International Paper Split Creates Two Public Companies

International Paper (IP) announced on Jan. 29, 2026, plans to split into two independent public companies after reporting a fourth-quarter loss driven by a large goodwill impairment. The move aims to refocus operations on profitable growth.

Formation of Two Regional Companies and Strategic Rationale

The company will separate into North America Packaging Solutions, which retains the International Paper name and combines legacy IP operations with North America assets from the DS Smith acquisition, and EMEA Packaging Solutions, which will include the remaining DS Smith assets alongside IP’s existing EMEA operations. International Paper will hold a meaningful stake in the new EMEA company. The separation is expected to complete in 12 to 15 months, subject to final board approval and customary closing conditions. The DS Smith acquisition closed on Jan. 31, 2025, with North America assets integrated into PS North America and EMEA assets into PS EMEA.

This split follows a fourth-quarter loss largely caused by a $2.47 billion pre-tax non-cash goodwill impairment related to the EMEA packaging business. Management framed the separation as a step to sharpen regional focus and unlock value, aligning with a broader transformation strategy.

Q4 2025 Results, 2026 Guidance, and Asset Restructuring

International Paper reported fourth-quarter net sales of $6.01 billion and a loss from continuing operations of $2.36 billion, driven mainly by the goodwill impairment, $90 million in accelerated depreciation, and $160 million in restructuring charges. Adjusted EBITDA for the quarter was $760 million, operating cash flow $910 million, and free cash flow $260 million.

For full-year 2025, net sales rose to $23.63 billion from $15.84 billion in 2024. The company posted a loss from continuing operations of $2.84 billion, reflecting the impairment, $960 million in accelerated depreciation, and $630 million in restructuring. Adjusted EBITDA was $2.98 billion, operating cash flow $1.70 billion, and free cash flow negative $160 million.

Segment results highlighted the regional divide. PS North America posted fourth-quarter net sales of $3.72 billion with an operating profit of $319 million. PS EMEA recorded net sales of $2.30 billion and an operating loss of $223 million.

The company set 2026 guidance calling for adjusted EBITDA between $3.5 billion and $3.7 billion, enterprise net sales of $24.1 billion to $24.9 billion, and free cash flow of $300 million to $500 million. First-quarter adjusted EBITDA is projected at $740 million to $760 million. Management expects PS North America adjusted EBITDA growth of roughly 9% to 13% and PS EMEA adjusted EBITDA of $1.0 billion to $1.1 billion as restructuring efforts take effect. The outlook excludes any unassessed impact from a recent U.S. winter storm.

To reshape the business, International Paper completed the sale of Global Cellulose Fibers to American Industrial Partners on Jan. 23, 2026, for $1.5 billion, including $190 million of preferred stock. To meet regulatory commitments tied to the DS Smith acquisition, the company sold its kraft paper bag business and five European box plants located in Mortagne, Saint-Amand, and Cabourg in France; Ovar in Portugal; and Bilbao in Spain.

These transactions are part of an “80/20” resource realignment. The company closed two U.S. packaging facilities in November 2025 and is restructuring EMEA operations, including 27 site closures and proposed headcount reductions of roughly 2,000 employees.

Management described the separation as a move to enhance regional focus and value creation, supported by the 2026 financial guidance issued alongside the results.