Smurfit Westrock CEO Saverio Mayer talks integration hurdles, expert consolidation and expansion ambitions
24 Sep 2024 --- Smurfit Kappa and Westrock officially merged this year and made a debut on the London and New York stock exchanges in July. The launch marked the start of a packaging company worth an estimated US$20 billion, which specializes in fiber-based products amid the global reduction in plastics. But what challenges does the new outfit face, what will it offer the packaging market and how will this shape the industry’s future?
Saverio Mayer, CEO of Smurfit Westrock Europe, MEA & APAC, speaks to Packaging Insights about how the merger is progressing and what he expects to see in the coming year.
“Since Smurfit Westrock made its stock exchange debut we have been working strenuously on our integration. While still early in the journey, our functions and business units have made a strong start on delivering synergies within each of their regions and our cultural alignment and strong customer focus has got us off to the right start,” he says.
The Smurfit Westrock EMEA and APAC regional footprint encompasses over 300 operations across 27 countries, with the Middle East and Asia Pacific segments being new additions to its geographical portfolio. When merger negotiations began, the combined last twelve months’ (as of June 2023) adjusted revenue and adjusted EBITDA was approximately US$34 billion and US$5.5 billion for Smurfit Kappa and WestRock, respectively.
Combining expertise
Smurfit Westrock posted US$3 billion in Q2 this year.Mayer says the merger brings an “abundance of benefits from both an R&D and production perspective given the new scale of our operations and capabilities.”
“Smurfit Kappa brought industry-leading operational execution and innovation as a European leader in corrugated and containerboard in addition to a significant pan-Americas presence. Westrock brought leadership in corrugated and consumer packaging and a strong footprint in Brazil and Mexico.”
As the integration efforts continue, Mayer asserts the new company now has the most sophisticated and wide reaching R&D capacities in the industry.
“Our combined expertise and investment in innovation is backed up by an even bigger team of designers who are collaborating on stand-out and creative packaging solutions,” he remarks, adding that the designers are backed by a “global network of experience centers and a world-class R&D center” located in Virginia, US.
Integration challenges
Mayer says that despite the enormous resources resulting from the merger, integrating two companies of this size represents “a huge challenge.”
“However, we have a solid foundation to build on given the similarity between our two cultures and the strong commitment to sustainability on both sides. Our integration journey began on July 5 when the transaction was completed and we officially became Smurfit Westrock. Then the real work could start in earnest.”
To aid the transition, Smurfit Westrock has assembled a new leadership team to guide and mentor its workforce. “From a personal perspective, I have already visited many legacy Westrock plants, and it has been an invaluable experience to meet my new colleagues and see the operations firsthand,” Mayer says.
“While the huge potential of our extended offering fills me with excitement, we have a lot of hard work ahead of us to bring everything to fruition.”
Company experts are working to design new packaging designs and brands.If this work is successful, results for the company’s customers will be evident soon, Mayer continues. “Consumers can expect to see their favorite products arriving in even more innovative and fit-for-purpose packaging.”
“Given the fact that Smurfit Westrock is one of the world’s biggest packaging companies, we have the scale, experience and expertise to provide the packaging solutions that change the game from both a sustainability and unboxing perspective.”
“Our consumer packaging combines innovative structural design with striking print to maximize brand impact and stand out in a competitive marketplace. We have moved packaging beyond being merely a transport medium to being a value-adding product for all stakeholders.”
Adapting to a changing landscape
Mayer asserts the combination between Smurfit Kappa and Westrock “represents a defining moment for the industry” due to the pair’s unique global footprint and the legislative changes now impacting the packaging sector, particularly the recently amended PPWR in Europe and the upcoming UN Global Plastic Treaty.
Moreover, the merger sparked a series of new mergers and acquisitions in the industry, with International Paper’s purchasing of DS Smith — and Suzano’s attempt to purchase International Paper — following shortly after.
“Our combination precipitated a wave of consolidation across the packaging industry so it’s an interesting time for our sector,” Mayer says. Moreover, changes implemented by the PPWR are driving targets companies know they will have to reach in a short period of time — in particular, recycled content requirements.
“PPWR stipulations are an extremely important consideration for packaging businesses. While it still needs to go through several stages ahead of official EU adoption, at Smurfit Westrock we are already working with customers on packaging that will meet the new regulatory requirements alongside reducing their carbon footprint,” Mayer notes.
“The uniqueness of Smurfit Westrock cannot be underestimated and the coming together of two such complementary organizations brings incredible expertise. Smurfit Westrock has the right market positions, the right product at the right time and, most importantly, the right people.”
By Louis Gore-Langton
