Sylvamo Doubles Quarterly EBITDA as Europe Loss Narrows
Second-quarter sales rose to $806 million from $755 million in the first quarter.
Sylvamo Corp. (SLVM), the paper producer, more than doubled adjusted EBITDA sequentially to $60 million as improvements in Europe and North America offset weaker results in Latin America.
The second quarter marked a partial recovery from a difficult start to the year. Adjusted EBITDA margin expanded to 7% from 4% in the first quarter, while remaining below 10% a year earlier. Adjusted operating earnings improved to $1 million from a $21 million loss sequentially and declined from $15 million a year earlier.
Net sales rose $51 million from the first quarter and $12 million from a year earlier. The net loss widened to $11 million from $3 million sequentially and reversed year-earlier net income of $15 million. Cost of products sold increased to $674 million from $630 million in the first quarter and $640 million a year earlier, outpacing sales growth.
Europe's operating loss narrowed to $20 million from $44 million in the first quarter as higher price and mix and lower operating and input costs outweighed increased planned-maintenance outages. North American operating profit doubled sequentially to $50 million on higher price and mix and lower costs, though it remained below $66 million a year earlier.
Latin America swung to a $16 million operating loss from a $4 million first-quarter profit as planned-maintenance outages and higher input costs outweighed improved price, mix and volume. The region's adjusted EBITDA fell to $9 million from $26 million, tempering sequential gains in Europe and North America.
Sylvamo expects second-half earnings to be much better than first-half results as price and mix, volume and operations improve, the company said. It also expects to generate most of its 2026 free cash flow in the second half. Paper-price increases are taking hold across all regions, with additional realization expected through the third quarter and seasonally stronger Latin American demand expected to support volume and geographic mix.
Operating cash flow improved to $38 million from negative $10 million in the first quarter, while free cash flow remained negative at $23 million. The Eastover paper-machine optimization remains scheduled for completion during a fourth-quarter outage and is expected to add 60,000 short tons of annual capacity. A warehouse expansion planned through a sale-leaseback is expected to be completed in the first quarter of 2027, reducing supply-chain costs and increasing flexibility.