International Paper Co. (NYSE: IP) announced today that its Board of Directors has approved a plan to separate its global operations into two independent, publicly traded entities. The strategic pivot, intended to decouple its North American and European businesses, was unveiled alongside fourth-quarter 2025 results that saw revenue surge 53% to $6.01 billion while bottom-line results missed analyst expectations due to significant non-cash impairment charges. “During the past year, we have created two regional powerhouses with scale, strong customer relationships, leading brands and talented teams,” said IP Chairman and CEO, Andy Silvernail.
Strategic Separation and Structural Rationale
The proposed transaction will be executed via a spin-off of International Paper’s European, Middle Eastern, and African (EMEA) packaging business. The company expects the separation to be finalized within 12 to 15 months, creating two regional leaders with distinct commercial models:
- International Paper (North America): Will focus on its integrated mill and box network, serving a market with an estimated 1.0% to 1.5% long-term demand growth. This entity reported pro forma 2025 net sales of $15.2 billion and adjusted EBITDA of $2.3 billion.
- EMEA Packaging: This new company will combine legacy IP assets with those from the recently completed $9.9 billion acquisition of DS Smith. It will seek a primary listing on the London Stock Exchange and a secondary listing in New York. Pro forma 2025 results for this business included net sales of $8.5 billion and adjusted EBITDA of $800 million.
Management indicated the split allows the North American business to leverage its high integration rate—now approximately 90% following the DS Smith deal—while the EMEA business focuses on localized dynamics and a targeted $400 million investment budget for 2026.
Fourth-Quarter and Full-Year 2025 Financial Performance
Financial results for the period ending December 31, 2025, reflected the heavy impact of corporate restructuring. While the $6.01 billion in quarterly revenue exceeded the analyst consensus estimates of $5.88 billion, the company reported an adjusted operating loss of $0.08 per share, significantly missing the expected $0.27 profit.
| Metric (Q4 2025) | Reported Value | Year-Over-Year Change |
| Net Sales | $6.01 Billion | +53.1% |
| Net Loss (GAAP) | ($2.38) Billion | N/A |
| Adj. Operating EPS | ($0.08) | -300% (from $0.04 in Q4 2024) |
| Adj. EBITDA | $758 Million | +71% |
The net loss was driven by $3.59 billion in pre-tax charges, including a $2.47 billion non-cash goodwill impairment related to the EMEA segment and $159 million in restructuring costs. For the full year 2025, net sales reached $23.63 billion, but the company recorded a total net loss of $3.52 billion, largely due to these non-cash items and accelerated depreciation of $960 million.
Operational Strategy and 2026 Guidance
International Paper is currently implementing an “80/20” commercial system, which has already yielded $710 million in full run-rate cost-out actions through 2025. This strategy focuses resources on the most profitable 20% of customers and products.
For the full year 2026, the company issued the following guidance:
- Enterprise Net Sales: $24.1 billion to $24.9 billion.
- Adjusted EBITDA: $3.5 billion to $3.7 billion.
- Free Cash Flow: $300 million to $500 million.
Leadership noted that these targets do not include potential benefits from future price increases or the estimated $20 million to $25 million negative impact from recent winter storms in the U.S.
Sector Analysis and Market Position
The move to separate follows a period of consolidation that saw IP complete the DS Smith acquisition in early 2025 to create a global packaging leader. However, the resulting company faced diverging regional economic conditions. In North America, IP achieved a 340 basis point expansion in adjusted EBITDA margins during 2025. Conversely, the EMEA segment faced a $(223) million operating loss in Q4, prompting the 2.47 billion impairment.
By creating two independent companies, IP aims to provide investors with a cleaner valuation of its dominant North American position while allowing the EMEA entity to pursue a “high-growth, sustainability-driven” strategy in the European market.
Industry Context and Market Implications
The separation marks a significant pivot from the global integration strategy pursued during the acquisition of DS Smith. By creating two regional leaders, International Paper aims to provide investors with a more transparent view of its dominant North American position while allowing the EMEA business to navigate the specific regulatory and economic environment of the European packaging market. The transaction remains subject to final board approval, regulatory filings, and favorable tax rulings. International Paper confirmed that its current dividend policy will remain unchanged until the separation is finalized, at which point each company will establish its own independent capital allocation framework.
