International Paper (IP) Jefferies Global Industrial Conference summary

Value creation framework

• Targeting EBITDA growth from $2B to $4B in the medium term by reducing complexity and improving profitability.

• Focus on a profit reset through cost structure overhaul and ongoing value creation via organic growth and productivity culture.

• Material margin has grown by $1B over five years, but operating costs rose $1.7B, mainly due to complexity.

• Emphasis on embedding a continuous improvement culture, inspired by Danaher, to drive safety, quality, delivery, and cost.

• Two main levers: profit reset and sustained value creation through growth and productivity.

Cost structure and investment strategy

• Plans to reset cost structure by identifying overcapacity and inefficiencies in the matrix organization.

• Will fund investments and improvements through internal cost savings, not by reducing profitability targets.

• Three focus areas: cost reduction, hybrid investments in productivity and capability, and commercial excellence.

• Capital spending will prioritize maintenance and productivity, with a shift to continuous improvement investments.

• Commercial excellence includes expanding sales coverage and improving pricing intelligence.

Pricing and market approach

• Industry has relied on cost-based pricing; shift planned toward value-based pricing for better returns.

• Disciplined pricing to avoid market volatility and attract only sustainable competition.

• Both national and local/regional customer segments offer profit pools if approached with tailored cost structures.

• Segmentation and differentiated service intensity are key to unlocking value in various customer segments.

• Most below-market contracts have been renegotiated; volume stabilization expected by end of next year.