Smurfit Westrock plc (SW) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF

OPERATIONS OF SMURFIT WESTROCK

The following discussion and analysis of Smurfit Westrock’s financial condition and results of operations should be read in

conjunction with Smurfit Westrock’s audited Consolidated Financial Statements and their related notes for the  year ended December

31, 2024, our audited Consolidated Financial Statements and their related notes for the year ended December 31, 2023 and Smurfit

Kappa’s audited Consolidated Financial Statements and their related notes for the year ended December 31, 2023, as well as the

information under the heading “Management’s Discussion and Analysis of the Financial Condition and Results of Operations of

Smurfit Kappa” that were disclosed in Smurfit Westrock’s Registration Statement on Form S-4 (file number 333-278185) which was

declared effective on April 26, 2024 (as supplemented by the prospectus filed with the SEC on April 26, 2024, the “Registration

Statement”). This discussion contains forward-looking statements that involve risks and uncertainties. Smurfit Westrock’s future

results could differ materially from the results discussed below. Factors that could cause or contribute to such differences include, but

are not limited to, those identified below and those discussed in the Item 1A. Risk Factors. Please refer to the section above entitled

“Cautionary Note Regarding Forward-Looking Statements" for additional information.

Smurfit Kappa was determined to be the accounting acquirer in the Combination; therefore, the historical consolidated financial

statements of Smurfit Kappa for periods prior to the Combination were also considered to be the historical financial statements of the

Company. Unless otherwise specified or the context otherwise requires, all references to the “Company” and “Smurfit Kappa” refer

to Smurfit Kappa Group plc and its subsidiaries and their operations when referring to periods prior to the closing of the

Combination, and references to the “Company” and “Smurfit Westrock” refer to the combined company, Smurfit Westrock and its

subsidiaries, including, among others, Smurfit Kappa and WestRock, when referring to periods after the Combination.

OVERVIEW

Smurfit Westrock is one of the world's largest integrated manufacturers of paper-based packaging products in terms of volumes and

sales, with operations in North America, South America, Europe, Asia, Africa, and Australia. Smurfit Westrock partners with its

customers to provide differentiated, sustainable paper and packaging solutions that enhance its customers’ prospects of success in their

markets.

Transaction Agreement and Combination with WestRock

On September 12, 2023, Smurfit Kappa, a public company incorporated in Ireland, and WestRock, a public company incorporated in

Delaware, United States, announced they had reached a definitive agreement on the terms of a proposed combination.

As described elsewhere in this report, the Combination closed on July 5, 2024. Pursuant to the Transaction Agreement, on the Closing

Date each issued ordinary share, par value €0.001 per share, of Smurfit Kappa (a “Smurfit Kappa Share”) was exchanged for one

ordinary share, par value $0.001 per share, of Smurfit Westrock (a “Smurfit Westrock Share”) and, in exchange for the net assets of

WestRock acquired through the Merger, each share of common stock, par value $0.01 per share, of WestRock (the “WestRock

Common Stock”), was converted into the right to receive one Smurfit Westrock Share and $5.00 in cash (the “Merger Consideration”)

for an aggregate cash consideration of $1,291 million (the “Cash Consideration”) and issuance of 258,228,403 shares to WestRock

shareholders.

Upon completion of the Combination, Smurfit Kappa and WestRock each became wholly owned subsidiaries of Smurfit Westrock

with Smurfit Kappa shareholders owning approximately 50.3% and WestRock shareholders owning approximately 49.7%. Prior to the

closing of the Combination, Smurfit Westrock had no operations other than activities related to its formation and the Combination.

Given the non-operational nature of the Company prior to the Combination, the Smurfit Kappa Share Exchange is not considered a

business combination and does not give rise to any goodwill or adjustments to accounting basis.

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The consolidated financial statements of Smurfit Westrock following the Smurfit Kappa Share Exchange are a continuation of the

financial statements of Smurfit Kappa and therefore, the historical consolidated financial information for periods prior to the

Combination, including the comparatives presented, reflect the pre-Combination carrying values of Smurfit Kappa except for the

retrospective adjustment to reflect the Company’s legal share capital as the successor after giving effect to the Smurfit Kappa Share

Exchange.

The Merger is recognized as a business combination under Accounting Standards Codification (“ASC”) 805, “Business

Combinations” (“ASC 805”). Smurfit Kappa was determined to be the accounting acquirer of WestRock. Accordingly, as noted

above, the financial statements reflected in these Consolidated Financial Statements and the discussions below include WestRock's

financial position and results of operations for the period subsequent to the completion of the Combination on July 5, 2024.

Consequently, the results reported for the twelve months ended December 31, 2024 do not include WestRock’s financial results for the

first five days of July or any prior periods.

Refer to “Note 2. Acquisitions” of the Consolidated Financial Statements for additional information related to the accounting for the

Combination.

Following the completion of the Combination, Smurfit Westrock reassessed the Company’s reportable segments due to changes in

organizational structure and how the Company’s chief operating decision maker (“CODM”) makes key operating decisions, allocates

resources and assesses the performance of the business. Consequently, subsequent to the Combination, Smurfit Westrock began to

manage the combined business as three reportable segments: (1) North America, (2) Europe, the Middle East and Africa (“MEA”),

and Asia-Pacific (“APAC”), and (3) Latin America (“LATAM”). As a result of the change in reportable segments, certain prior year

amounts have been recast to conform to the current year presentation. Throughout this Annual Report on Form 10-K, unless otherwise

indicated, amounts and activity reflect reclassifications related to the Company's change in reportable segments. Refer to “Note 3.

Segment Information” of the Consolidated Financial Statements for further discussion of the Company’s segment reporting structure.

EXECUTIVE SUMMARY

Smurfit Westrock’s net sales increased by $9,016 million, to $21,109 million in the year ended December 31, 2024, from $12,093

million in the year ended December 31, 2023. This increase was primarily due to the acquisition of WestRock and a positive volume

impact partially offset by a lower selling/price mix.

Net income attributable to common shareholders decreased by $506 million, to $319 million in the year ended December 31, 2024,

from $825 million in the year ended December 31, 2023. This decrease was primarily driven by an increase of $317 million in

transaction and integration-related expenses associated with the Combination, an increase of $259 million in interest expense, net, and

a charge of $224 million for the amortization of the fair value step up on inventory recognized on WestRock’s inventory acquired. The

increases in expenses were partially offset by the positive impact of the Combination. Refer to “Results of Operations” for a detailed

review of Smurfit Westrock’s performance.

