Paper & Packaging: 2Q Preview – Expect (Mostly) Solid Prints on In-line Demand, Stabilizing Costs

Research evidence excerpt

Paper & Packaging: 2Q Preview – Expect (Mostly) Solid Prints on In-line Demand, Stabilizing Costs

Paper & Packaging

08 July 2026 Citi Research

Risks

Risks to our valuation and target price include the following:

Supply/Demand Balance – Capacity additions or closures in North American

Boxboard may cause the market to become unbalanced, causing price

erosion or successful price increases. Explicit capacity additions, the 1-2%

"creep" capacity typically seen in the industry, and peer asset closures could

cause us to revise our neutral view.

Raw Material Volatility – GPK's packaging production requires the purchase of

raw materials including pulpwood, OCC, chemicals & natural gas. Prices for

these raw materials are volatile, and sudden price inflation or deflation may

cause GPK to miss or exceed earnings expectations.

Secular Demand Decline – GPK is a large supplier of boxboard for several

categories that have experienced secular decline in recent years (soft drinks,

dry food, frozen food); if the decline were to accelerate or moderate, we may

revise our neutral view.

Substrate Substitution – GPK has benefitted as fiber-based packaging has

gained share from plastic amid sustainability initiatives and evolving

consumer preferences, particularly in Europe; over the past 5 years, large CPG

customers and end consumers have been able to absorb the higher cost of

fiber-based packaging. If emphasis on fiber-based packaging

increases/decreases, or if CPGs & consumers increase/reduce willingness to

pay up for fiber, GPK earnings may be positively/negatively impacted,

respectively.

If the impact on the company from any of these factors proves to be greater

than we anticipate in either direction, the stock’s performance may deviate

meaningfully from our target price.