Industrial and mobility (6 of 6)

Paper and packaging

About 8 minutes to read in full, or 1 minute for the short version belowFacts checked 1 October 2026

In one minute

Companies turn wood, recycled paper, plastic resin, aluminium and glass into the boxes, cartons, films, cans and bottles that carry almost everything we buy.

The big idea: Packaging joins two businesses: a few huge, capital heavy mills and plants that make the material, and many smaller converting plants near customers that turn it into packs, because empty packaging is mostly air. The raw material is most of the cost, so profit depends on running mills full, owning low-cost material, and passing input costs on to customers quickly. New recycling rules are changing which materials win.

One unit, in numbers: One tonne of corrugated boxes from an integrated maker in Europe: EUR 1,000 comes in, and EUR 150 (15%) is left after its own costs.What is left is the unit's contribution, before the costs of the whole company. See the worked example
Typical margin: About 10 percent operating margin for US packaging companies and about 6 percent for paper and forest products; EBITDA margins of about 13 to 16 percent for large paper packaging groupsRoughly how much of every 100 of sales (or income) is left as profit after the running costs. More on margin
Capital intensity: HighA lot of money must be tied up before the business earns anything, so the return on that money matters as much as the margin. More on capital intensity
The number to watch: Mill operating rateProduction divided by capacity. Paper machines have high fixed costs and run around the clock.

Ask this first in a case

Which material, and are we a mill, a converter or both?

Words used above (3)

Converter:: A company that turns board, film, metal or resin into finished packs.
Integrated:: Owning both the mill that makes the board and the plants that turn it into boxes.
Operating rate:: Production divided by capacity.

The industry's other words are explained in Words to know (12).

On this page (17 sections)

How money is made

Mills sell board and paper by the tonne at prices that follow published indices, so profit swings with the price cycle and with utilization.
Integrated groups earn extra by making their own board and turning it into boxes, which smooths the cycle.
Converters sell packs under contracts that pass changes in resin, aluminium or board prices to the customer, usually with a delay.
Can and plastic converters win multi-year contracts with large drinks and food companies and earn on running fast lines full.
Specialists earn more where packs are hard to make or protect the product, such as aseptic cartons and medical packaging.

Worked example: one unit

Unit economics means the money in and out for one unit of the business. Start from the revenue, take away the unit's own costs, and what is left is its contribution. More on unit economics

The unit: One tonne of corrugated boxes from an integrated maker in Europe, sold at EUR 1,000. Illustrative, rounded figures.
Line	Amount	ShareShare of revenue
Box price per tonne of board used	EUR 1,000	100%
Minus Recovered paper fibre for the board	EUR 120	12%
Minus Mill energy (gas and power for drying)	EUR 110	11%
Minus Mill chemicals, labour and maintenance	EUR 120	12%
Minus Box plant labour	EUR 170	17%
Minus Starch glue, ink and other box plant materials	EUR 60	6%
Minus Box plant energy and maintenance	EUR 70	7%
Minus Freight to customers	EUR 60	6%
Minus Selling and administration	EUR 140	14%
What is left (contribution)	EUR 150	15%

Check: EUR 1,000 minus EUR 850 of costs leaves EUR 150.

So what: The integrated maker keeps about EUR 150 of EBITDA a tonne, about 15 percent, close to what large groups reported in 2025. Fibre and energy can each swing by tens of euros a tonne within months, so the levers are low-cost fibre and energy, a full mill, and contracts that pass cost changes through quickly.

Key measures(8)

Key measures (also called KPIs, key performance indicators) are the numbers people in this industry track. Ask for the first one or two early in a case.

Mill operating rate
Production divided by capacity. Paper machines have high fixed costs and run around the clock.
Typical: About 81 percent for European mills in 2025[2]
EBITDA margin
Profit before interest, tax, depreciation and amortization as a share of sales.
Typical: About 13 to 16 percent for large paper packaging groups in 2025[3]
Recovered paper (OCC) price
The price of old corrugated containers, the main fibre for recycled board.
Typical: About USD 55 to 100 a ton in the US from December 2025 to July 2026, against a five-year average of about USD 140 (price series as reported)[4]
Price minus cost spread
How far selling prices are ahead of fibre, energy, resin or metal costs at a moment in time.
Pass-through delay
How many months contracts take to move the selling price after input costs change.
Box shipments
Square metres or tonnes of boxes sold: the demand signal, which tracks how many goods people buy.
Integration rate
The share of a group's own board that its own box plants use.
Recycling rate
The share of a packaging material that is collected and recycled.
Typical: About 76 percent for aluminium drink cans in Europe in 2023[5]

First questions to ask

When a case lands in this industry, these questions get you to the numbers that matter.

