable modifications. The total incremental fair value associated with these modifications was $106 million. Certain
of the modified awards remain outstanding as of December 31, 2025.
Long-Term Incentive Plan
On July 5, 2024, immediately prior to the Combination, the Board adopted the LTIP, pursuant to which Smurfit Westrock plc may
grant RSUs, PSUs, stock options, including incentive stock options, stock appreciation rights, share awards, which may be subject to
performance-based and/or time-based vesting conditions, and cash bonus incentives to eligible employees (including Named
Executive Officers), directors and consultants/independent contractors. The key purpose of the LTIP is to retain key executives and to
align the interests of our executives with the achievement of sustainable long-term growth and performance.
The LTIP authorizes granting of 26,000,000 shares to employees. As of December 31, 2025, there were 21,464,470 shares available to
be granted under this plan, assuming the PSUs previously granted vest at maximum.
Performance Share Units granted under the LTIP
During the year, the Company granted PSUs under the LTIP. Awards will vest after a three-year performance period to the extent to
which the performance conditions have been met. The performance targets assigned to the PSU awards are set by the Smurfit
Westrock Compensation Committee on the granting of awards at the start of each three-year cycle.
For the PSU awards granted in 2025, the actual number of shares that will vest under the PSU is dependent on the performance
conditions of the Company’s Cumulative Adjusted Earnings per Share (“EPS”), Average Return on Capital Employed (“ROCE”) and
Total Shareholder Return relative to a peer group (“rTSR”) measured over a three-year performance period. Participants can earn
between 0% and 200% based on the achievement of these performance conditions. PSU performance conditions will be reviewed at
the end of the three-year performance period and the PSU shares awarded will vest depending upon the extent to which these
performance conditions have been satisfied and the participants’ continued service through to the vesting date.
For PSU awards granted in 2024, the performance period for these awards began on July 8, 2024, and ends on December 31, 2026.
The number of shares that will ultimately vest are based on a rTSR condition, where a participant can earn between 0% and 200%.
The table below summarizes the changes in the PSUs for the year ended December 31, 2025:
| Number of shares | Weighted average grant date fair value | ||
| Outstanding at January 1 | 232,422 | $50.07 | |
| Granted | 1,636,530 | 45.67 | |
| Forfeited | (93,321) | 41.87 | |
| Vested | (233) | 45.64 | |
| Outstanding at December 31 | 1,775,398 | $46.21 |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except share and per share data)
The fair values assigned to the EPS and ROCE components of the PSU awards are equivalent to the closing price of the Company’s
shares on the grant date. The fair value assigned to the portion of awards which are subject to rTSR performance was calculated as of
the grant date using the Monte Carlo simulation model. The grant date fair value for the rTSR portion of the awards was $48.77 for
2025 (year ended December 31, 2024: $50.07). The Monte Carlo simulation takes into account peer group total shareholder return and
volatilities together with the following assumptions:
| 2025 | 2024 | ||
| Risk-free interest rate | 3.9% | 3.7% | |
| Expected volatility | 28.8% | 33.7% | |
| Expected term (years) | 2.8 | 2.4 |
For the awards granted in 2025, the expected volatility rate applied by the Company was based on a blended volatility that used
implied volatility and the historical adjusted daily stock prices that were time weighted based on post-acquisition prices of Smurfit
Westrock and a Company selected peer group. For a term of 0.68 years, the volatility of Smurfit Westrock was used. The term of 0.68
years was calculated as the time from the transaction date (July 5, 2024) to the grant date. For the remaining term of 2.12 years, a
volatility calculation was used based on the implied volatility as of the valuation date of March 11, 2025 and the historical adjusted
daily stock prices using the selected peer group companies for the 2.12 years prior to July 5, 2024.
For the awards granted in 2024, in order to account for the Combination, the expected volatility rate applied was based on a blended
volatility that used historical adjusted daily stock prices that were time weighted based on pre- and post-acquisition prices of Smurfit
Kappa, WestRock, and Smurfit Westrock. For a term of 0.08 years, historical volatility of Smurfit Westrock was used (which was
calculated as the time from the transaction date of July 5, 2024, to the grant date of August 2, 2024). For the remaining term of 2.33
years, a market capitalization weighted volatility was used for Smurfit Kappa and WestRock as of the transaction date.
For the awards granted in 2025 and 2024, the risk-free interest rate is based on the U.S. Treasury Rate Yield Curve, adjusted to
approximate zero coupon yields using the “bootstrap” technique, over a period equal to the expected term.
During the year ended December 31, 2024, no shares vested.
As of December 31, 2025, unrecognized compensation expense related to the awards was $27 million, which will be recognized over
the remaining weighted average vesting period of 2.0 years.
Restricted Stock Units
As part of the Combination described in "Note 2. Acquisitions", the Company replaced outstanding legacy WestRock RSUs and PSUs
held by current employees with Smurfit Westrock RSUs and a cash award equal to $5.00 per share, with all replacement awards
retaining their original vesting conditions. WestRock director RSUs vested immediately upon the change in control and were settled in
July 2024.
During the year, the Company granted RSUs under the LTIP. Awards will vest after a 3-year service period subject to the participants’
continued service through to the vesting date.
The table below summarizes the changes in the RSUs granted under the LTIP and legacy WestRock RSU and PSU awards converted
to Smurfit Westrock RSU awards during the year ended December 31, 2025:
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except share and per share data)
| Number of shares | Weighted average grant date fair value | ||
| Outstanding at January 1 | 3,711,962 | $46.87 | |
| Granted | 1,099,826 | 43.64 | |
| Forfeited | (124,051) | 45.57 | |
| Vested | (1,821,776) | 46.75 | |
| Outstanding at December 31 | 2,865,961 | $45.72 |
During the years ended December 31, 2025 and 2024, 1,821,776 and 1,695,195 shares vested, respectively having a fair value of
$92 million and $75 million, respectively. As of December 31, 2025 unrecognized compensation expense related to the awards was
$42 million which will be recognized over the remaining weighted average vesting period of 1.8 years.
