Smurfit Kappa records 38% year-on-year earnings growth despite fall in demand

IRELAND – Irish corrugated company, Smurfit Kappa has announced its full-year results for 2022, showing a year-on-year (YOY) growth in earnings (EBITDA) of 38%, despite the widely-anticipated post-pandemic slowdown in corrugated box sales.

In its annual results, the firm posted earnings of €2.3 billion (US$2.47bn), climbing 38% on the previous year, and overall revenue jumped 27% to almost €13 billion (US$13.95bn).

Tony Smurfit, Smurfit Kappa Group CEO said: “Set against a year of extraordinary circumstances, 2022 was another highly successful year for the Smurfit Kappa Group.”

Company earnings for Europe increased by 42% to €1.8 billion (US$1.93bn) for the year, driven primarily by input cost recovery through box price increases.

Compared to 2021, the overall increase in recovered fiber prices in 2022 have cost the Group an additional €74 million (US$79.41m) while the increase in energy prices have cost the Group an additional €592 million (US$635.28m).

Box volumes were down 2% in 2022 against a strong prior year comparative as the packaging was in high demand during the pandemic.

The company witnessed a slowdown particularly in its German and UK markets, being partly offset by a more robust performance in countries such as France and Spain.

Mr. Smurfit added: “As guided by the Group, this coincided with the partial reversal of the unsustainably high demand levels seen through the pandemic period.

“This slowdown was particularly evidenced in the latter part of the year, especially in the month of December, where we saw stock reductions and downtime taken by customers.”

Smurfit Kappa is expected to deliver a 12% increase in the final dividend to €1.07 (US$1.15) per share following the positive earnings report.

The company directors believe that the Group is well placed to manage headwinds and have a reasonable expectation that the company have adequate resources to continue in operational existence for the foreseeable future.

Smurfit Kappa opens Nuevo Laredo plant

Meanwhile, the company has a new plant in Nuevo Laredo, with a total investment of US$23.6 million.

The plant’s product portfolio offers solutions for various sectors, such as automotive, electronics, furniture, food, health and beauty.

Cesar Solis, General Manager of Smurfit Kappa plant in Nuevo Laredo, said that its integrated business allows them to source almost all the raw materials from its paper mills, so consistency is always an essential attribute of their products.

“This enables us to produce a wide range of papers used for packaging solutions,” Solis said. “Annually, we manufacture more than 12.5 billion square meters of corrugated packaging to help us protect and promote our customers’ products. Because those products are 100% renewable and produced sustainably, we help our customers reduce their environmental footprint.”

He added that it is also a source of pride to contribute to the global goals of reducing CO2 emissions.

For him, this new facility and High Tech Corrugator machine will reinforce both Laredo’s economy and self-sufficiency, as it provides the packing required for most of the suppliance industries.

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