INTERNATIONAL PAPER CO /NEW/

International Paper Company operates as a global leader in sustainable packaging solutions, producing renewable fiber-based packaging products with manufacturing operations in North America, Latin America, Europe and North Africa. The packaging sector is large and fragmented, and the areas into which the company sells its principal products are very competitive. Substantially all of the company's businesses have experienced, and are likely to continue to experience, cycles relating to industry capacity and general economic conditions.

The company's products compete with similar products produced by other forest products companies, as well as with companies in other industries and against substitutes for wood-fiber products such as plastics and various types of metal. Many factors influence the company's competitive position, including price, cost, product quality and services. The company follows the IP 80/20 performance system, a disciplined, data-driven operating model focused on simplification, segmentation, resourcing and growth.

The company generates revenue by producing renewable fiber-based packaging solutions, primarily servicing industrial consumer goods and e-commerce markets. The company sells products directly to end users and converters, as well as through agents, resellers and distributors. The company operates under two divisions, which form the basis for the two segments it reports: Packaging Solutions North America and Packaging Solutions EMEA.

The company manufactures a broad range of containerboard and corrugated packaging products, which are used to protect, ship and display goods across diverse end-use categories. The containerboard portfolio includes linerboard, medium, whitetop, and saturating kraft, which serve as the base materials for corrugated packaging. The company converts containerboard into corrugated boxes, bulk bins, shipping containers and specialty packaging through its network of U.S. and international converting facilities. These products support customers in industries such as food and beverage, agriculture, industrial manufacturing, personal care pharmaceuticals and consumer goods.

In the United States, as of the date of this filing, the company operated 15 packaging mills, 159 converting and packaging plants and 15 recycling plants. Additionally, production facilities in Europe, North Africa and Latin America included 14 containerboard mills, 159 converting and packaging plants and 20 recycling plants.

In 2025, the company completed the acquisition of DS Smith Ltd., advanced regional integration and implemented the 80/20 performance system within the new teams. The company sold its Global Cellulose Fibers business for $1.5 billion ¹ to American Industrial Partners, completed in January 2026. The company exited non-core businesses and markets, streamlined its footprint and redeployed resources. The company streamlined its organizational structure to eliminate redundancies created by the acquisition, further decentralized its teams, outsourced some functional areas and better resourced high value-creation areas. The company returned $977 million ² to shareholders in dividends. The company announced plans to separate into two independent, publicly traded companies in North America and EMEA in January 2026. The company announced plans for two new greenfield packaging facilities in 2025. From 2021 through 2025, capital expenditures totaled approximately $5.4 billion ³, excluding mergers and acquisitions. Capital expenditures in 2025 were approximately $1.9 billion ⁴ and are expected to be approximately $2.0 billion to $2.1 billion ⁵ in 2026.

Net sales in 2025 totaled $23.63 billion ⁶ and cash provided by operating activities totaled $1.7 billion ⁷.

Capital expenditures are expected to be approximately $2.0 billion to $2.1 billion ⁸ in 2026.

A critical priority will be the execution of the strategic separation to create two independent, publicly traded companies in North America and EMEA, which the company aims to complete near the end of 2026 or early 2027. In North America, the business will continue strengthening its position in the region, focusing on customers and leading on innovation with an advantaged cost position. In EMEA, the company will prepare the business to stand alone as an independent, publicly traded entity following the separation with the goal of becoming the leading provider of innovative, sustainable packaging solutions in EMEA.

The company announced plans for two new greenfield packaging facilities in 2025, investing in capacity expansion. The company is focusing on achieving an advantaged cost position, delivering superior customer experience and capturing a high relative supply position in the right geographies, with the right customers and the right product offerings.

The company will continue to drive sustainable value creation and advance the company through the application of the 80/20 performance system, executing strategy with a sharp focus on achieving an advantaged cost position. The company is optimizing internal processes and organizational structures to reduce complexity and prioritizing the right customer segments and product offerings.

Capital expenditures in 2025 were approximately $1.9 billion ⁹ and are expected to be approximately $2.0 billion to $2.1 billion ¹⁰ in 2026. The company returned $977 million ¹¹ to shareholders in dividends in 2025.

The company faces risks from fluctuations in the prices of and demand for its products due to economic cyclicality and changes in customer or consumer preferences. Changes in the cost and availability of raw materials, energy and transportation have recently affected, and could continue to affect, profitability. The company has experienced, and may continue to experience, a significant increase in various costs, including recycled fiber, energy, freight, chemical, and other supply chain costs, which has adversely affected, and may continue to adversely affect, operations.

The company is subject to risks associated with climate change and other sustainability matters and global, regional and local weather conditions as well as legal, regulatory and market responses to climate change. The company faces risks from conducting business internationally, domestic and global geopolitical conditions, military conflict, changes in currency exchange rates, trade policies and global trade tensions.

Fluctuations in the prices of and demand for the company's products due to economic cyclicality and changes in customer or consumer preferences could materially affect financial condition, results of operations and cash flows. Changes in the cost and availability of raw materials, energy and transportation have recently affected, and could continue to affect, profitability, and the company has experienced a significant increase in various costs including recycled fiber, energy, freight, chemical, and other supply chain costs. The company faces competition and downward pricing pressure in the global packaging industry, competing with other forest products companies and substitutes for wood-fiber products such as plastics. The proposed separation of the EMEA packaging business may not be completed on the currently contemplated timeline or at all. The company is subject to risks associated with climate change and other sustainability matters and global, regional and local weather conditions as well as legal, regulatory and market responses to climate change.

Management's message emphasizes confidence that the initiatives undertaken as part of the transformational journey will unlock substantial value at IP and strengthen the company for employees, customers and shareholders. Management states that in 2026, the company will continue to drive sustainable value creation and advance the company through the application of the 80/20 performance system, executing strategy with a sharp focus on achieving an advantaged cost position, delivering superior customer experience and capturing a high relative supply position in the right geographies, with the right customers and the right product offerings. A critical priority will be the execution of the strategic separation to create two independent, publicly traded companies in North America and EMEA, which the company aims to complete near the end of 2026 or early 2027. Capital expenditures are expected to be approximately $2.0 billion to $2.1 billion ¹² in 2026.