- Smurfit Kappa Group revealed that box volumes declined by 3.5% last year
- The packaging company’s pre-tax profits also slumped by 18% to €1.06bn
Smurfit Kappa shares jumped on Wednesday despite a drop in revenues and profits for 2023, as volumes rebounded to growth towards the end of the year.
The FTSE 100 group, which is Europe’s largest packaging manufacturer, saw box volumes slide by 3.5 per cent last year amid a broader economic slowdown and destocking in the durable goods sector.
Packaging businesses have struggled to boost demand since the end of Covid-related restrictions shifted consumer spending away from online shopping and onto other services.
Trading slowdown: Smurfit Kappa revealed that box volumes slid by 3.5 per cent last year amid a broader economic slowdown and destocking among the durable goods sector
Yet demand improved sequentially in each quarter before flatlining in Europe during the final three months of the year and rising by 1.6 per cent year-on-year in the Americas.
Smurfit Kappa’s annual revenue still declined by 12 per cent to €11.3billion due to the drop in box volumes, as well as lower paper and box prices across Europe.
Pre-tax profits also slumped by 18 per cent to €1.06billion, although this was far above pre-pandemic levels and the €913million recorded in 2021.
Chief executive Tony Smurfit, whose grandfather founded the company, said the performance was ‘an excellent outcome’ and the ‘second best’ in its 90-year history.
He added: ‘Our 2023 results again demonstrate Smurfit Kappa Group’s proven capacity to perform across all market conditions.
‘While there are, and will always be, challenges in the macro environment, we look forward to the year ahead with confidence and excitement.’
Consequently, the Dublin-based business has hiked its full-year dividend by 10 per cent to 118.4 cents per share.
Smurfit Kappa shares rose 5.9 per cent to £30.40 on Wednesday morning, making them the best-performing stock on the blue-chip index. However, they have fallen by around 14 per cent over the past 12 months.
Adam Vettese, an analyst at eToro, said the firm ‘faces the challenge of sustaining the increased demand to make up the overall shortfall in volumes experienced last year.
‘If durable goods demand returns and customers increase their stock levels, then Smurfit Kappa shares could kick on in 2024.’
Back in September, investors were underwhelmed by a planned £15billion merger between Smurfit Kappa and American group WestRock.
The tie-up would create the world’s largest packaging provider, with combined annual revenues of approximately £27billion based on last year’s figures.
But it represented another blow to the UK markets, as the new company plans to cancel its premium London listing in favour of the New York Stock Exchange.
London has lost several high-profile listings in recent years to Wall Street, where firms can potentially access larger capital pools and higher valuations.
Plumbing products distributor Ferguson, building materials supplier CRH Holdings and gold mining operator AngloGold Ashanti all recently switched their primary listing to New York.
Tui, the world’s largest tourism company, is also contemplating abandoning the London Stock Exchange and shifting its primary listing to Frankfurt’s MDax.