18. Income Taxes
The components of income before income taxes are as follows:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Income before income taxes: | |||||
| Domestic (Ireland) | $315 | $197 | $173 | ||
| Foreign (U.S.) | (73) | (111) | (17) | ||
| Foreign (Other) | 717 | 474 | 982 | ||
| Total income before income taxes | $959 | $560 | $1,138 | ||
| Income tax expense consists of the following components: | |||||
| Current tax expense (net of investment tax credits of $6, $8 and $10) | |||||
| Domestic (Ireland) | $71 | $64 | $44 | ||
| Foreign (U.S., Federal & State) | 42 | 66 | 4 | ||
| Foreign (Other) | 337 | 248 | 292 | ||
| Total current tax expense | $450 | $378 | $340 | ||
| Deferred tax expense (benefit): | |||||
| Domestic (Ireland) | $(4) | $19 | $2 | ||
| Foreign (U.S., Federal & State) | (108) | (123) | 1 | ||
| Foreign (Other) | (78) | (33) | (31) | ||
| Total deferred tax benefit | (190) | (137) | (28) | ||
| Total income tax expense | $260 | $241 | $312 | ||
| Total income tax expense consists of the following components: | |||||
| Domestic (Ireland) | $67 | $83 | $46 | ||
| Foreign (U.S., Federal & State) | (66) | (57) | 5 | ||
| Foreign (Other) | 259 | 215 | 261 | ||
| Total income tax expense | $260 | $241 | $312 |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
The differences between income tax expense and the amount computed by applying the Republic of Ireland statutory trading income
tax rate of 12.5% (the primary rate of our country of domicile) to income before income taxes for the year ended December 31, 2025 is
as follows:
| Year ended December 31, | |||
| 2025 | |||
| Income before income taxes | $959 | ||
| Ireland corporate tax rate | 120 | 12.5% | |
| Foreign tax effects | |||
| United States | |||
| Statutory tax rate difference between United States and Ireland | (8) | (0.8)% | |
| State and local taxes, net of federal benefit | (8) | (0.8)% | |
| Change in valuation allowances | 33 | 3.4% | |
| Effects of cross border tax laws - GILTI | 11 | 1.1% | |
| Effects of cross border tax laws - Subpart F | 12 | 1.3% | |
| Nontaxable company-owned life insurance (COLI) | (9) | (0.9)% | |
| R&D tax credits | (8) | (0.8)% | |
| Other | 8 | 0.8% | |
| Mexico | |||
| Statutory tax rate difference between Mexico and Ireland | 32 | 3.3% | |
| Tax benefits associated with inflation deductions | (41) | (4.3)% | |
| Other | 1 | 0.1% | |
| Brazil | |||
| Statutory tax rate difference between Brazil and Ireland | 23 | 2.4% | |
| Other | (5) | (0.5)% | |
| France | |||
| Statutory tax rate difference between France and Ireland | 15 | 1.6% | |
| Corporate surtax | 8 | 0.8% | |
| Other | 3 | 0.3% | |
| Spain | |||
| Statutory tax rate difference between Spain and Ireland | 14 | 1.5% | |
| Other | (9) | (0.9)% | |
| Colombia | |||
| Statutory tax rate difference between Colombia and Ireland | 18 | 1.9% | |
| Other | (3) | (0.3)% | |
| Germany | |||
| Local corporate trade tax | (8) | (0.8)% | |
| Other | 3 | 0.3% | |
| Netherlands | |||
| Tax expense from foreign currency exchange transactions | 10 | 1.0% | |
| Austria | |||
| Statutory tax rate difference between Austria and Ireland | 8 | 0.8% | |
| Other | 1 | 0.1% | |
| Sweden | |||
| Statutory tax rate difference between Sweden and Ireland | 7 | 0.7% | |
| Other | 1 | 0.1% | |
| Other foreign jurisdictions | 46 | 4.8% | |
| Nontaxable or nondeductible items | |||
| Nondeductible interest expense | 16 | 1.7% | |
| Changes in unrecognized tax benefits | (49) | (5.1)% | |
| Other | |||
| Corporate earnings subject to Ireland 25% nontrading tax rate | 10 | 1.0% | |
| Other | 8 | 0.8% | |
| Effective tax rate | $260 | 27.1% |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
The differences between income tax expense and the amount computed by applying the Republic of Ireland statutory trading income
tax rate of 12.5% to income before income taxes for the years ended December 31, 2024 and December 31, 2023 are as follows:
| Years ended December 31, | |||
| 2024 | 2023 | ||
| Income before income taxes | $560 | $1,138 | |
| Income before income taxes multiplied by the statutory income tax rate | 70 | 142 | |
| Effects of: | |||
| Income subject to different rates of tax | 104 | 171 | |
| Change related to outside basis difference in foreign subsidiaries | 9 | 8 | |
| Change in valuation allowance | 14 | (1) | |
| Uncertain tax positions | 10 | 12 | |
| U.S. state and local taxes | (10) | — | |
| Ireland non-deductible interest | 12 | 11 | |
| Non-deductible U.S. executive compensation | 12 | — | |
| Non-deductible transaction costs | 21 | 11 | |
| Other items | (1) | (42) | |
| Income tax expense | $241 | $312 |
The tax effects of temporary differences and carryforwards that give rise to deferred tax assets and liabilities consist of the following:
| December 31, | |||
| 2025 | 2024 | ||
| Deferred tax assets: | |||
| Pension liabilities and other postretirement benefits | $35 | $45 | |
| Carryforwards | 648 | 570 | |
| Lease liabilities | 223 | 196 | |
| Accrued expenses | 230 | 341 | |
| Stock-based compensation | 27 | 33 | |
| Other | 179 | 144 | |
| Total | 1,342 | 1,329 | |
| Deferred tax liabilities: | |||
| Property, plant and equipment | (3,071) | (3,338) | |
| Investments in subsidiaries | (209) | (179) | |
| Prepaid pension asset | (103) | (124) | |
| Intangibles | (159) | (183) | |
| Inventory reserves | (206) | (203) | |
| Other non-current assets | (89) | (91) | |
| Other | (131) | (114) | |
| Total | (3,968) | (4,232) | |
| Valuation allowances | (429) | (372) | |
| Net deferred tax liability | $(3,055) | $(3,275) |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
At December 31, 2025, we had net operating loss carryforwards of $2,432 million. Of these net operating losses, $1,392 million expire
between 2026 and 2044 and $1,040 million of losses carryforward indefinitely. At December 31, 2025, we also had other
carryforwards of $116 million of tax credit carryforwards. Of these tax credits, $89 million expire between 2030 and 2035 and
$27 million of tax credits carry forward indefinitely.
