Nov 9 (Reuters) - WestRock on Thursday missed Wall Street expectations for fourth-quarter sales on softening retail demand for its containerboard and paper packaging goods.
Major packaging firms like International Paper and Packaging Corp of America are seeing waning demand after consumers prioritized spending on essentials over paper packaged goods.
This has hit companies like WestRock that saw a surge in sales during the pandemic when e-commerce demand soared as retail customers needed packaging products to ship.
However, these companies now face customer destocking as retailers who are seeing a distressed consumer start to control inventory and cut back on orders.
WestRock's revenue fell nearly 8% to $4.99 billion in the July-to-September period, missing analysts' average estimates of $5.11 billion, according to LSEG data.
Europe's largest paper packaging producer Smurfit Kappa, which agreed to buy WestRock in September, also said demand for its boxes slowed further in the third quarter.
Even peers, Packaging Corp of America and Amcor trimmed their revenue projections highlighting the weakness in demand with the former expecting pricing to remain soft particularly in packaging and paper segments.
The slump in net sales was driven by a 29.2% decrease in Global Paper segment sales, which was partially offset by a 5.8% increase in corrugated packaging segment sales.
WestRock, however, reported an adjusted profit per share of 81 cents for the quarter ended Sept. 30, topping analysts' estimates of 74 cents, as the company benefited from price hikes on its corrugated boxes and cost controls.
The company's shares edged up nearly 1% premarket. (Reporting by Annett Mary Manoj; Editing by Shailesh Kuber)