WestRock Company

This is our first report on WestRock Company, one of the largest providers of fiber-based paper and packaging solutions in the world. The company has been on the receiving end of strong economic volatility and delivered a highly disappointing set of results for the last quarter, failing to meet Wall Street expectations in terms of revenues as well as earnings. Pension and foreign exchange rates also had a $57 million negative impact on its year-over-year consolidated adjusted EBITDA growth. The first quarter operating environment experienced continued inventory rebalancing, increased inflation, and shifting consumer spending. These developments notably impacted external containerboard demand and its corrugated packaging business. But Corrugated Packaging improved quarter over quarter, with North American packaging shipments increasing 2% to 373 million square feet per day. They continue to align their supply with customers’ demand and experienced 356,000 tons of economic downtime throughout the quarter. Demand for consumer packaging products and external paperboard remains steady, demonstrating the advantages of their diversified business model and establishing them well in the industry. Furthermore, they completed the acquisition of Grupo Gondi, expanding their presence in North America and exposing them to the lucrative Latin American market. WestRock anticipates that its broad selection of environmentally friendly fiber-based packaging and the auxiliary equipment will help it to expand in the future. We initiate coverage on the stock of WestRock Company with an ‘Outperform’ rating.