INTERNATIONAL PAPER CO /NEW/

2025 Financial Summary

•Net sales of $23.63 billion

•Loss from continuing operations of $(2.84) billion includes the following:

◦$2.47 billion pre-tax non-cash goodwill impairment charge

◦$958 million non-cash accelerated depreciation associated with asset rationalization decisions

◦$626 million of restructuring charges

•Adjusted EBITDA (non-GAAP) from continuing operations of $2.98 billion(1)

•Cash provided by operating activities of $1.70 billion

•Free cash flow (non-GAAP) of $(159) million(1)

(1) See "Non-GAAP Financial Measures" for a list of our non-GAAP financial measures and reconciliations to the

most directly comparable GAAP measures.

Overview

Throughout 2025, we continued to execute a multi‑year transformation designed to simplify our portfolio, sharpen

our regional focus and improve underlying earnings power. The Company undertook significant strategic and

operational changes driven largely by our 80/20 performance system, the integration of DS Smith and the

divestiture of our Global Cellulose Fibers ("GCF") business.

The Company acquired DS Smith in early 2025 for an enterprise value of approximately $9.9 billion. The acquisition

expanded our geographic reach across both the North America and EMEA regions, enabling advantaged cost

positions, superior customer experiences and improved supply positions. Integration progressed rapidly during

2025, with teams applying the 80/20 performance system across both regions to streamline combined operations,

optimize production footprints, and realize supply chain and commercial synergies. By year‑end, we had executed

approximately $710 million of full run‑rate cost‑out actions, including synergy benefits attributable to the DS Smith

combination.

In North America, we continued to leverage 80/20 to simplify our business operations and focus our resources to

accelerate growth. In our packaging business, we exited non-strategic export and specialty markets and rationalized

higher cost capacity to better align with profitable customer demand. We achieved approximately $510 million of

run-rate cost savings in 2025 with the closures of several mills and plants, allowing us to increase investment in our

remaining assets. We also entered into a definitive agreement to divest our GCF business, positioning the company

as a pure play leading sustainable packaging solutions company.

Parallel with our efforts in North America, the Company advanced its integration and transformation strategy in

EMEA, where it launched the 80/20 performance system with approximately $200 million of run-rate cost-out

actions and synergy benefits actioned in 2025. Early adoption from teams across the regions has supported a

smooth rollout as the Company positions the EMEA business for its next phase of operational focus and regional

alignment.

In the first quarter of 2026, we completed the sale of our GCF business to American Industrial Partners for $1.5

billion. We intend to use proceeds from the transaction to support strategic reinvestment in our packaging business,

reduce debt to improve our credit profile and preserve financial flexibility and maintenance of a strong investment-

grade credit rating.

On January 29, 2026, the Company announced plans to separate into two independent, publicly traded companies:

International Paper will be comprised of its current business in North America including both legacy IP and DS

Smith assets, and the EMEA packaging business will be comprised of both legacy DS Smith and IP assets in

EMEA. The separation is expected to be structured as a spinoff of the EMEA business to shareholders, with

International Paper retaining a meaningful ownership stake. The transaction is expected to be completed within 12

to 15 months, subject to customary approvals, including final approval by IP’s Board of Directors, filing and

effectiveness of registration statement with the U.S. SEC and publication of prospectus approved by the U.K.

Financial Conduct Authority. No assurance can be provided regarding the ultimate timing or structure of the

proposed separation or its eventual completion.

The Company expects that creating two regionally focused businesses will allow each to tailor strategies to their

distinct markets, enhance management focus, and support long-term value creation. In 2026, the Company expects

to continue advancing its transformation strategy through the planned strategic separation, targeted investment

agendas, and continued operational improvements across its regional platforms. This strategic action represents the

next phase of our transformation and is designed to advance long‑term value creation for customers and

shareholders. Following the separation, International Paper plans to intensify its focus on its North American

operations, with an emphasis on targeted capital allocation, investments in productivity and innovation, and

disciplined strategic acquisitions.

As previously disclosed, IP intends to retain a meaningful ownership stake in the EMEA packaging business, which

is expected to be listed on both London Stock Exchange and the New York Stock Exchange. For additional

information about the separation, including process steps and anticipated impacts, please see Note 22 Subsequent

Events of Item 8. Financial Statements and Supplementary Data and Part I, Item 1A. Risk Factors - Risks Related

to the Separation.

Market Conditions

Throughout 2025, the Company operated in challenging demand environments across both North America and

EMEA. In North America, market demand was weaker than expected throughout most of the year as economic

uncertainty from tariffs, slower housing starts, weaker consumer sentiment and lower industrial production

negatively impacted box demand. Although industry growth was subdued throughout 2025, we grew above market

in the second half of the year as we gained commercial momentum through our focused customer service and

reliability efforts. In EMEA, overall demand remained relatively soft throughout 2025 as macroeconomic uncertainty

and volatility persisted, influenced by trade uncertainty, geopolitical tensions in the Middle East and the Russia-

Ukraine conflict.

Non-GAAP Financial Measures