Net cash provided by operating activities decreased by $76 million, to $1,483 million in the year ended December 31, 2024, from

$1,559 million in the year ended December 31, 2023, primarily due to a $508 million increase in the outflow in the change in

operating assets and liabilities driven by additional operating cash flow activity as a result of the Combination, higher volumes

(excluding acquisitions) in the Europe, MEA and APAC segment, and an increased outflow for creditors in the North America

segment. The increase in the cash outflows from changes in operating assets and liabilities was partially offset by the $432 million

increase in net income adjusted for non-cash items, including depreciation, depletion and amortization, cash surrender value increase

in excess of premiums paid, impairment charges on assets other than goodwill, share-based compensation expense, deferred tax

(benefit) expense, and pension and other post-retirement funding more than cost, resulting in a net decrease in cash flows from

operating activities. During the year ended December 31, 2024, Smurfit Westrock invested $1,466 million in capital expenditures and

paid $719 million in cash for purchase of businesses, net of cash acquired. The Company’s net cash inflow from changes in debt was

$1,367 million, and it paid $650 million of cash dividends to shareholders. See the section entitled “Liquidity and Capital Resources”

below for additional information.

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SIGNIFICANT FACTORS AND TRENDS AFFECTING SMURFIT WESTROCK’S RESULTS

Smurfit Westrock’s operations have been, and will continue to be, affected by many factors, some of which are beyond the Company’s

control. Smurfit Westrock’s net sales are primarily derived from the sale of containerboard, corrugated containers, paperboard,

consumer packaging, and other paper-based packaging products. As such, Smurfit Westrock’s net sales during any period are largely

influenced by volumes, prices and costs of the corrugated containers and consumer packaging products that Smurfit Westrock sells

during that period.

Volumes

In general, demand for corrugated containers and consumer packaging is closely correlated with overall economic growth and activity.

It also directionally correlates with levels of industrial production and is impacted by the trends affecting the choice of medium (paper,

plastic, glass, metal, or wood) used in the packaging of these products. As a result, demand is driven by the need for: (i) packaging

products for consumer and industrial goods, (ii) higher value-added corrugated products used for point-of-sale displays and consumer

and shelf-ready packaging, and (iii) packaging of pharmaceutical products and the growth of related industries. Normal patterns of

demand growth can be disrupted by other macroeconomic trends, including inflation, pandemics (including the COVID-19 pandemic

and related lockdowns), and global economic and geopolitical developments, among others.

Consumer patterns also play a significant role in demand for corrugated packaging and consumer packaging. In recent years, shifting

consumer behaviors have accelerated, particularly with the rise of e-commerce and increased awareness of unsustainable packaging

solutions. These trends have, to date, been beneficial for paper-based packaging, which is typically made from renewable, recyclable

materials. Changing demographics can also influence demand trends in the pharmaceutical industry, a major user of consumer

packaging.

Prices and Costs

Prices of corrugated containers and consumer packaging are primarily a function of the cyclical nature of Smurfit Westrock’s industry,

capacity and competition in the markets it operates in, prevailing raw material prices, and other operating costs, such as energy,

chemicals, and transportation, overlaying supply and demand balances.

As paper costs generally represent a large portion of the cash cost of production for corrugated containers or consumer packaging,

containerboard price movements tend to impact the prices of corrugated containers. In turn, the cost of paper is influenced by

movements in the price of its major raw materials—wood or recycled paper—along with other supply and demand factors. Smurfit

Westrock’s production processes are energy-intensive, making production costs also sensitive to the price of energy (primarily gas and

electricity), which have historically been volatile. Other key cost drivers include employee benefit expenses, largely determined by

workforce size, and shipping and handling costs, which are generally affected by fuel prices and overall labor inflation.

While many of Smurfit Westrock’s customer contracts include price adjustment clauses that allow cost increases to be passed on to

customers, these clauses may not in all cases be effective to offset rising costs. Additionally, for corrugated and consumer packaging

products, even when Smurfit Westrock is able to implement price increases, there is typically a three- to six-month lag between raw

material price hikes and the realization of higher pricing from customers.

Foreign Currency Effects

Smurfit Westrock operates in multiple countries across North America, Europe, MEA, APAC, and LATAM. As a result, currency

fluctuations can have both direct and indirect impacts on its financial statements, which are presented in U.S. dollars.

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RESULTS OF OPERATIONS

The following table summarizes Smurfit Westrock’s consolidated results for the three years ended December 31, 2024, December 31,

2023 and December 31, 2022:

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Results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023

Net Sales

Net sales increased by $9,016 million, to $21,109 million in the year ended December 31, 2024, from $12,093 million in the year

ended December 31, 2023. This increase was primarily due to the impact of $9,381 million related to the acquisition of WestRock.

Excluding the impact of this acquisition, net sales decreased by $365 million primarily resulting from a $715 million impact due to a

lower selling/price mix, partially offset by a positive volume impact of $377 million. See “Segment Information” below for more

detail on Smurfit Westrock’s segment results.

Cost of Goods Sold

Cost of goods sold increased by $7,875 million, to $16,914 million in the year ended December 31, 2024, from $9,039 million in the

year ended December 31, 2023. The increase in cost of goods sold was primarily due to the impact of the acquisition of WestRock of

$7,997 million, which included an expense of $224 million for the amortization of the fair value step up on inventory recognized on

WestRock’s inventory acquired. Excluding the impact of this acquisition, cost of goods sold decreased by $122 million primarily due

to lower input prices partly offset by higher volumes.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses increased by $1,189 million, to $2,793 million in the year ended December 31, 2024, from $1,604 million in the year

ended December 31, 2023. The increase in SG&A expenses of $1,189 million was primarily due to additional SG&A expenses of

$1,189 million related to the acquisition of WestRock.

Transaction and Integration-related Expenses Associated with the Combination

The Company incurred transaction and integration-related expenses associated with the Combination of $395 million and $78 million

in the years ended December 31, 2024 and 2023, respectively.

Transaction-related expenses associated with the Combination were $202 million and $78 million in the years ended December 31,

2024 and 2023, respectively. Transaction-related costs associated with the Combination comprised of banking and financing related

costs as well as legal and other professional services which were directly attributable to the Combination and retention payments that

were contractually committed to and associated with the successful completion of the Combination.

Integration-related expenses associated with the Combination were $193 million in the year ended December 31, 2024. We incur

integration costs post-acquisition that reflect work performed to facilitate merger and acquisition integration and primarily consist of

professional services and personnel and related expenses, such as work associated with information systems.

