Smurfit Kappa posts 16% drop in first quarter profit
Smurfit Kappa shares rose this morning after its first quarter core profit fell sharply year-on-year but was higher than the final quarter of 2023 when it had signalled a dip in demand for packaging was at an end.
Smurfit Kappa, Europe’s largest paper packaging producer, posted a 16% year-on-year fall in core profit to €487m but that was 7% higher than the final three months of 2023.
Its shares were 3% higher this morning in Dublin trade.
Smurfit also reported volume growth of 3% in Europe and 2% in the Americas and chief executive Tony Smurfit told an analyst call that the pricing environment was improving with customers informed of increases coming in May and June.
The group’s margin on earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at 18% compared with 16.6% in the previous quarter and 19.3% a year ago.
In a trading update today, the group said it remained on track to complete its $11 billion acquisition of US rival WestRock in early July.
The group also reported revenue of €2.7 billion for the first quarter and said that box demand continued to improve with volume growth in Europe and the Americas of approximately 3% and
2% respectively.
“Smurfit Kappa Group has once again delivered,” its chief executive Tony Smurfit said.
“Due to our investment program in recent years and set against an improving industry backdrop with long-term positive structural trends, our combination with WestRock creates a global leader
in innovative and sustainable packaging with a very exciting future for all stakeholders,” he added.
Smurfit, which operates in 22 European countries and 13 in South, Central and North America, is Europe’s largest paper and packaging producer. WestRock is the second-largest packaging company in the US.
The companies’ combined adjusted revenue was about $34 billion for the year ended June 30.
The deal would make the new company, called Smurfit WestRock, the largest listed global packaging partner by revenue.
Under the terms of the deal with WestRock, Smurfit Kappa will delist from Euronext Dublin and the merged entity will be listed on the New York Stock Exchange as well as its standard listing on the London Stock Exchange.
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