The following table represents a summary of the change in the valuation allowances against deferred tax assets for each year:
| 2025 | 2024 | 2023 | |||
| Balance at January 1 | $372 | $67 | $68 | ||
| Increases through continuing operations | 60 | 21 | 9 | ||
| Reductions through continuing operations | (3) | (7) | (10) | ||
| Net change in the valuation allowance through continuing operations | 57 | 14 | (1) | ||
| Valuation allowances assumed as part of the Combination | — | 291 | — | ||
| Net change in the valuation allowance | 57 | 305 | (1) | ||
| Balance at December 31 | $429 | $372 | $67 |
We consider a portion of earnings from certain foreign subsidiaries as subject to repatriation and have recognized deferred taxes
accordingly. However, we consider that all other outside basis differences from all other foreign subsidiaries to be indefinitely
reinvested. Accordingly, we have not provided for any deferred taxes for amounts that would be due upon recovery of those
investments.
In the event of a distribution in the form of dividends or dispositions of the subsidiaries, we may be subject to incremental foreign tax,
subject to an adjustment for foreign tax credits, withholding taxes or income taxes payable to the foreign jurisdictions. As of
December 31, 2025, the determination of the amount of unrecognized deferred tax liability related to investments in foreign
subsidiaries that are indefinitely reinvested is not practicable.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years presented is as follows:
| 2025 | 2024 | 2023 | |||
| Balance at January 1 | $472 | $50 | $40 | ||
| Additions for tax positions taken in current year | 5 | 11 | 12 | ||
| Unrecognized tax benefits acquired as part of the Combination | 10 | 427 | — | ||
| Additions for tax positions taken in prior years | 72 | 1 | — | ||
| Reductions for tax positions taken in prior years | — | — | (1) | ||
| Reductions due to settlements | (8) | (8) | — | ||
| Currency translation adjustments | 4 | (6) | — | ||
| Reductions as a result of a lapse of the applicable statute of limitations | (75) | (3) | (1) | ||
| Balance at December 31 | $480 | $472 | $50 |
As of December 31, 2025 and 2024, the total amount of unrecognized tax benefits was $480 million and $472 million, respectively,
exclusive of interest and penalties. Of these balances, as of December 31, 2025 and 2024, if all unrecognized tax benefits recorded
were to prevail, $402 million and $429 million, respectively, would benefit the effective tax rate.
For interest and penalties related to income taxes, we recognized a tax benefit of $7 million in the year ended December 31, 2025 and
a tax expense of $8 million and $1 million in the years ended December 31, 2024 and 2023, respectively. As of December 31, 2025,
and 2024, we have liabilities of $151 million and $127 million, respectively, related to estimated interest and penalties for income
taxes.
See “Note 21. Commitments and Contingencies — Brazil Tax Liability” for additional information.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
We file tax returns in Ireland and foreign jurisdictions. With limited exceptions, we are no longer subject to income tax examinations
by tax authorities for years prior to 2016.
During the years ended December 31, 2025, 2024 and 2023, cash paid for income taxes, net of refunds, was $521 million,
$383 million and $439 million, respectively.
Income taxes paid, net of refunds, exceeds 5% of the total in the following jurisdictions during the year ended December 31, 2025:
| Year ended December 31, | |
| 2025 | |
| Domestic | |
| Ireland | $67 |
| Foreign | |
| Netherlands | 70 |
| Mexico | 49 |
| France | 40 |
| Colombia | 39 |
| United States, Federal | 36 |
| Brazil | 34 |
| Sweden | 32 |
| Spain | 31 |
| Austria | 29 |
| Other | 94 |
| Total Foreign | 454 |
| Total income tax paid, net of refunds | $521 |
19. Retirement Plans and Deferred Compensation Arrangements
We operate both defined benefit and defined contribution pension plans as well as other postretirement benefit plans throughout our
operations in accordance with local conditions and practice. The majority of plans are of the defined benefit type and are funded by
payments to separately administered funds. Other postretirement benefits in the Company are not material and as such the disclosures
below relate to defined benefit plans only.
In connection with the Combination, Smurfit Kappa acquired the existing employee benefit plans of WestRock. At the time of the
acquisition, the projected benefit obligation in respect of the acquired pension and postretirement benefits amounted to $4,930 million
and plan assets of $5,164 million.
The Company reports more than 95% of its benefit obligations by order of size in the U.S., the U.K., the Netherlands, Canada,
Germany, and Ireland.