Pension and Other Postretirement Non-Service Expense, Net

Pension and other postretirement non-service expense, net decreased by $25 million, to $24 million in the year ended December 31,

2024, from $49 million in the year ended December 31, 2023. This decrease was primarily due to a $170 million increase in the return

on plan assets primarily due to acquired net pension assets in connection with the Combination, that was partially offset by an increase

in interest costs of $128 million primarily due to acquired net pension assets in connection with the Combination; a $12 million

increase in one-time settlement expenses and a $7 million increase in the net actuarial loss.

Interest Expense, Net

Interest expense, net increased by $259 million to $398 million in the year ended December 31, 2024, from $139 million in the year

ended December 31, 2023. The increase was primarily the result of interest on debt assumed as part of the Combination and the

$2,750 million April Notes Offering (as hereinafter defined) in connection with the Combination. The increase was partially offset by

higher interest income of $96 million primarily due to increased average cash balances in the period. See “Note 14.  Debt” of the

Notes to Consolidated Financial Statements for details of the April Notes Offering.

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Other (Expense) Income, Net

Other (expense) income, net decreased by $21 million, to a net expense of $25 million in the year ended December 31, 2024, from a

net expense of $46 million in the year ended December 31, 2023. This decrease was primarily due to a $30 million net positive impact

from foreign currency translation of monetary assets and liabilities and a $10 million increase in income from equity method

investments. This was partially offset by a $23 million expense recorded in the year ended December 31, 2024 in connection with the

sale of receivables under an accounts receivable monetization program acquired as a result of the Combination.

Income Tax Expense

Income tax expense decreased by $71 million, to $241 million (consisting of current tax expense of $378 million and deferred tax

benefit of $137 million) in the year ended December 31, 2024, from $312 million (consisting of current tax expense of $340 million

and deferred tax benefit of $28 million) in the year ended December 31, 2023.

The net increase of $38 million in current tax expense was primarily due to the tax impact of the acquired U.S. operations resulting

from the Combination and from lower profitability elsewhere. The net increase of $109 million in deferred tax benefit largely relates

to the amortization of differences arising in the acquisition accounting for the Combination.

Results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022

Net Sales

Net sales decreased by $1,416 million, to $12,093 million in the year ended December 31, 2023, from $13,509 million in the year

ended December 31, 2022. This decrease was primarily due to a reduction of $842 million due to lower volumes, as well as a lower

selling price/mix of $789 million. In addition, there was a net negative impact of $142 million from acquisitions and disposals,

primarily due to the disposal of our Russian operations. These decreases were partially offset by a net positive foreign currency impact

of $390 million, primarily due to the weakening of the U.S. dollar against the euro. See “Segment Information” below for more detail

on Smurfit Westrock’s segment results.

Cost of Goods Sold

Cost of goods sold decreased by $1,198 million, to $9,039 million in the year ended December 31, 2023, from $10,237 million in the

year ended December 31, 2022. The decrease in cost of goods sold was primarily due to lower input prices, lower volumes and the net

impact of acquisitions and disposals, partly offset by the impact of net negative foreign currency.

SG&A Expenses

SG&A expenses increased by $61 million, to $1,604 million in the year ended December 31, 2023, from $1,543 million in the year

ended December 31, 2022. This increase was primarily due to an increase in wages and salaries, redundancy and reorganization and IT

costs.

Goodwill Impairment

In the year ended December 31, 2022 the Company recorded a pre-tax, non-cash goodwill impairment in the LATAM segment of

$12 million to fully impair the goodwill balance in its Peru reporting unit as a result of continued difficult economic conditions.

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Impairment of Other Assets

In the year ended December 31, 2022, the Company recorded an impairment charge of $159 million in the Europe, MEA and APAC

segment on the assets relating to its Russian operations upon their classification as assets held for sale.

Transaction and Integration-related Expenses Associated with the Combination

In the year ended December 31, 2023, the Company incurred $78 million of transaction-related expenses associated with the

Combination, which included legal and financial advisory, accounting, and consulting costs as well as bond consent fees incurred in

connection with the Combination.

Pension and Other Postretirement Non-Service Expense, Net

Pension and other postretirement non-service expense, net increased by $41 million, to $49 million in the year ended December 31,

2023, from $8 million in the year ended December 31, 2022. This increase was primarily due to an increase in interest costs of $48

million due to higher discount rates. The increase in costs was partially offset by an increase in the expected return on assets of $15

million. In addition, there was a net settlement loss of $8 million in the year ended December 31, 2023 compared to a net settlement

gain of $1 million in the year ended December 31, 2022.

Interest Expense, Net

Interest expense, net was $139 million in both the years ended December 31, 2023 and December 31, 2022. The Company incurred

incremental costs of $10 million in the year ended December 31, 2023 related to bridge facility fees associated with the Combination

which was offset by a $10 million decrease in the net interest expense excluding the bridge facility fees, primarily due to additional

interest income earned on the Company’s deposits as a result of the higher interest environment, partially offset by higher interest

costs on the Company’s variable debt.

Other (Expense) Income, Net

Other (expense) income, net decreased by $61 million, to a net expense of $46 million in the year ended December 31, 2023, from net

income of $15 million in the year ended December 31, 2022. This decrease was primarily due to a $50 million increase in loss on

foreign currency transactions, mainly driven by the devaluation of the Argentine Peso, as well as a $5 million decrease in net gain on

the disposal of businesses and assets in the year ended December 31, 2023.

Income Tax Expense

Income tax expense decreased by $79 million, to $312 million (consisting of current tax expense of $340 million and deferred tax

benefit of $28 million) in the year ended December 31, 2023, from $391 million (consisting of current tax expense of $350 million

and deferred tax expense of $41 million) in the year ended December 31, 2022.

The net decrease of $10 million in current tax expense was primarily due to lower profitability. The net decrease of $69 million in

deferred tax expense was largely due to: the effects of timing differences on which deferred tax was previously recognized; the impact

of deferred tax on certain unremitted earnings where the Company was not availing of a permanent reinvestment assertion; and the

recognition of other tax benefits and credits.

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SEGMENT INFORMATION

Smurfit Westrock has identified its operating segments based on how the CODM makes key operating decisions, allocates resources

and assesses performance of the Company’s business. Effective the third quarter of 2024 Smurfit Westrock has identified three

operating segments: (i) North America, which includes operations in the U.S., Canada and Mexico, (ii) Europe, MEA and APAC and

(iii) LATAM, which includes operations in Central America and Caribbean, Argentina, Brazil, Chile, Colombia, Ecuador and Peru.

