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Smurfit Westrock last year took major steps to operate more smoothly following the 2024 merger of Smurfit Kappa and WestRock. The container and packaging giant closed 600,000 tons of high-cost or inefficient capacity and cut headcount by more than 3,000.
The WSJ Leadership Institute’s Mark Maurer talked with Chief Financial Officer Ken Bowles about these efforts, from setting up a new enterprise resource planning system to leadership challenges. (Mark also asked Bowles for his reaction to the Supreme Court’s strikedown of tariffs, but he said it’s too early for him to comment.)
Edited excerpts follow.
How did you approach closing plants and laying people off?
Bowles: For the mill closures last year, ultimately it was about trimming down the footprint. The same amount of production overall, but taking out that inefficient capacity. The problem is if you keep them going, you do have to reinvest on an annual basis and the maintenance costs can be significant over time. You always have to look at the footprint. You invest behind the good assets and then some of the other assets just naturally fall out of the system over time. It's never a perfect science, never completely done. A good chunk of the 3,000 people would have been folks that worked in those facilities. The rest largely was the elimination of duplicate roles on both sides of the house.
Did the merger necessitate a new ERP system?
Bowles: We're essentially moving the entire organization to SAP 4 Hana. Smurfit Kappa had already been on SAP since 1998 and we had a plan in place to move to Hana. Westrock, we're about to begin a journey to move there. Both organizations are on the same kind of path. Ultimately, we now have one big project to move the entire organization to Hana over the next two to three years and that gives us that commonality of systems and data sets.
As CFO, what was the most challenging part of helping lead the integration?
Bowles: It's scale. You've got another 350 entities that you need to report into by the third working day, and you’re getting those numbers in shape. We went from being an IFRS-listed company to a U.S. GAAP company. Not just the nuts and bolts of technical accounting and getting it all together under different timeframes is hard, particularly when the organization we merged with didn't have a single ERP system to deliver those numbers in the same way that we would have had for Smurfit Kappa. We're largely there, and it's in great shape. But unfortunately, the stuff that people don't see is the tricky piece. It's all the stuff that goes on under the hood in the dark rooms at month- and year-ends. That's what takes time.
—Mark Maurer
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Meanwhile, in business and earnings news, Gildan Activewear says it expects to unlock more cost savings tied to how it integrates HanesBrands. The company also plans to sell its Hanes Australia business, which comes just a few months after completing the combination of the two apparel companies.
For the full year, Gildan said it expects revenue between $6 billion and $6.2 billion and adjusted earnings per share of $4.20 to $4.40. The guidance excludes the $675 million and 21 cents a share contribution from Hanes Australia. Adjusted earnings came to 96 cents a share. According to FactSet, analysts were expecting $1 a share.
For more earnings news, read on below.
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