The pension funds are governed by a board of trustees or similar institutes. The funding requirements are agreed between the
Company, the trustees and the relevant regulators on country or state level in the U.S., the U.K., the Netherlands, Canada, and Ireland.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
The following tables show the changes in benefit obligation, plan assets and funded status for the years ended December 31:
| Defined Benefit Pension Plans | |||||||
| U.S. Plans | Non-U.S. Plans | ||||||
| 2025 | 2024 | 2025 | 2024 | ||||
| Change in projected benefit obligation: | |||||||
| Benefit obligation at January 1 | $3,797 | $42 | $3,132 | $2,406 | |||
| Service cost | 20 | 11 | 38 | 32 | |||
| Interest cost | 207 | 105 | 142 | 112 | |||
| Plan amendments | 1 | — | 7 | (10) | |||
| Actuarial loss (gain) | 100 | (81) | (81) | (50) | |||
| Benefits paid | (264) | (131) | (185) | (135) | |||
| Plan participant contributions | — | — | 6 | 6 | |||
| Curtailments | — | — | (5) | (1) | |||
| Settlements | — | — | (14) | (45) | |||
| Acquisitions | — | 3,851 | — | 969 | |||
| Other items | — | — | (2) | — | |||
| Foreign currency rate changes | — | — | 302 | (152) | |||
| Benefit obligation at December 31 | $3,861 | $3,797 | $3,340 | $3,132 | |||
| Change in plan assets: | |||||||
| Fair value of plan assets at January 1 | $4,179 | $31 | $2,730 | $1,886 | |||
| Actual gain on plan assets | 301 | 58 | 39 | 78 | |||
| Employer contributions | 13 | 6 | 120 | 113 | |||
| Plan participant contributions | — | — | 6 | 6 | |||
| Benefits paid | (264) | (131) | (185) | (135) | |||
| Settlements | — | — | (14) | (45) | |||
| Acquisitions | — | 4,215 | — | 949 | |||
| Other items | — | — | (2) | — | |||
| Foreign currency rate changes | — | — | 248 | (122) | |||
| Fair value of plan assets at December 31 | $4,229 | $4,179 | $2,942 | $2,730 | |||
| Funded status at December 31 | $368 | $382 | $(398) | $(402) | |||
| Amounts recognized in the Consolidated Balance Sheets: | |||||||
| Non-current assets | $491 | $508 | $125 | $127 | |||
| Current liabilities | (11) | (13) | (38) | (33) | |||
| Non-current liabilities | (112) | (113) | (485) | (496) | |||
| Funded status at December 31 | $368 | $382 | $(398) | $(402) | |||
| Accumulated Benefit Obligation | $3,857 | $3,794 | $3,281 | $3,078 |
The net actuarial gain or loss in benefit obligation for the U.S. Plans and Non-U.S. Plans is generally driven by a change in discount
rates and to a lesser degree the rate of compensation change in the Non-U.S. Plans.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Accumulated other comprehensive loss at December 31 not yet recognized as components of net periodic benefit cost consist of:
| Defined Benefit Pension Plans | |||||||
| U.S. Plans | Non-U.S. Plans | ||||||
| 2025 | 2024 | 2025 | 2024 | ||||
| Net actuarial loss | $79 | $8 | $705 | $659 | |||
| Prior service cost (credit) | 2 | — | (9) | (16) | |||
| Total accumulated other comprehensive loss | $81 | $8 | $696 | $643 |
The following table sets forth the pension plans for which their projected benefit obligation or accumulated benefit obligation exceeds
the fair value of their respective plan assets on December 31:
| Defined Benefit Pension Plans | |||||||
| U.S. Plans | Non-U.S. Plans | ||||||
| 2025 | 2024 | 2025 | 2024 | ||||
| Plans with projected benefit obligations in excess of plan assets: | |||||||
| Projected benefit obligation | $123 | $125 | $1,053 | $1,308 | |||
| Accumulated benefit obligation | 122 | 125 | 1,000 | 1,266 | |||
| Fair value of plan assets | — | — | 530 | 779 | |||
| Plans with accumulated benefit obligations in excess of plan assets: | |||||||
| Accumulated benefit obligation | $122 | $125 | $962 | $1,262 | |||
| Fair value of plan assets | — | — | 486 | 774 |
The net periodic benefit cost recognized in the Consolidated Statements of Operations is composed of the following for the years
ended December 31:
| Defined Benefit Pension Plans | |||||||||||
| U.S. Plans | Non-U.S. Plans | ||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||
| Service cost | $20 | $11 | $— | $38 | $32 | $23 | |||||
| Interest cost | 207 | 105 | 2 | 142 | 112 | 91 | |||||
| Expected return on assets | (272) | (142) | (2) | (146) | (112) | (82) | |||||
| Amortization of: | |||||||||||
| Net actuarial (gain) loss | — | — | (1) | 34 | 39 | 33 | |||||
| Prior service credit | — | — | — | (1) | (1) | (1) | |||||
| Curtailment gain | — | — | — | (2) | (1) | — | |||||
| Settlement loss | — | — | — | 3 | 20 | 8 | |||||
| Net periodic benefit (income) cost | $(45) | $(26) | $(1) | $68 | $89 | $72 |
Service cost is included within Cost of goods sold and Selling, general and administrative expenses while all other cost components
are recorded within Pension and other postretirement non-service income (expense), net.
In the year ended December 31, 2025, a loss of $126 million was recognized related to Defined Benefit Pension Plans, in Consolidated
other comprehensive income (loss) (December 31, 2024: gain of $105 million, year ended December 31, 2023: loss of $59 million).
For the detail of the components of other comprehensive income movements, refer to “Note 24. Accumulated Other Comprehensive
Loss”.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Actuarial Assumptions
Weighted‐average assumptions used to determine benefit obligations as of December 31 are:
| Defined Benefit Pension Plans | |||||||
| U.S. Plans | Non-U.S. Plans | ||||||
| 2025 | 2024 | 2025 | 2024 | ||||
| Discount rate | 5.45% | 5.66% | 4.84% | 4.42% | |||
| Rate of compensation increase | 3.00% | 3.02% | 2.35% | 2.32% | |||
| Interest crediting rates | 5.12% | 4.51% | 2.03% | 1.91% |
Weighted-average assumptions used in the calculation of defined benefit plan expense for the years ended December 31:
| Defined Benefit Pension Plans | |||||||||||
| U.S. Plans | Non-U.S. Plans | ||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||
| Discount rate | 5.66% | 4.93% | 5.15% | 4.42% | 3.81% | 4.15% | |||||
| Rate of compensation increase | 3.02% | 5.00% | 5.00% | 2.32% | 2.64% | 2.64% | |||||
| Expected long-term rate of return on plan assets | 6.74% | 5.85% | 4.11% | 5.13% | 4.73% | 4.79% | |||||
| Interest crediting rates | 4.51% | —% | —% | 1.91% | 2.00% | 2.00% |
At December 31, 2025, the discount rates for both the U.S. and Non-U.S. defined benefit pension plans were determined based on a
yield curve developed by our actuary.
We typically review our expected long-term rate of return on plan assets periodically through an asset allocation study with either our
actuary or investment advisor. Our expected rates of return in 2025 are based on an analysis of our long-term expected rate of return
and our current asset allocation.
Our Investment Policies and Strategies
Our investment policies and strategies guide and direct how the funds are managed for the pension plans we sponsor.
The Trustees of all our funded plans all use a fiduciary manager to implement the investment policy appropriate for each plan and
there is an Investment Committee for each of these plans. The investment strategy varies by local legislative requirements, funded
status and maturity of the plan. Periodic reviews are made of both investment policy objectives and investment manager performance.
