IRELAND – Irish corrugated packaging company, Smurfit Kappa has reported drops in both revenue and profits for the six months to the end of June in what it called a “challenging macro backdrop”.

Smurfit Kappa said its half-year revenue fell by 9% to €5.84 billion (US$6.38bn), while its profit before income tax fell by 14% to €659 million (US$720.28m).

The company’s earnings before interest, tax, depreciation and amortization (EBITDA) for the first half of the year fell by 5% to €1.11 billion (US$1.21bn) with lower earnings in Europe and higher earnings in the Americas.

The company is to pay an interim dividend of 33.5 cents per share, an increase of 6% on the same time last year.

Packaging volumes have fallen as consumers spend more on travel and other services than packaged goods.

In March Smurfit Kappa said it had sold its Russian operations to local management, which completed its exit from the Russian market.

Its exceptional items amounted to €34 million (US$37.16m) due to an impairment loss on assets and other costs relating to the sale of its Russian operations as well as currency issues.

Smurfit Kappa expanded its geographic reach with the opening of its new integrated plant in Morocco in July as well as the purchase of a speciality packaging operation in Spain.

Tony Smurfit, Smurfit Kappa’s chief executive, said the company delivered an “excellent outcome” against a challenging macro backdrop with a strong first-half performance.

“Although volumes declined by 6% in the first half, we saw market share gains across many of the countries in which we operate, and encouragingly, in Europe, during the second quarter, we saw our shipments per day improve on the previous 3 quarters,” he said.

He said he feels very strongly that the trends seen over the last nine months or so will be reversed as we go through the rest of the year.

“Volumes were unsustainably high during the pandemic, are now very low and will reverse as we go forward,” added Tony.

“As we come out of the pandemic and travel-related expenditure has improved, that has an impact on packaging, but we do believe that that’s going to change over the coming months as things normalize.”

In its Q1 of FY23 results, Smurfit Kappa reported a 13% year-over-year rise in its earnings before interest, taxes, depreciation, and amortization (EBITDA) to €579m (US$634.73m).

In its trading update for the quarter ending 31 March 2023, the company reported an EBITDA margin of 19.3% and net debt to EBITDA ratio of 1.2x.

During Q1 2023, the company registered a return on capital employed (ROCE) of 21.6%, compared to the same period a year ago.

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