Smurfit Kappa records 13% growth in earning as International Paper Q1 sales dip

IRELAND – Irish corrugated packaging company, Smurfit Kappa has reported a 13% year-over-year rise in its earnings before interest, taxes, depreciation, and amortization (EBITDA) to €579m (US$634.73m) in the first quarter (Q1) of 2023.

In its trading update for the quarter ending 31 March 2023, the company reported an EBITDA margin of 19.3% and net debt to EBITDA ratio of 1.2x.

During Q1 2023, the company registered a return on capital employed (ROCE) of 21.6%, compared to the same period a year ago.

Smurfit Kappa CEO Tony Smurfit said: “This performance reflects the continuing benefits of our integrated model, the effectiveness of our capital spend, our constant focus on innovation for customers and our geographic footprint.

“Together with the commitment and dedication of our people and our performance-led culture, these attributes have enabled us to continue to deliver in an environment where volumes were lower than the previous year.

“As anticipated, first quarter demand was broadly in line with the fourth quarter of 2022. We expect the demand environment to improve as the year progresses and SKG is well placed across our geographies to take advantage of this.”

Tony added: “As stated in our full-year results, Smurfit Kappa has never been better positioned to continue to develop and take advantage of opportunities as they present themselves either through organic investments or acquisitions.”

During the quarter, Smurfit Kappa also completed its exit from the Russian market almost a year after deciding to leave the country due to Russia’s invasion of Ukraine.

The assets sold to local management, as part of the exit, included three plants in and around St Petersburg, as well as a corrugated packaging facility in Moscow.

International Paper records US$5.02B

International Paper has registered net sales of US$5.02 billion in the first quarter (Q1) of fiscal year (FY) 2023, compared to US$5.23 billion in Q1 FY22.

The company’s net earnings (loss) for the quarter, which ended on 31 March 2023, was US$172 million or US$0.49 per diluted share. In Q1 FY22 loss was US$360 million or US$0.95 per diluted share.

The packaging, pulp and fiber-based products manufacturer said its adjusted operating earnings (non-GAAP) for Q1 FY23 was US$185 million or US$0.53 per diluted share.

The company’s free cash flow for Q1 FY23 totaled US$4 million and included the final payment of US$193 million made to the IRS for the timber-monetization restructuring settlement.

According to International Paper, it focused on building a better intellectual property (IP) strategy, which delivered around US$65 million incremental year-over-year earnings during Q1 FY23.

In this quarter, the company was able to return US$319 million to its shareholders via US$157 million in share repurchases and US$162 million in dividends.

International Paper’s board chair and CEO Mark Sutton said: “International Paper operated well in the first quarter, while navigating a challenging and dynamic macro-environment.

“We successfully executed our highest maintenance outage quarter and realized additional benefits from our Building Better IP initiatives and lower input costs.”

The company’s Industrial Packaging segment made the highest contribution to the consolidated net sales. The segment’s net sales were US$4.83 billion in Q1 FY23, compared to US$4.406 billion in Q1 FY22.

The operating profits of this segment decreased from $397m in Q1 FY22 to $322m in Q1 FY23.

The company said earnings decreased during this period, specifically in North America, due to the lower input costs of recovered fiber and energy.

It can also be attributed to higher planned maintenance outage expenses and higher operating costs.

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