The Company has continued to implement a diversified and strategic investment approach for its various pension plans, aimed at
ensuring long-term financial stability and growth. The strategy focuses on balancing risk and return by investing in a mix of equities,
fixed-income securities, alternative assets and property. The diversified portfolios have been designed to withstand market volatility
while maximizing returns to meet the future obligations of our pension plan beneficiaries. Through regular monitoring and
adjustments, we aim to achieve consistent, risk-adjusted performance to safeguard the financial security of our employees’ retirement
funds.
Derivatives, including swaps, forward and future contracts may be used as asset class substitutes or for hedging or other risk
management purposes. All the plans hold highly diversified investment portfolios that are not reliant on any single named stocks or
specific parts of the market.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Valuation of Our Plan Assets
Pension assets are stated at fair value or net asset value (“NAV”). Fair value is based on the amount that would be received to sell an
asset or paid to settle a liability, in an orderly transaction between market participants at the reporting date. We consider both
observable and unobservable inputs that reflect assumptions applied by market participants when setting the exit price of an asset or
liability in an orderly transaction within the principal market for that asset or liability.
We typically review our expected long-term rate of return on plan assets periodically through an asset allocation study with either our
actuary or investment advisor. We value the pension plan assets based upon the observability of exit pricing inputs and classify
pension plan assets based upon the lowest level input that is significant to the fair value measurement of the pension plan assets in
their entirety.
The Company's weighted target asset allocations are as follows:
| Defined Benefit Pension Plans | |||
| U.S. Plans | Non-U.S. Plans | ||
| 2025 | 2025 | ||
| Equities | 12% | 24% | |
| Fixed Income | 74% | 62% | |
| Real Estate | —% | 3% | |
| Other (incl. Liability-Driven Investments (“LDI”)) | 14% | 11% |
Fair Value Measurement
The guidance for fair value measurements and disclosure sets out a fair value hierarchy that group fair value measurement inputs into
the three classifications outlined in the table below. Transfers between levels are recognized at the end of the reporting period.
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability reflecting the reporting entity’s own assumptions or external inputs from
inactive markets.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
The following tables summarize our pension plan assets measured at fair value on a recurring basis (at least annually) as of December
31:
| Defined Benefit Pension Plans | |||||||||||
| U.S. Plans | |||||||||||
| 2025 | 2024 | ||||||||||
| Asset Class | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Total | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Total | |||||
| Cash | $266 | $— | $266 | $224 | $— | $224 | |||||
| Equity | 528 | — | 528 | 483 | 2 | 485 | |||||
| Government Bonds | — | 430 | 430 | — | 356 | 356 | |||||
| Corporate Bonds | 156 | 2,528 | 2,684 | 154 | 2,585 | 2,739 | |||||
| Other (incl. LDI) | — | 15 | 15 | — | 12 | 12 | |||||
| Total assets measured using fair value hierarchy | $950 | $2,973 | $3,923 | $861 | $2,955 | $3,816 | |||||
| Assets measured at NAV | 306 | 363 | |||||||||
| Total assets | $4,229 | $4,179 |
There were no assets within the U.S. plans valued using level 3 inputs at December 31, 2025 or 2024.
| Defined Benefit Pension Plans | |||||||||||||||
| Non-U.S. Plans | |||||||||||||||
| 2025 | 2024 | ||||||||||||||
| Asset Class | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||
| Cash | $8 | $39 | $— | $47 | $21 | $55 | $— | $76 | |||||||
| Equity | 607 | 31 | 1 | 639 | 509 | 97 | 1 | 607 | |||||||
| Government Bonds | 387 | 685 | — | 1,072 | 313 | 489 | — | 802 | |||||||
| Corporate Bonds | 183 | 425 | — | 608 | 190 | 516 | — | 706 | |||||||
| Other (incl. LDI) | 37 | (44) | 193 | 186 | 21 | 11 | 130 | 162 | |||||||
| Total assets measured using fair value hierarchy | $1,222 | $1,136 | $194 | $2,552 | $1,054 | $1,168 | $131 | $2,353 | |||||||
| Assets measured at NAV | 390 | 377 | |||||||||||||
| Total assets | $2,942 | $2,730 |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
NAV Measurement
Commingled fund investments are valued at the NAV per share multiplied by the number of shares held.
We maintain holdings in certain private equity partnerships and private real estate investments for which a liquid secondary market
does not exist. Both types of investment are commingled. Valuation techniques, such as discounted cash flow and market-based
comparable analyses, are used to determine fair value of these private investments. Unobservable inputs used for the discounted cash
flow technique include projected future cash flows and the discount rate used to calculate present value. For private equity
partnerships, unobservable inputs used for the market-based comparisons technique include earnings before interest, taxes,
depreciation and amortization multiples in other comparable third-party transactions, price to earnings ratios, liquidity, current
operating results, as well as input from general partners and other pertinent information. Private equity investments have been valued
using NAV as a practical expedient. For private real estate investments, unobservable inputs used for the market-based comparison
technique include a combination of third-party appraisals, replacement cost, and comparable market prices.
Equity-related investments are hedged equity investments in a commingled fund that consist primarily of equity indexed investments
which are hedged by options and also hold collateral in the form of short-term treasury securities. Equity-related investments have
been valued using NAV as a practical expedient.
Pension Plan Contributions and Benefit Payments
Established funding standards govern the funding requirements for our qualified and approved pensions in various jurisdictions. We
fund the benefit payments of our non-qualified or unfunded plans as benefit payments come due.
During 2026, based on estimated year-end asset values and projection of plan liabilities we expect to make contributions and/or benefit
payments of: $49 million for our non-qualified or unfunded plans and $77 million for our qualified or funded plans.
At December 31, 2025, projected future pension payments (excluding any termination benefits) were as follows:
| Year ended December 31, | Defined Benefit Pension Plans | |
| 2026 | $484 | |
| 2027 | 490 | |
| 2028 | 495 | |
| 2029 | 501 | |
| 2030 | 500 | |
| 2031-2035 | 2,546 |
Defined Contribution Plans
We have 401(k) plans that cover certain U.S. salaried, union and non-union hourly employees, generally subject to an initial waiting
period. The 401(k) plans permit participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal
Revenue Code. At December 31, 2025, our contributions may be up to 7.5% for U.S. salaried and non-union hourly employees,
consisting of a match of up to 5% and an automatic employer contribution of 2.5%.
