Smurfit Kappa posts 33% profit jump in first quarter

Smurfit Kappa said its revenue and core profit both rose by 33% year on year in the first quarter, which the boxmaker attributed to significant investment to support growing demand and ensure security of supply.

In a trading update ahead of its AGM today, Europe’s largest paper packaging producer said demand remains strong in the second quarter after corrugated box volumes grew 3.6% in the first three months of the year.

It added that it is increasing prices progressively.

Smurfit Kappa raised prices by 19% in 2021 and had flagged further increases this year to recover input costs that it said today had risen sharply in practically all areas, with existing supply chain problems exacerbated by the conflict in Ukraine.

Today’s trading update did not disclose the extent of its price increases in the first quarter.

Smurfit Kappa had said in February that its customers were more concerned about getting their hands on a sufficient amount of packaging than how much they were having to pay for it.

“This performance demonstrates the continuing benefits of Smurfit Kappa Group’s integrated and resilient operating model, our geographic diversity and recent acquisitions,” chief executive Tony Smurfit said.

Mr Smurfit said the first quarter of 2022 had presented a number of significant operational challenges for the company.

“Practically all input costs have risen sharply and already tight markets and supply chains have been exacerbated by the war in Ukraine. Our integrated and resilient business model has ensured security of supply in this increasingly complex environment,” he added.

The company said on April 1 that it was leaving the Russian market. As a response to the war in Ukraine, the group and its staff have made significant contributions to aid agencies to support relief efforts in the region, it added.

Smurfit Kappa said that as it enters the second quarter, demand continues to be good with progressive corrugated price recovery.

“Cost increases and supply constraints remain a feature of our business which is being dealt with through the dedication of our people and through active price recovery,” it said.

“We remain confident in the future prospects of our business and our first quarter performance, together with our ongoing investment programme, sets a strong foundation for 2022 and beyond,” it added.

Smurfit Kappa said in February that customers were more concerned about getting their hands on a sufficient amount of packaging than how much they were having to pay for it.

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