Shares of Sylvamo (SLVM) plunged 7.60% in pre-market trading on Friday after the paper company reported first-quarter earnings that missed analyst estimates and provided a weak outlook for the second quarter. The company's adjusted earnings per share of $0.68 fell short of the $0.69 expected by analysts, while revenue of $821 million slightly beat expectations of $815.91 million.

Sylvamo's Q1 net income dropped to $27 million from $43 million a year earlier, while adjusted EBITDA declined to $90 million from $118 million. The company cited unfavorable price and mix, lower volumes, and increased costs as key factors impacting its performance. Additionally, Sylvamo warned of potential risks from a global economic slowdown due to tariffs, which could impact uncoated freesheet demand and lead to higher inflation on raw materials and transportation costs.

Looking ahead, Sylvamo provided a cautious outlook for the second quarter, projecting adjusted EBITDA of $75 million to $95 million. This guidance implies continued weakness compared to recent quarters. However, management expressed optimism that earnings would "significantly improve" in the second half of the year, benefiting from lower planned maintenance outage expenses, improved commercial results, and better operations. Investors appear to be focusing on the near-term challenges, driving the stock lower despite the company's expectations for a stronger second half.