Which material, and are we a mill, a converter or both?
How full are our mills and lines, and is new capacity coming or old capacity closing?
Where are fibre, energy, resin or metal prices in their cycle?
What do our biggest contracts say about passing on input costs, and how long is the delay?
Which rules on recyclability, recycled content or plastic apply to our customers, and by when?

Value chain: where the margin sits

The value chain is the steps a product or service passes through, from the first supplier to the customer. Each step below shows how much of the value it keeps. More on value chains

Step 1: Raw materials: wood from forests, recovered paper, plastic resin, aluminium and steel sheet, glass sand and soda ash
Margin varies
Forest owners, recovered paper collectors, petrochemical companies, aluminium rollers
US prices for old corrugated containers hit their low for the year in December 2025, around USD 55 a ton in one regional series, well below the five-year average of about USD 140 (as reported).
Step 2: Mills: pulp, containerboard, carton board, graphic paper and tissue
Margin varies
Smurfit Westrock, International Paper, Mondi, Stora Enso, Nine Dragons, Asia Pulp and Paper
Highly cyclical; European mills ran at about 81 percent of capacity in 2025.
Step 3: Paper converting: corrugated boxes, folding cartons, paper bags
Medium margin
The same paper groups' box plants, plus many local converters
Large paper packaging groups earned EBITDA margins of about 13 to 16 percent in 2025.
Step 4: Plastic, metal, glass and carton converting under long contracts
Medium margin
Amcor, Ball, Crown, Tetra Pak, Huhtamaki, UFlex, Verallia
Input costs are usually passed through to customers, so margin comes from converting well and running lines full.
Step 5: Brand owners and retailers: food, drink, consumer goods and online shops that fill and sell the packs
Fat margin
Nestle, Coca-Cola, Unilever, Amazon, local food makers
Packaging is a small share of the shelf price of most branded goods; the brand owner keeps far more of that price.
Step 6: Collection and recycling: used boxes, cans, bottles and films collected and sorted
Thin margin
Municipal systems, waste companies, deposit return schemes
Rules that make producers pay for collection are growing in the EU and India.

Profit pool: who keeps the money

Where in the value chain the profit ends up, which is often not where most of the sales are. More on profit pools

Within packaging, the profit sits with low-cost mills that are integrated into their own box plants, and with converters that hold long contracts with big brand owners and pass input costs through. Mills selling paper on the open market earn little at the bottom of the cycle, and graphic paper is a shrinking business. The brand owners that fill the packs keep far more of the final price than any packaging maker.

Cost structure(4)

The main costs, each as a share of revenue (the money from sales).

Cost of goods sold, US packaging and container companies: About 76 percent of revenue[1]
Selling, general and administrative costs, same companies: About 11 percent of revenue[1]
Operating profit, same companies: About 10 percent of revenue[1]
Research and development, same companies: Under 1 percent of revenue[1]

Benchmarks(8)

Typical figures for the industry, to check a client's numbers against.

Operating margin, US packaging and container companies: About 9.6 percent[1]January 2026 data, 19 companies.
Operating margin, US paper and forest products companies: About 6.3 percent[1]Only six companies in the sample.
Adjusted EBITDA margin, Smurfit Westrock, 2025: About 15.8 percent[3]
Underlying EBITDA margin, Mondi, 2025: About 13.1 percent, down from 14.1 percent[7]
EBITDA margin, SCG Packaging (Thailand), 2025: About 13.8 percent (our calculation: EBITDA of THB 17.2 billion on revenue from sales of THB 124.4 billion)[8]
Adjusted EBITDA margin, International Paper, 2025: About 12.6 percent (our calculation: adjusted EBITDA of USD 2.98 billion on net sales from continuing operations of USD 23.63 billion)[9]
European paper and board mills' operating rate, 2025: About 81 percent[2]
US consumer recycling rate for aluminium cans, 2023: About 43 percent[6]

Typical cases(6)

Case prompts you might hear in this industry.

