5. Goodwill

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The changes in the carrying amount of goodwill at June 30, 2026, December 31, 2025 and June 30, 2025 are as follows:

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As part of its on-going assessment of goodwill, the Company determined that indicators of impairment occurred during the second quarter of 2026, including a significant reduction of its share price and lower projected earnings and cash flow from its European operations.  The Company's business in Europe has experienced a combination of softer demand and an increasingly competitive market backdrop, which pressured price amid low-capacity utilization. In the second quarter of 2026, higher operating costs associated with recent plant restructuring actions in Europe also impacted operations more negatively. Higher global energy costs in Europe are also expected in future periods driven by the conflicts in the Middle East.  These factors, combined with the narrow difference between the estimated fair value and carrying value of the Europe reporting unit as of December 31, 2025, resulted in the Company performing an interim impairment analysis during the second quarter of 2026.  As a result, the Company recorded a non-cash impairment charge of $873 million in the second quarter of 2026, which was equal to the excess of the Europe reporting unit's carrying value over its fair value and resulted in a complete impairment of Europe’s goodwill balance. Goodwill related to the Company’s Latin America reporting unit (Americas segment) was determined to not be impaired as a result of the interim impairment analysis and no goodwill remains on the Company's North America reporting unit.

When performing its test for goodwill impairment, the Company compares the business enterprise value (“BEV”) of each reporting unit with its carrying value. The BEV is computed based on estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. If the BEV is less than the carrying value for any reporting unit, then any excess of the carrying value over the BEV is recorded as an impairment loss.  The calculations of the BEV are based on significant internal and external inputs, such as projected future cash flows of the reporting units, discount rates, and terminal business value, among other assumptions. The valuation approach utilized by management represents a Level 3 fair value measurement measured on a non-recurring basis in the fair value hierarchy due to the Company’s use of unobservable inputs. The Company’s projected future cash flows incorporates management’s best estimates of the expected future results including, but not limited to, price trends, customer demand, material costs, asset replacement costs and any other known factors.  

The remaining balance of goodwill in Latin America remains susceptible to future impairment charges.  If the Company’s projected future cash flows were substantially lower, or if the assumed weighted average cost of capital were substantially higher, the testing performed during the second quarter of 2026 may have resulted in an impairment in the Company’s Latin America reporting unit. Any impairment charges that the Company may take in the future could be material to its consolidated results of operations and financial condition.

As a result of the impairment of Europe’s goodwill balance, the Company conducted a review during the second quarter of 2026 and determined there was no impairment of Europe’s long-lived assets.

Goodwill for the Americas segment is net of accumulated impairment losses of $1,040 million as of June 30, 2025, December 31, 2025, and June 30, 2026.