International Paper misses on $2.47B charge, announces split into two companies
Packaging giant to separate North American and EMEA operations in 12-15 months, issues strong 2026 guidance
International Paper shares declined in early Thursday trading after the packaging conglomerate reported fourth-quarter results that missed analyst expectations and revealed a massive goodwill impairment charge, while simultaneously announcing plans to split itself into two independent public companies.
The Memphis-based company posted adjusted earnings per share of negative $(0.08), missing the consensus estimate of $0.56, according to analyst expectations compiled before the release. Revenue reached $6.01 billion, falling short of the $6.46 billion projected by Wall Street.
The earnings shortfall was driven primarily by a $2.47 billion non-cash goodwill impairment charge related to the Packaging Solutions EMEA segment, which the company said reflects challenges in the European market. For the full year 2025, International Paper reported net sales of $23.63 billion and a loss from continuing operations of $2.84 billion, including the substantial goodwill impairment.
Despite the headline loss, management provided bullish guidance for 2026, projecting adjusted EBITDA of $3.5 billion to $3.7 billion, a significant increase from the $2.98 billion achieved in 2025. The company also maintained its quarterly dividend of $0.4625 per share, yielding approximately 4.3% at current levels.
In what analysts characterized as the more significant development, International Paper announced it will separate into two independent public packaging companies over the next 12 to 15 months. The spin-off will create distinct entities focused on Packaging Solutions North America and Packaging Solutions EMEA (Europe, Middle East, and Africa).
According to company announcements, the EMEA business will be spun off to shareholders and is expected to pursue dual listings on both the London and New York stock exchanges. The strategic separation comes on the heels of International Paper's 2025 acquisition of UK-based DS Smith and the divestiture of its Global Cellulose Fibers business.
The restructuring represents a dramatic shift in strategy for the 127-year-old company, which has been working to transform itself into a pure-play packaging business. The DS Smith acquisition significantly expanded International Paper's European footprint, but the EMEA operations have faced what management described as structural issues and market softness.
Analyst reactions to the announcement were mixed. Some research firms maintained "Hold" ratings, viewing the stock as fairly valued given what they anticipate will be muted growth prospects and a challenging market environment extending into 2026. Zacks Investment Research had assigned a "Strong Sell" rating ahead of the earnings report, citing weaker-than-expected volumes.
However, other analysts see opportunity in the separation. Simply Wall St's discounted cash flow analysis suggested in January that International Paper may be undervalued, estimating an intrinsic value significantly higher than its current share price. The consensus target price among analysts stands at $46.80, roughly 13% above Thursday's trading level of $41.49.
The dual-track approach—absorbing a massive one-time charge while simultaneously reorganizing for future growth—reflects the balancing act Chief Executive Andy Silvernail must navigate. The company has acknowledged that softer markets have delayed progress on its transformation journey, but the 2026 EBITDA guidance suggests management expects improved operational performance once the restructuring is complete.
For investors, the key questions will center on execution. The separation process over the next year will incur substantial transaction costs and management distraction, but if successful, it could unlock value by allowing each regional business to pursue its own strategic priorities without being weighed down by the other's challenges.
International Paper's dividend provides some cushion during the transition period, with the next payout scheduled for March 17 to shareholders of record as of February 23. The company's ability to maintain that dividend while funding the separation will be a critical test of its financial flexibility.