SW · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

Smurfit Westrock plc · 2026-11-04 · Importance 30 · Surprise 32

Nine-month cost of goods sold increased $859 million, or 4.5%, to $19,797 million, while sales rose only 1.3%, reducing gross margin to about 17.2% from 19.8%. The cost increase included $364 million of net adverse foreign currency impact, $226 million of higher freight costs, $119 million of higher energy costs, and $74 million of accelerated depreciation for machine closures. Adverse weather added $65 million and higher labor costs added $49 million; lower volumes and raw-material costs offset $156 million combined. In the third quarter, cost of goods sold rose $287 million, including $88 million each from freight and energy and $57 million from higher volumes, including mix and downtime.

Key facts

• Cost of goods sold increased $859 million to $19,797 million in the nine months ended September 30, 2026, driven by a $364 million net negative foreign currency impact, $226 million higher freight costs, $119 million higher energy costs, $8 million higher depreciation, $74 million accelerated depreciation for machine closures, $65 million adverse weather impact and $49 million higher labor costs; lower volumes of $129 million and a $27 million decrease in raw material costs partially offset the increases. source
• North America segment Adjusted EBITDA decreased $286 million to $2,061 million in the nine months ended September 30, 2026, mainly due to $292 million higher costs and a $68 million lower-volume impact, partly offset by $90 million higher selling price mix; higher costs included $161 million freight, $98 million raw materials and $55 million adverse weather. source
• Cost of goods sold increased $287 million to $6,721 million in the three months ended September 30, 2026, primarily due to $88 million of higher freight costs, $88 million of higher energy costs and $57 million of higher volumes, including product mix and downtime. source
• North America segment Adjusted EBITDA decreased $50 million to $760 million in the three months ended September 30, 2026, primarily due to $157 million of higher costs, partly offset by $95 million higher selling price mix and $18 million higher volume impact; higher costs included $62 million higher freight and $62 million higher raw material costs. source
• Europe, MEA and APAC segment Adjusted EBITDA decreased $40 million to $379 million in the three months ended September 30, 2026, due mainly to $64 million higher costs, partly offset by a $21 million higher-volume impact; the higher costs included $70 million higher energy and $23 million higher freight, partly offset by $36 million lower raw material costs. source
• LATAM segment Adjusted EBITDA increased $10 million to $126 million in the three months ended September 30, 2026, primarily due to a $12 million net positive currency impact and $6 million lower costs, partly offset by $6 million lower volumes. source
• LATAM segment Adjusted EBITDA increased $5 million to $359 million in the nine months ended September 30, 2026, mainly due to a $21 million net positive currency impact, partly offset by $11 million higher costs primarily from higher energy costs. source
• Europe, MEA and APAC segment Adjusted EBITDA was $1,180 million in both the nine months ended September 30, 2026 and the corresponding 2025 period; a $60 million lower selling price mix impact and $12 million higher costs were offset by $50 million net positive currency impact and $22 million higher volumes. source