No operating segments have been aggregated for disclosure purposes. Prior period comparatives have been recast to reflect the change

in segments.

Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis, but

exclude certain central costs such as corporate costs, including executive costs, and costs of Smurfit Westrock’s legal, company

secretarial, pension administration, tax, treasury and controlling functions and other administrative costs. Segment profitability is

measured based on Adjusted EBITDA, defined as income before income taxes, unallocated corporate costs, depreciation, depletion

and amortization, interest expense, net, pension and other postretirement non-service expense, net, share-based compensation expense,

other (expense) income, net, impairment of goodwill and other assets, amortization of fair value step up on inventory, transaction and

integration-related expenses associated with the Combination and other specific items that management believes are not indicative of

the ongoing operating results of the business.

The following table contains selected financial information for Smurfit Westrock’s segments for the years ended December 31, 2024,

2023 and 2022:

(1) Net sales before intersegment eliminations

The year ended December 31, 2024, compared to the year ended December 31, 2023

North America Segment

Net Sales

Net sales before intersegment eliminations for the North America segment increased by $8,468 million, to $10,092 million in the year

ended December 31, 2024, from $1,624 million in the year ended December 31, 2023. This increase was primarily due to the positive

impact of $8,481 million from the acquisition of WestRock.

Adjusted EBITDA

Adjusted EBITDA for the North America segment increased by $1,329 million, to $1,610 million in the year ended December 31,

2024, from $281 million in the year ended December 31, 2023. This increase was primarily due to the positive impact of $1,380

million from the acquisition of WestRock.

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Europe, MEA and APAC Segment

Net Sales

Net sales before intersegment eliminations for the Europe, MEA and APAC segment increased by $384 million, to $9,577 million in

the year ended December 31, 2024, from $9,193 million in the year ended December 31, 2023. This increase was primarily due to the

impact of $740 million which related to the acquisition of WestRock. Excluding the impact of this acquisition, net sales before

intersegment eliminations decreased by $356 million primarily due to a lower selling/price mix of $732 million, partially offset by a

positive volume impact of $352 million and net foreign currency impact of $36 million primarily due to the weakening of the U.S.

dollar against the euro, pound sterling and Polish zloty.

Adjusted EBITDA

Adjusted EBITDA for the Europe, MEA and APAC segment decreased by $155 million, to $1,529 million in the year ended

December 31, 2024, from $1,684 million in the year ended December 31, 2023. There was a $63 million positive impact from the

acquisition of WestRock. Excluding the impact of this acquisition, Adjusted EBITDA decreased by $218 million mainly due to a

lower selling price/mix impact of $732 million, partly offset by lower input prices of $449 million and a positive impact of $67 million

due to higher volumes.

LATAM Segment

Net Sales

Net sales before intersegment eliminations for the LATAM segment increased by $367 million, to $1,711 million in the year ended

December 31, 2024, from $1,344 million in the year ended December 31, 2023. This increase was primarily due to the positive impact

of $363 million from the acquisition of WestRock.

Adjusted EBITDA

Adjusted EBITDA for the LATAM segment increased by $104 million, to $378 million in the year ended December 31, 2024, from

$274 million in the year ended December 31, 2023. This increase was primarily due to the positive impact of $106 million from the

acquisition of WestRock.

The year ended December 31, 2023, compared to the year ended December 31, 2022

North America Segment

Net Sales

Net sales before intersegment eliminations for the North America segment decreased by $96 million, to $1,624 million in the year

ended December 31, 2023, from $1,720 million in the year ended December 31, 2022. This decrease was primarily due to the impact

of lower volumes of $110 million, as well as the impact of a lower selling price/mix of $21 million, partially offset by a net positive

foreign currency impact of $35 million.

Adjusted EBITDA

Adjusted EBITDA for the North America segment was $281 million in the years ended December 31, 2023 and 2022, primarily due to

the impact of lower volumes, offset by lower input prices.

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Europe, MEA and APAC Segment

Net Sales

Net sales before intersegment eliminations for the Europe, MEA and APAC segment decreased by $1,258 million, to $9,193 million in

the year ended December 31, 2023, from $10,451 million in the year ended December 31, 2022. This decrease was primarily due to a

lower selling price/mix of $779 million, as well as a decrease in volumes (excluding the impact of acquisitions and disposals), which

reduced net sales by $632 million. In addition, there was a net negative impact of $168 million from acquisitions and disposals. These

decreases were partially offset by a net positive foreign currency impact of $321 million, primarily due to the weakening of the U.S.

dollar against the euro.

Adjusted EBITDA

Adjusted EBITDA for the Europe, MEA and APAC segment decreased by $236 million, to $1,684 million in the year ended

December 31, 2023, from $1,920 million in the year ended December 31, 2022. The decrease was primarily due to a lower selling

price/mix which had an impact of $779 million along with a lower volume impact of $293 million, partly offset by lower input prices

of $694 million and a net positive foreign currency impact of $127 million.

LATAM Segment

Net Sales

Net sales before intersegment eliminations for the LATAM segment decreased by $53 million, to $1,344 million in the year ended

December 31, 2023, from $1,397 million in the year ended December 31, 2022. This decrease was primarily due to the impact of

lower volumes of $89 million, as well as the impact of lower selling price/mix of $24 million, partially offset by a positive impact of

$25 million from acquisitions and a net positive foreign currency impact of $35 million.

Adjusted EBITDA

Adjusted EBITDA for the LATAM segment decreased by $6 million, to $274 million in the year ended December 31, 2023, from

$280 million in the year ended December 31, 2022. The decrease was primarily due to a lower selling price/mix and lower volumes,

partly offset by a lower input prices.

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LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Smurfit Westrock’s primary sources of liquidity are the cash flows generated from its operations, its commercial paper program, and

committed credit lines. The uncommitted commercial paper program is supported by the $4,500 million revolving loan facility with a

separate swingline sub-facility which allows for same-day drawing in U.S. dollar. The amount of commercial paper outstanding does

not reduce available capacity under the revolving loan facility. The primary uses of this liquidity are to fund Smurfit Westrock’s day-

to-day operations, capital expenditures, debt service, dividends and other investment activity, including acquisitions.

