Revenues up 38 percent at Smurfit Kappa

Paper packaging giant Smurfit Kappa reported profit of €2.3 billion for 2022, up 38 percent from 2021.

The company said it had a successful performance in “a year of exceptional circumstances,” with sales up 27 percent over the period.

According to the annual results published by the company, total sales rose to 12.8 billion euros in 2022.

The group’s Chief Executive, Tony Smurfit, said the inflation rate and pace of inflation have had a negative impact on demand over the past year, with this trend coinciding with the reversal of “unsustainably high levels of demand” experienced during the pandemic.

Cartonboard volumes declined less than 2 percent for the full year, with a slowdown particularly evident in the second half of the year, when Smurfit Kappa noted a trend towards reducing inventory levels at its customers.

While cartonboard volumes in Europe fell 2 percent for the year, sales in the region rose 26 percent due to price increases.

Earnings before interest, taxes, depreciation and amortization (EBITDA) in the European market rose by 42 percent to 1.8 billion euros, and margins rose to 18.6 percent.

This was also attributed to the impact of price increases for customers in the market, partially offset by higher energy and other commodity costs.

Since April 2022, the group has reported that it will increase its prices to overcome the increase in input costs related to supply chain challenges and the war in Ukraine.

In the Americas, sales increased by 29 percent compared to the full year 2021.

Following Russia’s invasion of Ukraine, Smurfit Kappa also announced that it had reached an agreement to sell its Russian operations to local management, subject to the completion of the transaction subject to local regulatory approvals.

The overall EBITDA margin of the Dublin-listed group was 18.4 percent in 2022.

“The year was marked by unprecedented cost inflation, particularly in energy, which moderated towards the end of the year,” said Smurfit.

“As our performance in 2022 demonstrates, Smurfit Kappa has successfully navigated this environment.”

“Although very early, 2023 has started well,” he added. “While there are and always will be challenges, Smurfit Kappa has never been in better shape strategically, financially and operationally.”

Based on the performance, the company’s board recommends increasing the final dividend by 12 percent to 107.6 cents per share.

Smurfit Kappa employs around 48,000 people at over 350 production sites in 36 countries.

The company is present in 23 countries in Europe and 13 across America.