International Paper (IP) Baird 2024 Global Industrials Conference summary

Leadership vision and strategic focus

• New CEO joined in May, bringing experience from IDEX and private equity, and identified a misunderstood but valuable core in sustainable packaging.

• Emphasis on the 80/20 methodology and Danaher Business System to focus resources on the most impactful areas.

• Shift from a matrixed, global commodity structure to a focused, sustainable packaging business.

• Strategic alternatives are being pursued for the Global Cellulose Fibers business, and a major acquisition (DS Smith) will make the company a leading sustainable packaging player in the U.S. and Europe.

• Targeting leading market positions: ~30% share in the U.S. and low 20s% in Europe.

Industry dynamics and competitive strategy

• North American packaging is 80% integrated, with strong local economics and structural advantages in box plant network and virgin mill system.

• Industry volatility is driven by excess capacity and fixed-cost mentalities; focus is on reducing commodity exposure and emphasizing differentiated solutions.

• Competition is fundamentally local, not global, and success depends on being the low-cost producer per unit of solution, not per ton.

• Customers pay a 3–5% premium for superior service; regional strength and targeted market participation are key.

• Long-term industry growth is about 1% annually, with inflation-matching top-line potential.

Operational transformation and financial outlook

• Recent years saw market share loss due to underinvestment, loss of service edge, and a cumbersome matrix structure.

• Major organizational changes include dismantling the matrix structure, consolidating plants and mills, and announcing $250 million in structural cost changes.

• Three main initiatives (Enterprise, North American Packaging Solutions, Global Cellulose Fibers) are expected to contribute $230 million in EBITDA.

• Lighthouses (pilot projects) in select geographies are showing significant improvements in productivity and service.

• Path laid out for a couple billion dollars of improvement, with a focus on cost discipline and commercial mix.