As of December 31, 2024, Smurfit Westrock held cash and cash equivalents of $855 million, of which $426 million were held in euro,

$169 million were held in U.S. dollars and $260 million were held in other currencies. At December 31, 2024, the Company had

$5,079 million in undrawn committed facilities available under the New RCF and receivables securitization facilities. The weighted

average period until maturity of undrawn committed facilities was 4.4 years as of December 31, 2024. Combined with cash and cash

equivalents of $855 million, the Company had $5,934 million of available liquidity.

On June 28, 2024, conditional upon the closing of the Combination, the Company entered into the Multicurrency Term and Revolving

Facilities Agreement (the "New Credit Agreement") with certain lenders and Wells Fargo Bank, National Association, as agent,

providing for (i) the $600 million Term Loan Facility, (ii) a multicurrency revolving loan facility in an aggregate principal amount of

$4,500 million including a swingline sub-facility in an aggregate principal amount of $500 million (together, the “New RCF”). On

July 2, 2024, the Term Loan Facility of $600 million under the New Credit Agreement was cancelled prior to any drawdown and no

early termination penalties were incurred as a result of the cancellation. On July 5, 2024, the Company cancelled the €1,350 million

Revolving Credit Facility (that was due to mature in January 2026) (the “Existing RCF”) as part of the conditions of the New Credit

Agreement upon the closing of the Combination on the Closing Date. As of December 31, 2024, there were no amounts outstanding

under the New RCF.

As of December 31, 2024, Smurfit Westrock had $13,658 million of debt, excluding debt issuance costs, of which $1,053 million was

current. The carrying amount of the Company’s debt includes a fair value adjustment related to debt assumed through mergers and

acquisitions. At December 31, 2024 the unamortized fair value market adjustment was $48 million. Included within the carrying value

of Smurfit Westrock’s borrowings as of December 31, 2024 are deferred debt issuance costs of $63 million, of which $8 million is

current, all of which will be recognized in interest expense in Smurfit Westrock’s Consolidated Statements of Operations using the

effective interest rate method over the remaining life of the borrowings.   See “Note 14.  Debt” for a discussion of the Company’s

additional debt-related information, including bond issuance and repayments throughout the year.

The Company believes that the cash flows generated from its operations, cash on hand, its commercial paper program, available

borrowings under its committed credit lines and available capital through access to capital markets will be adequate to meet the

Company's  liquidity and capital requirements, including payments of any declared dividends, for the next 12 months and for the

foreseeable future.

Smurfit Westrock uses a variety of working capital management strategies including supply chain financing (“SCF”) programs,

vendor financing and commercial card programs, monetization facilities where we sell short-term receivables to a group of third-party

financial institutions and receivables securitization facilities. The programs are described below.

The Company engages in certain customer-based SCF programs to accelerate the receipt of payment for outstanding accounts

receivables from certain customers. Certain costs of these programs are borne by the customer or the Company. Receivables

transferred under these customer-based SCF programs generally meet the requirements to be accounted for as sales in accordance with

guidance under “Transfers and Servicing” (“ASC 860”), resulting in derecognition of such receivables from the Company’s

Consolidated Balance Sheets. Receivables involved with these customer-based SCF programs constitute approximately 6% of the

Company’s accounts receivable balance at December 31, 2024. In addition, Smurfit Westrock has monetization facilities that sell to

third-party financial institutions all of the short-term receivables generated from certain customer trade accounts. See “Note 13. Fair

Value Measurement” for a discussion of the Company’s monetization facilities.

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Smurfit Westrock’s working capital management strategy includes working with its suppliers to revisit terms and conditions, including

the extension of payment terms. The Company’s current payment terms with the majority of its suppliers generally range from payable

upon receipt to 120 days and vary for items such as the availability of cash discounts. The Company does not believe its payment

terms will be shortened significantly in the near future, and does not expect its net cash provided by operating activities to be

significantly impacted by additional extensions of payment terms. Certain financial institutions offer voluntary SCF programs that

enable the Company’s suppliers, at their sole discretion, to sell their receivables from Smurfit Westrock to the financial institutions on

a non-recourse basis at a rate that leverages the Company’s credit rating and thus might be more beneficial to the Company’s

suppliers. Smurfit Westrock and its suppliers agree on commercial terms for the goods and services we procure, including prices,

quantities and payment terms, regardless of whether the supplier elects to participate in SCF programs. The suppliers sell Smurfit

Westrock goods or services and issue the associated invoices based on the agreed-upon contractual terms. The due dates of the

invoices are not extended due to the supplier’s participation in SCF programs. Smurfit Westrock suppliers, at their sole discretion if

they choose to participate in a SCF program, determine which invoices, if any, they want to sell to the financial institutions. No

guarantees are provided by the Company under SCF programs, and it has no economic interest in a supplier’s decision to participate in

the SCF program. Therefore, amounts due to the Company’s suppliers that elect to participate in SCF programs are included in the

“Accounts payable” line item in the Company’s Consolidated Balance Sheets and the activity is reflected in “Net cash provided by

operating activities” in the Company’s Consolidated Statements of Cash Flows. Based on correspondence with the financial

institutions that are involved with Smurfit Westrock’s two primary SCF programs, while the amount suppliers elect to sell to the

financial institutions varies from period to period, the amount generally averages approximately 13.7% of the Company’s accounts

payable balance. The outstanding payment obligations to financial institutions under these programs were $450 million as of

December 31, 2024.

Smurfit Westrock also participates in certain vendor financing and commercial card programs to support travel and entertainment

expenses and smaller vendor purchases. Amounts outstanding under these programs are classified as debt primarily because the

Company receives the benefit of extended payment terms and a rebate from the financial institution that would not have otherwise

been received without the financial institution's involvement. Smurfit Westrock also has receivables securitization facilities that allows

for borrowing availability based on underlying accounts receivable eligibility and compliance with certain covenants. See “Note 14.

Debt” and “Note 22. Variable Interest Entities” of the Notes to Consolidated Financial Statements for a discussion of the receivables

securitization facilities and the amount outstanding under the Company’s vendor financing and commercial card programs.

Smurfit Westrock is a party to enforceable and legally binding contractual obligations involving commitments to make payments to

third parties. These obligations impact Smurfit Westrock’s short-term and long-term liquidity and capital resource needs. Certain

contractual obligations are reflected on Smurfit Westrock’s Consolidated Balance Sheets as of December 31, 2024, while others are

considered future obligations. Smurfit Westrock’s contractual obligations primarily consist of items such as long-term debt, including

current portion, lease obligations, purchase obligations and other obligations. See “Contractual Obligations and Commitments” for

more information.