A European containerboard mill is losing money. Should we close it?
A box maker's margin fell although its volume held. Why?
Should an Indian flexible packaging maker invest in recyclable single-material film lines?
Should a can maker build a plant in Vietnam or Saudi Arabia?
A food company wants to cut its packaging cost by 10 percent. Where should it look?
Two box makers want to merge. What are the synergies?

Common traps(6)

Mistakes candidates make in this industry, and what to do instead.

Treating revenue growth as success when it only reflects higher resin or aluminium prices passed through.
Reading one quarter's margin without knowing where input prices moved in the last few months.
Forgetting that empty packaging is bulky, so converting plants must be near customers.
Closing a mill without checking which box plants depend on its board.
Assuming a pack labelled recyclable will be recycled, when collection systems decide that.
Reaching for a generic framework instead of the real driver of this industry. Instead, start from the material, mill utilization and the pass-through terms in the contracts.

What changed, 2024 to 2026(7)

Recent changes a case could turn on.

Mergers made giants: Smurfit Kappa and WestRock combined on 5 July 2024, and Smurfit Westrock reported 2025 net sales of about USD 31.2 billion with an adjusted EBITDA margin of 15.8 percent, after closing about 600,000 tons of high-cost capacity.[3]
International Paper completed its purchase of DS Smith on 31 January 2025, closed three US containerboard mills in 2025, and in January 2026 announced a plan to split into a North American and a European, Middle Eastern and African company within 12 to 15 months.[9]
Amcor completed its combination with Berry Global on 30 April 2025, creating a plastic packaging giant whose sales in the year to June 2026 rose 57 percent to about USD 23.5 billion, almost all of it from adding Berry.[10]
Graphic paper kept shrinking: European paper and board output fell about 1.6 percent in 2025, to about 77.4 million tonnes, with graphic paper down about 7 percent, while packaging grades held at about 64 percent of output.[2]
US box demand was weak: third quarter 2025 shipments were the lowest for a third quarter since 2015.[11]
The EU Packaging and Packaging Waste Regulation applies from 12 August 2026. It aims to make all packaging recyclable in an economically viable way by 2030 and requires 90 percent separate collection of single-use plastic and metal drink containers by 2029.[12]
Cans kept growing: Ball's global aluminium packaging shipments rose 4.1 percent in 2025.[14]

Players by region(7)

Well-known companies in each region. You do not need to learn them by heart; they help you picture the market.

Global: Smurfit Westrock
International Paper (with DS Smith)
Amcor (with Berry Global)
Tetra Pak
Ball
Crown
Mondi
Europe: Smurfit Westrock (Ireland)
Mondi
Stora Enso
UPM
Huhtamaki
Constantia Flexibles
Verallia (glass)
Ardagh (metal and glass)
United States: International Paper
Packaging Corporation of America
Graphic Packaging
Ball
Crown
Sealed Air
Sonoco
Middle East: Obeikan (Saudi Arabia)
Middle East Paper Company (Saudi Arabia)
Napco National (Saudi Arabia)
Hotpack (UAE)
India: ITC (paperboards)
JK Paper
West Coast Paper
UFlex (flexible packaging)
TCPL Packaging
Huhtamaki India
Southeast Asia: SCG Packaging (Thailand)
Asia Pulp and Paper (Indonesia)
APRIL (Indonesia)
China: Nine Dragons
Lee and Man

Words to know(12)

Linked words have a fuller entry in the glossary.

Containerboard: Strong paper used to make corrugated boxes: liner on the outside, fluting in the middle.
Kraftliner and testliner: Liner made mostly from fresh wood fibre, and liner made from recovered paper.
OCC: Old corrugated containers: used boxes collected for recycling into new board.
Converter: A company that turns board, film, metal or resin into finished packs.
Integrated: Owning both the mill that makes the board and the plants that turn it into boxes.
Operating rate: Production divided by capacity.
Pass-through clause: A contract term that moves the selling price when an input price moves.
Flexible packaging: Pouches, wrappers and films, usually printed plastic or laminate.
PET: The clear plastic used for most drink bottles.
Aseptic carton: A sterile carton that keeps milk or juice fresh without a fridge.
Extended producer responsibility: Rules that make producers pay for collecting and recycling their packaging.
Deposit return scheme: A small deposit paid on a bottle or can and refunded when it is returned.

Business model patterns

The ways of making money this industry follows. Spot the pattern in a new industry and you already know the first questions to ask.

Sources(15)

Facts checked on 1 October 2026. Worked examples are illustrative, shaped by these sources rather than one company's figures.

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