International Paper’s Strategic Split Amidst Lowered Earnings Outlook

International Paper US4601461035

International Paper is embarking on a profound corporate transformation. As market experts significantly scale back their profit forecasts for the start of fiscal 2026, the company's leadership is pursuing a radical separation of the business. This move to create two independent, publicly traded entities raises a pivotal question: can this split catalyze a strategic turnaround for the paper and packaging giant?

Recent data from Zacks Research highlights the near-term challenges facing the company. Analysts have made a substantial downward revision to their first-quarter 2026 earnings per share (EPS) estimate, slashing it to $0.24 from a previous forecast of $0.49. For the full fiscal year, the consensus EPS projection now stands at $1.83. This adjustment follows disappointing fourth-quarter results, where International Paper reported a loss of $0.08 per share, falling well short of market expectations.

In a notable contrast to this analyst caution, CEO Andrew Silvernail sent a strong signal of confidence on January 30. He purchased 50,000 shares on the open market, a transaction valued at approximately $2 million. This marked his first open-market acquisition since taking the helm. Market observers are closely watching this divergence between skeptical external forecasts and the capital commitment from top management.

A Two-Pronged Future: The Planned Separation

The centerpiece of International Paper's future is the planned division into two separate companies, a process management aims to complete within 12 to 15 months.

• The North American Industrial Business: This unit will retain the International Paper name and focus on its core industrial packaging operations across North America. This segment generated revenue of roughly $15.2 billion in 2025.
• The New EMEA Packaging Entity: This spin-off will encompass the company's operations in Europe, the Middle East, and Africa, including the integrated assets from the DS Smith acquisition. It is expected to be built upon a revenue base of approximately $8.5 billion.

Concurrent with the preparation for this split, the company is advancing a cost-reduction initiative. Plans for the current year include the closure of additional facilities, affecting about 700 positions. The objective is to streamline the operational structure before the legal independence of the EMEA packaging business.

Shareholders of record as of February 23 will receive the next quarterly dividend of $0.4625 per share on March 17. The upcoming quarterly report, scheduled for release on April 29, is anticipated to provide an update on the progress of both the cost-saving measures and the integration of DS Smith ahead of the formal separation.