Cash Flow Activity

The following table contains selected financial information from Smurfit Westrock’s Consolidated Statements of Cash Flows for the

years ended December 31, 2024, 2023 and 2022:

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Net cash provided by operating activities decreased by $76 million, or 4.9%, to $1,483 million in the year ended December 31, 2024

from $1,559 million in the year ended December 31, 2023, primarily due to a $508 million increase in the outflow in the change in

operating assets and liabilities driven by additional operating cash flow activity as a result of the Combination, higher volumes

(excluding acquisitions) in the Europe, MEA and APAC segment, and an increased outflow for creditors in the North America

segment. The increase in the cash outflows from changes in operating assets and liabilities includes proceeds of $62 million resulting

from the sale of accounts receivables in connection with monetization agreements. The increase in the cash outflows from changes in

operating assets and liabilities was partially offset by the $432 million increase in net income adjusted for non-cash items, including

depreciation, depletion and amortization, cash surrender value increase in excess of premiums paid, impairment charges on assets

other than goodwill, share-based compensation expense, deferred tax (benefit) expense, and pension and other post-retirement funding

more than cost, resulting in a net decrease in cash flows from operating activities.

Net cash provided by operating activities increased by $126 million, or 8.8%, to $1,559 million in the year ended December 31, 2023

from $1,433 million in the year ended December 31, 2022, primarily due to an increase in the cash inflow in the change in operating

assets and liabilities, partially offset by a decrease of $350 million in net income adjusted for non-cash items, including depreciation,

depletion and amortization, impairment charges for goodwill and other assets, share-based compensation expense, deferred tax

(benefit) expense, and pension and other post-retirement funding more than cost resulting in a net increase in cash flows from

operating activities.

Net cash used for investing activities of $2,114 million in the year ended December 31, 2024 consisted primarily of capital

expenditures of $1,466 million and cash paid for purchase of businesses, net of cash acquired of $719 million, partially offset by

proceeds from sale of property, plant and equipment of $61 million. Net cash used for investing activities of $931 million in the year

ended December 31, 2023 consisted primarily of capital expenditures of $929 million and cash paid for purchase of businesses, net of

cash acquired of $29 million. Net cash used for investing activities of $1,020 million in the year ended December 31, 2022 consisted

primarily of capital expenditures of $930 million and cash paid for purchase of businesses, net of cash acquired of $93 million.

Net cash provided by financing activities of $607 million in the year ended December 31, 2024 consisted primarily of cash inflows

from a net increase in debt of $1,367 million, partially offset by cash dividends paid to shareholders of $650 million and debt issuance

costs of $63 million. Net cash used for financing activities of $479 million in the year ended December 31, 2023 consisted primarily of

cash outflows from net repayments of debt of $55 million and cash dividends paid to shareholders of $391 million. Net cash used for

financing activities of $431 million in the year ended December 31, 2022 consisted primarily of cash outflows from repayments of

debt net of additions to debt of $7 million and cash dividends paid to shareholders of $349 million.

Contractual Obligations and Commitments

Smurfit Westrock’s primary cash requirements from contractual obligations and commitments include:

•Debt obligations. See “Note 14. Debt,” of the Notes to the Consolidated Financial Statements included elsewhere in this

Annual Report on Form 10-K for more information on Smurfit Westrock’s debt obligations and timing of expected future

payments.

•Operating and finance leases. See “Note 12. Leases,” of the Notes to the Consolidated Financial Statements included

elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s operating and finance lease

obligations and timing of expected future payments.

•Pension liabilities. See “Note 18. Retirement Plans,” of the Notes to the Consolidated Financial Statements included

elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s pension liabilities and the timing

of expected future benefit payments under its pension plans and postretirement plans.

•Capital commitments. See “Note 21. Commitments and Contingencies,” of the Notes to the Consolidated Financial

Statements included elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s future

spending for property, plant and equipment that Smurfit Westrock is obligated to purchase.

•Purchase commitments. See “Note 21. Commitments and Contingencies,” of the Notes to the Consolidated Financial

Statements included elsewhere in this Annual Report on Form 10-K for more information on Smurfit Westrock’s purchase

commitments and the timing of the expected future payments.

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Off-Balance Sheet Arrangements

As of December 31, 2024, Smurfit Westrock did not have any off-balance sheet arrangements.

NON-GAAP FINANCIAL MEASURES

Definitions

Non-GAAP Financial Measures

Smurfit Westrock reports its financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”).

However, management believes certain non-GAAP financial measures, as discussed below, provide Smurfit Westrock’s Board of

directors, investors, potential investors, securities analysts and others with additional meaningful financial information that should be

considered when assessing its ongoing performance. Smurfit Westrock management also uses these non-GAAP financial measures in

making financial, operating and planning decisions, and in evaluating company performance. Non-GAAP financial measures are not

intended to be considered in isolation of or as a substitute for, or superior to, financial information prepared and presented in

accordance with GAAP and should be viewed in addition to, and not as an alternative for, the GAAP results. The non-GAAP financial

measures Smurfit Westrock presents may differ from similarly captioned measures presented by other companies. Smurfit Westrock

uses the non-GAAP financial measures “Adjusted EBITDA,” “Adjusted Net Income,” and “Adjusted Earnings Per Share - Basic.”

Adjusted EBITDA

Smurfit Westrock uses the non-GAAP financial measure “Adjusted EBITDA” to evaluate its overall performance. The composition of

Adjusted EBITDA is not addressed or prescribed by GAAP. Smurfit Westrock defines Adjusted EBITDA as net income before

income tax expense, depreciation, depletion and amortization, interest expense, net, pension and other postretirement non-service

expense, net, share-based compensation expense, other (expense) income, net, impairment of goodwill and other assets, amortization

of fair value step up on inventory, transaction and integration-related expenses associated with the Combination and other specific

items that management believes are not indicative of the ongoing operating results of the business. Smurfit Westrock views Adjusted

EBITDA as an appropriate and useful measure to compare financial performance between periods.

Management believes that the most directly comparable GAAP measure to Adjusted EBITDA is “Net income”. Management believes

this measure provides Smurfit Westrock’s management, Board of directors, investors, potential investors, securities analysts and

others with useful information to evaluate Smurfit Westrock’s performance because, in addition to income tax expense, depreciation,

depletion and amortization, interest expense, net, pension and other postretirement non-service expense, net, share-based

compensation expense and other expense (income), net, Adjusted EBITDA also excludes impairment of goodwill and other assets,

amortization of fair value step up on inventory, transaction and integration-related expenses associated with the Combination, and

other specific items that management believes are not indicative of the operating results of the business. Smurfit Westrock and its

Board of directors use this information in making financial, operating and planning decisions and when evaluating Smurfit Westrock’s

performance relative to other periods.

