Smurfit Kappa recorded an increase in cardboard box demand in Q1, a significant recovery after a recent industry slump. This comes as the firm is advancing its merger with US competitor WestRock, aiming to create a paper packaging colossus with an estimated annual turnover of roughly £31.1 billion. The company reported a 3% growth in box volumes within Europe, where it is a dominant figure, and a 2% increase within the Americas.
This trend signifies a reversal from 2023’s challenging market when group volumes witnessed a 3.5% drop. However, demand was beginning to rise again during the last quarter, despite a late 2022 hit across the industry caused by a decrease in durable goods consumer spending.
Tony Smurfit, the company’s chief executive, praised his team’s dedication and commitment, attributing the impressive Q1 results to the ongoing positive effects of their long-term capital plans.
Nevertheless, revenue experienced a drop, decreasing from approximately €2.99 billion to €2.7 billion Q1 year-on-year, as the sector still grapples to raise prices after a fall during the cyclical economic downturn.
Industry experts have noted a recent rise in certain containerboard products’ prices, used in cardboard box production, which had previously fallen more than 35% from late 2022. It is predicted this will bring about box price increases in three to six months.
The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) fell to €487 million from €579 million.
Mr Smurfit stated that the merger plans with WestRock are making positive progress and anticipated a successful completion in early July. First revealed in September, this partnership is set to form the world’s largest box manufacturer, with Mr Smurfit and CFO Ken Bowles at the helm.
Over the past month, DS Smith, the UK enterprise and primary European rival of Irish firm Smurfit Kappa, has received an acquisition proposal from the US-based International Paper. This follows a previous unsuccessful bid by the same company to purchase Smurfit Kappa in 2018.