Outside the U.S., the Company operates various defined contribution plans for its employees in line with local market practice and the
tax and legal rules in the jurisdictions in which they operate.
The expense for defined contribution pension plans for the years ended December 31, 2025, 2024 and 2023, was $268 million,
$170 million, and $79 million, respectively. The increase in the expense for the year ended December 31, 2025 was due to the full
year impact of the Combination.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Deferred Compensation Arrangements
We have financial assets related to supplemental retirement savings plans (“Supplemental Plans”) that are carried at cash surrender
value. These Supplemental Plans are non-qualified deferred compensation plans where participants’ accounts are credited with
investment gains and losses in accordance with their investment election or elections. The investment alternatives under the
Supplemental Plans are generally similar to investment alternatives available under 401(k) plans. Assets and liabilities held in respect
of these Supplemental Plans were carried at $203 million and $158 million, respectively, as of December 31, 2025 (December 31,
2024: $185 million and $168 million, respectively).
20. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
| Years ended December 31, | |||||
| 2025 | 2024 | 2023 | |||
| Numerator: | |||||
| Net income attributable to common shareholders | $699 | $319 | $825 | ||
| Denominator: | |||||
| Basic weighted average shares outstanding | 522 | 386 | 258 | ||
| Effect of dilutive share options | 4 | 3 | 2 | ||
| Diluted weighted average shares outstanding | 526 | 389 | 260 | ||
| Basic earnings per share attributable to common shareholders | $1.34 | $0.83 | $3.19 | ||
| Diluted earnings per share attributable to common shareholders | $1.33 | $0.82 | $3.17 |
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. These comprise of restricted stock units, performance stock units and performance
shares issued under the Company’s long-term incentive plans. Details of these plans are set out in “Note 17. Share-based
Compensation”.
For the years ended December 31, 2025, 2024 and 2023, respectively, there were no material weighted average share-based
compensation awards excluded from the diluted earnings per share computation because the effect would have been antidilutive.
21. Commitments and Contingencies
We have financial commitments and obligations that arise in the ordinary course of our business. These include debt (discussed in
“Note 15. Debt”), lease obligations (discussed in “Note 13. Leases”), pension liabilities (discussed in “Note 19. Retirement Plans and
Deferred Compensation Arrangements”) and capital commitments, purchase commitments and certain legal proceedings are discussed
below.
Capital Commitments
Estimated costs for future purchases of Property, plant and equipment that we are obligated to purchase as of December 31, 2025, are
$1,149 million.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Purchase Commitments
In the table below, we set forth our enforceable and legally binding purchase obligations as of December 31, 2025, excluding the
capital commitments disclosed above. These obligations relate to various purchase agreements for items such as minimum amounts of
energy, supplies (including fiber, wood, and chemicals), transport and software licensing over periods generally ranging from one year
to seven years. Some of the amounts are based on management’s estimates and assumptions about these obligations, including their
duration, the possibility of renewal, anticipated actions by third parties, and other factors. Because these estimates and assumptions are
necessarily subjective, our actual payments may vary from those reflected in the table. Total purchase commitments are as follows:
| Year ended December 31, | Total | |
| 2026 | $609 | |
| 2027 | 263 | |
| 2028 | 159 | |
| 2029 | 77 | |
| 2030 | 65 | |
| Thereafter | 109 | |
| Total | $1,282 |
Brazil Tax Liability
Our subsidiary, WestRock, is challenging claims by the Brazil Federal Revenue Department that we underpaid taxes as a result of
amortization of goodwill generated by the 2002 merger of two of its Brazilian subsidiaries. The matter has proceeded through the
Brazil Administrative Council of Tax Appeals (“CARF”) principally in two proceedings, covering tax years 2003 to 2008 and 2009 to
- WestRock was assessed additional taxes, penalties, and interest in both CARF proceedings. In the proceeding for the tax years
2003 to 2008, WestRock was also assessed penalties and interest for fraud, but WestRock won the fraud claim in the proceeding for
the tax years 2009 to 2012. WestRock subsequently filed two lawsuits in Brazilian federal courts seeking annulment of the adverse
CARF decisions. In February 2025, the federal court adjudicating the WestRock challenge to CARF's decision against WestRock for
the 2003 and 2008 period issued a ruling in favor of WestRock nullifying the financial assessments in that case. The decision of the
federal court was appealed by the tax authorities.
We assert that we have no liability in these matters. The total amount in dispute in the two cases before CARF and in the annulment
actions relating to the claimed tax deficiency was R$790 million ($144 million) as of December 31, 2025, including various penalties
and interest. Resolution of the tax positions could have a material adverse effect on our cash flows and results of operations or
materially benefit our results of operations in future periods depending upon their ultimate resolution.
Asbestos-Related Litigation
We have been named as a defendant in asbestos-related personal injury litigation, primarily in relation to the historical operations of
certain companies acquired by the Company. To date, the costs resulting from the litigation, including settlement costs, have not been
significant. We accrue for the estimated value of pending claims and litigation costs using historical claims information, as well as the
estimated value of future claims based on our historical claims experience. As of December 31, 2025, there were approximately 720
such lawsuits. We believe that we have substantial insurance coverage, subject to applicable deductibles and policy limits, with respect
to asbestos claims. We also believe we have valid defenses to these asbestos-related personal injury claims and intend to continue to
contest these matters vigorously. Should the Company’s litigation profile change substantially, or if there are adverse developments in
applicable law, it is possible that the Company could incur significantly more costs resolving these cases. We record asbestos-related
insurance recoveries that are deemed probable. In assessing the probability of insurance recovery, we make judgments concerning
insurance coverage that we believe are reasonable and consistent with our historical dealings and our knowledge of any pertinent
solvency issues surrounding the insurers. The Company currently does not expect the resolution of pending asbestos litigation and
proceedings to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. As of
December 31, 2025, the Company had estimated liabilities in respect of these matters of $82 million and estimated insurance
recoveries of $50 million.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Environmental Contingencies
The Company is subject to a variety of environmental laws and regulations.
The Company has recorded aggregate accruals of $67 million and $14 million on an undiscounted basis at December 31, 2025 and
2024, respectively, relating to environmental matters including remediation of environmental conditions in connection with some of
our current or former facilities, as well as third-party owned sites. The change in liability from 2024 to 2025 primarily reflects an
adjustment to the provisional amount recognized in the Combination with an offsetting credit to goodwill.