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Set forth below is a reconciliation of the non-GAAP financial measure Adjusted EBITDA to Net income, the most directly comparable

GAAP measure, for the periods indicated.

For the year ended December 31, 2022, impairment of other assets in the table above is made up of the impairment of Russian

operations of $159 million, included in the Europe, MEA and APAC segment. See “Note 20. Disposal of Russian Operations” for

additional information on the impairment of the Russian operations.

Other adjustments in the table above include restructuring costs of $56 million for the year ended December 31, 2024 ($32 million and

$29 million for the years ended December 31, 2023 and 2022, respectively), a non-recurring, non-cash currency translation adjustment

in Argentina of $42 million and losses at closed facilities of $10 million partially offset by a reimbursement of a fine from the Italian

Competition Authority of $18 million.

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Adjusted Net Income and Adjusted Earnings per Share - Basic

Smurfit Westrock uses the non-GAAP financial measures “Adjusted Net Income” and “Adjusted Earnings Per Share - Basic”.

Management believes these measures provide Smurfit Westrock’s management, Board of directors, investors, potential investors,

securities analysts and others with useful information to evaluate Smurfit Westrock’s performance because they exclude amortization

of fair value step up on inventory, impairment of goodwill and other assets, transaction and integration-related expenses associated

with the Combination and other specific items that management believes are not indicative of the operating results of the business.

Smurfit Westrock and its Board of directors use this information when making financial, operating and planning decisions and when

evaluating Smurfit Westrock’s performance relative to other periods. Smurfit Westrock believes that the most directly comparable

GAAP measures to Adjusted Net Income and Adjusted Earnings Per Share - Basic are Net income attributable to common

shareholders and basic earnings per share attributable to common shareholders (“Earnings per share - Basic”).

Set forth below is a reconciliation of the non-GAAP financial measure Adjusted Net Income to Net income attributable to common

shareholders and Earnings per share to Adjusted Earnings per Share, the most directly comparable GAAP measures for the periods

indicated.

For the year ended December 31, 2022, impairment of other assets in the table above is made up of the impairment of Russian

operations of $159 million, included in the Europe, MEA and APAC segment. See “Note 20. Disposal of Russian Operations” for

additional information on the impairment of the Russian operations.

Other adjustments in the table above include restructuring costs of $56 million for the year ended December 31, 2024 ($32 million and

$29 million for the years ended December 31, 2023 and 2022, respectively), a non-recurring, non-cash currency translation adjustment

in Argentina of $42 million and losses at closed facilities of $10 million partially offset by a reimbursement of a fine from the Italian

Competition Authority of $18 million.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Smurfit Westrock has prepared the accompanying Consolidated Financial Statements in conformity with GAAP, which requires

management to make estimates that affect the amounts of revenues, expenses, assets and liabilities reported. Significant accounting

policies are described in “Note 1. Description of Business and Summary of Significant Accounting Policies” in the accompanying

Consolidated Financial Statements.

These critical accounting policies are both important to the portrayal of Smurfit Westrock’s financial condition and results of

operations and require some of management’s most subjective and complex judgments. The accounting for these matters involves the

making of estimates based on current facts, circumstances and assumptions that, in management’s judgment, could change in a manner

that would materially affect management’s future estimates with respect to such matters and, accordingly, could cause Smurfit

Westrock’s future reported financial condition and results of operations to differ materially from those that it is currently reporting

based on management’s current estimates.

Smurfit Westrock believes the following are critical accounting policies and estimates used in the preparation of its Consolidated

Financial Statements:

Business Combinations

From time to time, Smurfit Westrock may enter into business combinations, such as the Combination with WestRock which closed on

July 5, 2024. As described further in “Note 2. Acquisitions” to the Consolidated Financial Statements, Smurfit Westrock allocated the

$13,461 million aggregate merger consideration to the preliminary fair values of WestRock assets acquired and liabilities assumed as

of the Closing Date using currently available information. The excess of the purchase price over the fair value of net assets acquired

has been allocated to goodwill.

The purchase price allocation for the Merger is preliminary and is subject to revision as additional information about the acquisition-

date fair value of assets and liabilities becomes available during the measurement period (a period not to exceed 12 months from the

Closing Date). The Company is still evaluating the fair value of acquired property, plant and equipment, intangible assets and certain

income tax related items in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded.

The acquisition method of accounting requires significant estimates and assumptions regarding the fair values of the elements of a

business combination. The most significant assumptions related to the fair value estimates of plant and machinery assets acquired as

part of property, plant and equipment. The company prepared estimates and engaged third-party valuation specialists to assist in the

valuation of plant and machinery assets, which required significant judgements and assumptions inherent in the estimates regarding

items such as deriving the effective age, economic lives, residual values and other factors, including estimating future cash flows that

Smurfit Westrock expects to generate from the acquired assets.

If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and

projections used to develop these values, we could record future impairment charges. In addition, we have estimated the economic

lives of certain acquired assets, and these lives are used to calculate depreciation and amortization expense. If the Company’s

estimates of the economic lives change, depreciation or amortization expenses could be increased or decreased, or the acquired asset

could be impaired.

See “Note 1. Description of Business and Summary of Significant Accounting Policies — Business Combinations” and “Note 2.

Acquisitions” to the Consolidated Financial Statements for Smurfit Westrock’s accounting policy on business combinations and more

information on the Combination with WestRock.

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Goodwill Impairment

Smurfit Westrock reviews the carrying value of its goodwill annually during the fourth quarter, or more often if events or changes in

circumstances indicate that the carrying amount may exceed fair value as set forth in ASC 350, “Intangibles — Goodwill and Other”

(“ASC 350”). Smurfit Westrock tests goodwill for impairment at the reporting unit level. During the third quarter of 2024, following

the completion of the Combination, the Company changed its reportable segments and reassessed its reporting units. As a result of this

reassessment, the Company identified the following reporting units: (1) North America, which includes operations in the U.S. and

Canada, (2) Europe, MEA and APAC, (3) Mexico, (4) Argentina and Chile, (5) Colombia & Central Cluster, and (6) Brazil. See “Note

1.  Description of Business and Summary of Significant Accounting Policies — 1.12.  Goodwill and Non-current Assets” and “Note

9. Goodwill” to the Consolidated Financial Statements for Smurfit Westrock’s accounting policy on goodwill and more information

on the change in reporting units.

