The Zacks Paper and Related Products industry is currently facing challenges due to decreased demand driven by lower consumer spending and a shift to digital formats, particularly in graphic paper. However, the industry is bolstered by rising e-commerce activity and ongoing demand from sectors such as food, beverages, and healthcare, coupled with environmental awareness promoting paper as a sustainable packaging option. Notably, global e-commerce revenues are projected to grow at a CAGR of 18.9% from 2024 to 2030, with the U.S. market specifically expected to grow at 16.4%.
Companies like Smurfit Westrock PLC and Klabin are poised to benefit from these trends. Smurfit Westrock, formed through the merger of Smurfit Kappa and WestRock, aims for $400 million in synergies in its first year of combined operations. Meanwhile, Klabin reported a 10% year-over-year increase in revenues to R$4.9 billion in Q1 2025, and its Zacks Consensus Estimate for earnings shows a significant increase of 12.5% from the previous year.
Despite these growth opportunities, the industry faces headwinds, including rising operational costs and tariffs, resulting in a Zacks Industry Rank of #234, indicating it is in the bottom 5% of the 246 Zacks industries. Within the past year, shares in the industry have risen 19.6%, outperforming the Basic Materials sector’s increase of 0.8% and the S&P 500’s growth of 12.2%.