Liabilities recorded for environmental contingencies are estimates of the probable costs based upon available information and these
estimates may change. However, the Company does not believe that its potential environmental obligations will have a material
adverse effect upon its liquidity, results of operations, or financial condition.
Italian Competition Authority Investigation
In August 2019, the Italian Competition Authority (the “AGCM”) notified approximately 30 companies, of which Smurfit Kappa
Italia, a subsidiary of Smurfit Westrock, was one, that an investigation had found the companies to have engaged in anti-competitive
practices, in relation to which the AGCM levied a fine of approximately $138 million on Smurfit Kappa Italia, which was paid in
In October 2019, Smurfit Kappa Italia appealed the AGCM’s decision to the First Administrative Court of Appeal (TAR Lazio),
however Smurfit Kappa Italia was later notified that this appeal had been unsuccessful. In September 2021, Smurfit Kappa Italia filed
a further appeal to the Council of State which published its ruling in February 2023. While some grounds of appeal were dismissed,
the Council of State upheld Smurfit Kappa Italia’s arguments regarding the quantification of the fine. As a result, the AGCM was
directed to recalculate Smurfit Kappa Italia’s fine. On March 7, 2024, the AGCM notified Smurfit Kappa Italia that its fine had been
reduced by approximately $18 million. Smurfit Kappa Italia has appealed the amount of this reduction and a decision on that appeal is
expected in the second quarter of 2026.
Separate to these proceedings regarding the fine, in May 2023, Smurfit Kappa Italia filed an application with the Council of State for
revocation of the February 2023 ruling to the extent that it failed to consider certain pleas that had been raised by Smurfit Kappa Italia
on appeal. That application was rejected in July 2025.
After publication of the AGCM’s August 2019 decision, a number of purchasers of corrugated sheets and boxes initiated litigation
proceedings against Smurfit Kappa companies, alleging that they were harmed by the alleged anti-competitive practices and seeking
damages. In addition, other parties have threatened litigation against Smurfit Westrock seeking damages (either specified or
unspecified). The Company believes it has significant defenses to the damages claims and intends to vigorously defend the current and
any future litigation.
International Arbitration Against Venezuela
Smurfit Kappa, which is now a subsidiary of Smurfit Westrock, announced in 2018 that due to the Government of Venezuela’s
measures, Smurfit Kappa no longer exercised control over the business of Smurfit Kappa Carton de Venezuela. Smurfit Kappa’s
Venezuelan operations were therefore deconsolidated in the third quarter of 2018. Later that year, Smurfit Kappa’s wholly-owned
subsidiary, Smurfit Holdings BV, filed an international arbitration claim against the Bolivarian Republic of Venezuela before the
World Bank’s International Center for Settlement of Investment Disputes (“ICSID”) seeking compensation for Venezuela’s unlawful
seizure of its Venezuelan business as well as for other arbitrary, inconsistent and disproportionate State measures that destroyed the
value of its investments in Venezuela. Following the exchange of written submissions, an oral hearing was held in September 2022 in
Paris.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
On August 28, 2024, upon the completion of its deliberations, the arbitral tribunal issued an award granting Smurfit Holdings BV,
then a wholly-owned subsidiary of Smurfit Westrock, compensation in excess of $469 million, plus legal costs of $5 million, plus
interest from May 31, 2024, until the date of payment (the “Award”). In September 2024, Smurfit Holdings BV initiated proceedings
against the Bolivarian Republic of Venezuela to enforce the Award. In December 2024, the Bolivarian Republic of Venezuela applied
to ICSID to annul the Award. An Annulment Committee has been formed by ICSID to decide on this application and an oral hearing
has been scheduled for March 2026.
U.S. Antitrust Violations Class Action
On July 29, 2025, Smurfit Westrock plc, Smurfit Kappa North America LLC, WestRock CP, LLC and seven other industry
participants were named as defendants in a class action lawsuit filed in the U.S. District Court for the Northern District of Illinois
alleging violations of U.S. antitrust laws. The lawsuit alleges violations of Sections 1 and 3 of the Sherman Act, asserting that the
defendants conspired to fix, raise and maintain supracompetitive prices for containerboard sheets, linerboard sheets, and finished
packaging products made from containerboard and/or linerboard in the United States. The complaint seeks damages, including treble
damages under the Clayton Act, pre- and post-judgment interest, injunctive relief and litigation expenses and attorneys’ fees. The
Company believes that it has substantial defenses and intends to vigorously defend against the lawsuit. While the Company is
currently unable to determine the ultimate outcome of this matter or estimate the range of potential loss due to the early stage of this
proceeding, it is possible that an adverse outcome could have a material impact on its financial condition, results of operations, or cash
flows. On October 17, 2025, the plaintiff voluntarily dismissed Smurfit Westrock plc from the lawsuit without prejudice to seek to
rejoin it at a later date. The Company’s subsidiaries Smurfit Kappa North America LLC and WestRock CP, LLC remain defendants in
the lawsuit. On January 20, 2026, the Company completed briefing the court on its motion to dismiss the complaint, which was filed
on October 20, 2025. The Company expects the court to rule on the motion to dismiss in 2026.
Other Litigation
We are a defendant in a number of other lawsuits and claims arising out of the conduct of our business. While the ultimate results of
such suits or other proceedings against us cannot be predicted as of the date of this Annual Report on Form 10-K, we believe the
resolution of these other matters will not have a material adverse effect on our results of operations, financial condition or cash flows.
22. Variable Interest Entities
Trade Receivables Securitization Arrangements
The Company is a party to arrangements involving securitization of its trade receivables. The arrangements required the establishment
of certain special purpose entities namely Smurfit Kappa International Receivables DAC, Smurfit Kappa Receivables plc and Smurfit
Kappa European Packaging DAC (a subsidiary of Smurfit Kappa Receivables plc). The sole purpose of the securitization entities is the
raising of finance for the Company using the receivables generated by certain operating entities, as collateral. All entities are
considered to be VIEs.
The Company is the primary beneficiary of Smurfit Kappa International Receivables DAC, Smurfit Kappa European Packaging DAC
and Smurfit Kappa Receivables plc, through various financing arrangements and due to the fact that it is responsible for the entities’
most significant economic activities.
