DAVY VIEW

Following subdued 0.1% US H1 2024 box demand (Q1: +0.7%, Q2: -0.5%), we forecast 1% H2 2024E box volume growth with raw material cost inflation (e.g. OCC) impacting profit growth. International Paper (IP) is targeting $4bn ‘medium term’ EBITDA, c.80% growth from $2.2bn in 2023, but cautions on H2 2024E due to (1) increased reliability spend and (2) higher raw material costs. Our reduced IP $1.93bn FY24E EBITDA sits in line with the street. Smurfit Westrock (SW) reported $2.24bn proforma H1 2024E EBITDA, but investors await disclosure on future capex and profit guidance. Reflecting industry-wide muted demand and cost pressures, we forecast $4.7bn SW proforma 2024E EBITDA (reduced from $5.0bn); however, as confidence builds in merged SW profit delivery, increased disclosure and de-leveraging, we expect a re-rating.