During the fourth quarter of the year ended December 31, 2024, Smurfit Westrock completed its annual goodwill impairment testing

for each of the Company’s reporting units by performing a qualitative assessment. Multiple factors were evaluated to assess whether it

was more likely than not that the estimated fair value of any reporting unit was below its carrying value. These factors included, but

were not limited to, its expectations for macroeconomic conditions, industry and market considerations, and financial performance,

including planned net sales and earnings of each reporting unit. The qualitative assessment also considered changes since a

quantitative test across all of the Company’s reporting units was last performed in 2023.

As a result of the qualitative assessment, Smurfit Westrock determined that it was more likely than not that the estimated fair value of

each reporting unit with goodwill exceeded its respective carrying value. Therefore, the Company determined that goodwill for each

reporting unit was not impaired and that a quantitative goodwill test was not required. See “Note 9. Goodwill” to the Consolidated

Financial Statements for further information about the Company’s annual assessment of goodwill for impairment.

Although the Company believes all relevant factors were considered in the qualitative impairment analysis to reach the conclusion that

goodwill was not impaired, significant changes in any one of the assumptions, estimates and market factors underlying Smurfit

Westrock’s fair value determinations could produce a significantly different result potentially leading to the recording of an

impairment that could have significant impacts on the results of operations and financial position of the Company. Smurfit Westrock

has not made any material changes to its impairment loss assessment methodology during the past three fiscal years.

Accounting for Income Taxes

Smurfit Westrock’s income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits, reflect

management’s best assessment of estimated current and future taxes to be paid. Significant judgements and estimates are required in

determining the consolidated income tax expense. In evaluating its ability to recover deferred tax assets and establishing or reducing a

valuation allowance in the jurisdiction from which they arise, Smurfit Westrock considers all available positive and negative evidence,

including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and the

effect of enacted tax rates expected to apply in the periods in which the deferred tax assets or liabilities are anticipated to be settled or

realized. A high degree of judgment is required to assess the impact of possible future outcomes on Smurfit Westrock’s current and

deferred tax positions.

As a result of this evaluation, Smurfit Westrock recorded valuation allowances of $372 million as of December 31, 2024 and $67

million as of December 31, 2023, related to certain deferred tax assets, primarily tax loss carryforwards, where there is uncertainty as

to the ultimate realization of a benefit. Smurfit Westrock regularly reviews the recoverability of deferred tax assets for adjustments to

taxable income, changes in tax laws or interpretations thereof and tax rates, as all of these could impact its effective tax rate.

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Smurfit Westrock is subject to routine tax audits and examinations. It uses significant judgement in (i) determining whether a tax

position, based solely on its technical merits, is “more likely than not” to be sustained upon examination and (ii) measuring the tax

benefit as the largest amount of benefit that is “more likely than not” to be realized upon settlement. Smurfit Westrock does not record

any benefit for tax positions that do not meet the “more likely than not” recognition threshold at the balance sheet date. Resolutions of

current uncertain tax positions are not expected to have a material adverse effect on the effective tax rate or on cashflows. Smurfit

Westrock has a progressive dividend strategy which means that it will remit earnings from some of its overseas subsidiaries to the

parent company in Ireland. Its foreign earnings are generally taxed at rates that are higher than in Ireland and so no incremental tax

should arise there, due to the availability of foreign tax credits. However, some earnings may be subject to limited additional foreign

taxes upon repatriation. Smurfit Westrock continues to indefinitely reinvest its foreign earnings as part of its wider capital allocation

strategy. To the extent that it cannot assert indefinite reinvestment of earnings, it records a deferred tax liability on its foreign earnings

at the applicable tax rate if it is not otherwise possible to remit earnings without additional tax.

As of December 31, 2024 and 2023, Smurfit Westrock recognized a deferred tax liability of $179 million and $126 million,

respectively, on unremitted earnings, in respect of foreign income taxes or withholding taxes for expected or assumed repatriation,

respectively. As Smurfit Westrock can decide which subsidiaries should pay dividends, it is does not expect that this deferred tax

liability will have a material impact on its cash flows in the foreseeable future.

The determination of the amount of unrecognized deferred tax liability related to indefinitely invested foreign earnings not subject to

additional outside basis difference taxes is not practicable. A 1% change in the effective tax rate would increase or decrease Smurfit

Westrock’s income tax expense for the year ended December 31, 2024 by $6 million.

In 2021, political agreement was reached by the OECD Inclusive Framework on a two-pillar approach to international tax reform. This

includes the commitment to introduce a minimum effective tax rate of 15% for companies with revenue above €750 million (‘Pillar

Two’). The agreement has been enacted in most of the countries where Smurfit Westrock has business activities. The law was enacted

in Ireland with an effective date January 1, 2024, and it was broadly in line with the OECD Inclusive Framework. For the year ended

December 31, 2024, a Pillar Two assessment was performed.  The impact of Pillar Two was not significant.

The Company has made accounting policy elections to account for the income tax effect(s) of U.S. Global Intangible Low-Taxed

Income (GILTI) as a period cost and to account for the income tax effect(s) of investment tax credits under the flow-through method.

Pension and Other Postretirement Obligations

The determination of pension obligations and pension expense requires various assumptions that can significantly affect liability and

expense amounts, such as the expected long-term rate of return on plan assets, discount rates, projected future compensation increases

and mortality rates for each of Smurfit Westrock’s plans. These assumptions are determined annually in conjunction with Smurfit

Westrock’s actuary. The accounting for these matters involves the making of estimates based on current facts, circumstances and

assumptions that, in management’s judgment, could change in a manner that would materially affect management’s future estimates

with respect to such matters and, accordingly, could cause Smurfit Westrock’s future reported financial condition and results of

operations to differ materially from those that Smurfit Westrock is currently reporting based on management’s current estimates.

A 50-basis point change in the discount rate, compensation level and expected long-term rate of return on plan assets, factoring in our

corridor as appropriate, would have had the following effect on Smurfit Westrock’s pension expense for the year ended December 31,

2024, (in millions):

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NEW ACCOUNTING STANDARDS

See “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial

Statements included elsewhere in this Annual Report on Form 10-K for a full description of recent accounting pronouncements,

including the respective expected dates of adoption and expected effects on Smurfit Westrock’s results of operations and financial

condition.