Greif's Q1 2025: Unpacking Contradictions on SG&A Margins, Timberland Sales, and Growth Strategies

These are the key contradictions discussed in Greif's latest 2025 Q1 earnings call, specifically including: SG&A margin expectations, timberland sale strategy, fiber segment performance and SG&A allocation, strategic focus on polymer segments, and volume assumptions for fiscal year 2025.



EBITDA and Free Cash Flow Targets:
- Greif, Inc. set new financial commitments of $1 billion EBITDA and $500 million free cash flow by 2027.
- These targets are supported by $100 million in known positive discrete items, volume recovery, and a $100 million cost optimization initiative.

Cost Optimization Initiatives:
- Greif identified $5 million in savings on a run rate basis and reaffirmed a goal of $15 million to $25 million by the end of fiscal 2025.
- The savings, primarily SG&A related, will benefit the full year 2026 and provide incremental impact for the remainder of this year.

Mill Closures and Production Adjustments:
- Greif announced the closure of two facilities, A1 paperboard machine and containerboard machines, reducing capacity by 100,000 tons of containerboard and 90,000 tons of URB capacity.
- This decision is expected to result in $8 million of EBITDA benefit by 2027, despite a short-term EBITDA headwind of $3 million in fiscal '25.

Regional Market Performance:
- EMEA demonstrated the highest level of resilience among regions, followed by APAC, while LATAM showed slightly downward trends, and North America remained the most bearish in demand.
- The company's focus on end segments like agrochemicals and food and beverage contributes to resilience, despite macroeconomic challenges.