Smurfit Kappa and WestRock’s combination to form Smurfit Westrock has been the talk of the packaging industry since it was announced last September – but what can we expect from its future? Saverio Mayer, CEO of Smurfit Westrock Europe MEA and APAC, walks us through his vision of the new company’s industrial, financial, and efficiency benefits, and how this all reflects on its pursuit of sustainable packaging, in this ‘In Conversation With…’ feature.
For any readers who may be unfamiliar, could you outline the details of the combination and what it means for the companies involved?
On 12th September 2023, Smurfit Kappa and WestRock announced their intention to combine to create a global leader in sustainable packaging. The transaction was completed on 5th July and on 8th July, Smurfit Westrock was proud to make its debut on the New York Stock Exchange.
I was fortunate enough to be there on the day and it felt very special to witness this special moment first hand. As someone who has spent most of my working life in Smurfit Kappa, reaching this historic milestone will stay with me forever.
Smurfit Westrock also has a standard listing on the London Stock Exchange.
The Smurfit Kappa and WestRock combination is anticipated to create a “global leader” in the packaging space. What do you expect each party to bring to the table?
We saw compelling strategic, commercial, and financial rationale for bringing these two companies together. Smurfit Kappa brought industry-leading operational execution and innovation as a European leader in corrugated and containerboard as well as a large-scale pan-Americas presence.
WestRock brought leadership in the United States across corrugated and consumer packaging as well as a strong footprint in Brazil and Mexico.
Bringing the two companies together creates unparalleled geographic and product diversity. There is also huge cultural alignment which is very important for the road ahead and becoming a truly integrated company.
How do you envision the companies’ combined efforts to benefit sustainability-minded solutions, such as recyclable, renewable, or biodegradable packaging?
Sustainability has been at the core of both Smurfit Kappa and WestRock’s business strategies with both companies’ climate change targets SBTi-validated in line with the Paris Agreement. There are many sustainability synergies in place such as chain-of-custody certification to internationally recognized standards such as FSC®, PEFC™, and SFI®.
Now that the deal has closed, we can develop new targets for Smurfit Westrock. We have a strong foundation on which to base these targets as the goals in our previous companies closely mirrored each other. I am confident that this combination will elevate our sustainability agenda, where aligned and ambitious sustainability goals will continue on a larger scale with a bigger impact.
When the news broke, it was said that the combination would improve operating efficiency and increase returns across converting operations and mills. Could you tell us more about this?
Now that the deal is complete, we are at the beginning of our integration journey. At present, I’m working on a new strategic plan for the years ahead. As a business, we will continue to be customer-centric and customer-driven, which has been the guiding principle in both companies.
We will also be sharing best practice, knowledge transfer, and establishing the best and most efficient way to optimize our new and significantly extended portfolio and wider geographical footprint. We also believe that our disciplined capital allocation will deliver improved operating efficiency and increased returns.
And could you elaborate on how the combination could benefit immediate and long-term value creation?
I believe that we have an unparalleled portfolio, unrivalled scale, and an unbeatable product offering. Our portfolio encompasses paper and board, corrugated packaging, consumer packaging, specialty packaging, bag-in-box products, machinery and automation, and displays.
In short, we have the assets and global footprint and enhanced scale to deliver value in the short, medium, and long term. We expect there to be at least €400 million of cost synergies from the combination. The journey ahead will be a challenging but exciting one.
Going forward, what will your role as CEO of Europe, MEA and APAC look like in this newly combined company?
Before the deal closed, I was in charge of Smurfit Kappa Europe which represented more than 250 operations across 23 countries. Today, I have responsibility for Europe, MEA and APAC, which includes around 300 operations in 27 countries and a much wider product range.
Our ambition is to lead the packaging industry taking a collaborative approach to developing innovative solutions that are tailored to meet customer demands and build long-term loyalty.
I have already visited some of the (legacy) WestRock plants and was impressed by the dedication of people and the quality of assets and products. I am looking forward to the challenges ahead as we embark on our integration journey.
We are fortunate to have a population of talented and skilled employees who will drive the success of the company. I am committed to continuing to create a welcoming and inclusive culture where everyone belongs and is respected.
No comments yet