The carrying values of the restricted asset and limited recourse liability as of December 31, 2025 were $874 million and $374 million
respectively (December 31, 2024: $765 million and $5 million respectively).
Timber Note Receivable Securitization Arrangement
The Company is also a party to an arrangement involving securitization of its note receivable. Pursuant to the sale of forestlands in
2007, a special purpose entity (“SPE”) namely MeadWestvaco Timber Notes Holding, LLC (“MWV TN”) received an installment
note receivable in the amount of $398 million (“Timber Note”). Using this installment note as collateral, the SPE received proceeds
under secured financing agreements, which is recorded as a non-recourse liability.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
Using the Timber Note as collateral, MWV TN received $338 million in proceeds under a secured financing agreement with a bank.
Under the terms of the agreement, the liability from this transaction is non-recourse to the Company and is payable from the Timber
Note proceeds upon its maturity in October 2027. As a result, the Timber Note is not available to satisfy any obligations of the
Company. MWV TN can elect to prepay at any time the liability in whole or in part, however, given that the Timber Note is not
prepayable, MWV TN expects to repay the liability at maturity from the Timber Note proceeds.
The Company is the primary beneficiary of MWV TN through various financing arrangements and due to the fact that it is responsible
for the entity’s most significant economic activities. This entity is considered to be a VIE.
The carrying values of the restricted asset and non-recourse liability as of December 31, 2025 ($391 million and $335 million,
respectively) and as of December 31, 2024 ($387 million and $333 million, respectively) approximate their fair values due to their
floating rates. The fair values of the restricted assets and non-recourse liabilities are classified as level 2 within the fair value
hierarchy.
In addition to the vehicles outlined above, the Company also consolidates a smaller VIE, not considered material for separate
disclosure.
The carrying amounts of the assets and liabilities of VIEs reported within the Consolidated Balance Sheets are set out in the following
table:
| December 31, | |||
| 2025 | 2024 | ||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | $3 | $2 | |
| Accounts receivable | 876 | 767 | |
| Inventories | 1 | — | |
| Other current assets | 4 | — | |
| Non-current assets: | |||
| Property, plant and equipment, net | 60 | 60 | |
| Other non-current assets | 393 | 389 | |
| Total assets | $1,337 | $1,218 | |
| Liabilities | |||
| Current liabilities: | |||
| Accounts payable | $1 | $6 | |
| Current portion of debt | 1 | 2 | |
| Other current liabilities | 7 | 2 | |
| Non-current liabilities: | |||
| Non-current debt due after one year | 376 | 8 | |
| Other non-current liabilities | 335 | 335 | |
| Total liabilities | $720 | $353 |
23. Related Party Transactions
We sell products to and receive services from affiliated entities. These transactions are undertaken and settled at normal trading terms.
No guarantees are given or received by either party. Related party balances and transactions were not material for any period
presented.
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
24. Accumulated Other Comprehensive Loss
The tables below summarize the changes in accumulated other comprehensive loss by component for the years ended December 31,
2025, 2024 and 2023:
| Foreign Currency Translation | Cash Flow Hedges | Defined Benefit Pension and Other Postretirement Benefit Plans | Other Adjustments**(1)** | Total**(2)** | |
| Balance at December 31, 2022 | $1,199 | $21 | $740 | $(751) | $1,209 |
| Other comprehensive (income) loss | (410) | (5) | 53 | — | (362) |
| Balance at December 31, 2023 | $789 | $16 | $793 | $(751) | $847 |
| Other comprehensive loss (income) | 895 | — | (87) | — | 808 |
| Reclassification from retained earnings | — | — | (209) | — | (209) |
| Balance at December 31, 2024 | $1,684 | $16 | $497 | $(751) | $1,446 |
| Other comprehensive (income) loss | (1,219) | 1 | 120 | — | (1,098) |
| Balance at December 31, 2025 | $465 | $17 | $617 | $(751) | $348 |
(1) This relates to a reverse acquisition reserve which arose on the creation of a new parent of the Company prior to the United Kingdom and Ireland listings.
(2) All amounts are net of tax and noncontrolling interest.
A summary of the components of other comprehensive income (loss), including noncontrolling interest, for the years ended
December 31, 2025, 2024 and 2023, is as follows:
| Years ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Pre-Tax | Tax | Net of Tax | Pre-Tax | Tax | Net of Tax | Pre-Tax | Tax | Net of Tax | |||
| Foreign currency translation gain (loss) | $1,219 | $— | $1,219 | $(895) | $— | $(895) | $410 | $— | $410 | ||
| Defined benefit pension and other postretirement benefit plans: | |||||||||||
| Net actuarial (loss) gain arising during year | (97) | 13 | (84) | 19 | (5) | 14 | (60) | 13 | (47) | ||
| Amortization and settlement recognition of net actuarial loss | 39 | (5) | 34 | 59 | (15) | 44 | 40 | (9) | 31 | ||
| Prior service (cost) credit arising during year | (8) | 1 | (7) | 10 | (2) | 8 | (5) | 2 | (3) | ||
| Amortization of prior service credit | (1) | — | (1) | (1) | — | (1) | (1) | — | (1) | ||
| Foreign currency (loss) gain - pensions | (62) | — | (62) | 22 | — | 22 | (33) | — | (33) | ||
| Changes in fair value of cash flow hedges | (1) | — | (1) | — | — | — | 5 | — | 5 | ||
| Consolidated other comprehensive income (loss) | 1,089 | 9 | 1,098 | (786) | (22) | (808) | 356 | 6 | 362 | ||
| Other comprehensive loss (income) attributable to noncontrolling interests | — | — | — | — | — | — | — | — | — | ||
| Other comprehensive income (loss) attributable to common shareholders | $1,089 | $9 | $1,098 | $(786) | $(22) | $(808) | $356 | $6 | $362 |
Smurfit Westrock plc
Notes to Consolidated Financial Statements
(in millions, except per share data)
25. Subsequent Events
Dividend Approval
On February 3, 2026, the Company announced that its Board of Directors approved a quarterly dividend of $0.4523 per share on its
ordinary shares. The quarterly dividend of $0.4523 per ordinary share is payable on March 18, 2026 to shareholders of record at the
close of business on February 17, 2026.
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