- Smurfit Kappa Group revealed that case volume decreased by 3.5% last year
- The packaging company’s pre-tax profit also fell 18% to €1.06 billion
Smurfit Kappa shares rose on Wednesday despite a drop in revenue and profits for 2023, as volumes rebounded and grew towards the end of the year.
The FTSE 100 group, which is Europe’s largest packaging manufacturer, saw box volumes fall 3.5 per cent last year amid a broader economic slowdown and destocking in the durable goods sector.
Packaging companies have struggled to boost demand since the end of Covid-related restrictions shifted consumer spending from online shopping to other services.
Trade slowdown: Smurfit Kappa revealed case volumes fell 3.5 percent last year amid a broader economic slowdown and destocking in the durable goods sector.
However, demand improved sequentially in each quarter before stagnating in Europe during the final three months of the year and increasing 1.6 percent year-on-year in the Americas.
Smurfit Kappa’s annual revenue still decreased by 12 percent to 11.3 billion euros due to the drop in box volume as well as lower paper and box prices across Europe.
Pre-tax profits also plummeted 18 percent to €1.06 billion, although well above pre-pandemic levels and the €913 million recorded in 2021.
Chief executive Tony Smurfit, whose grandfather founded the company, said the performance was “an excellent result” and the “second best” in its 90-year history.
He added: ‘Our 2023 results once again demonstrate the Smurfit Kappa Group’s proven ability to perform in all market conditions.
“While there are and always will be challenges in the macroeconomic environment, we look forward to next year with confidence and enthusiasm.”
As a result, the Dublin-based company has increased its annual dividend by 10 per cent to 118.4 cents per share.
Smurfit Kappa Stock rose 5.9 per cent to £30.40 on Wednesday morning, making it the best-performing stock in the blue-chip index. However, they have fallen about 14 percent in the last 12 months.
Adam Vettese, an analyst at eToro, said the company “faces the challenge of sustaining increased demand to offset the overall volume shortfall experienced last year.”
“If durable goods demand profitability and customers increase their stock levels, Smurfit Kappa shares could begin trading in 2024.”
In September, investors were left disappointed by a planned £15bn merger between Smurfit Kappa and US group WestRock.
The alliance would create the world’s largest packaging supplier, with combined annual revenues of around £27bn based on last year’s figures.
But it represented another blow to UK markets as the new company plans to cancel its premium listing in London in favor of the New York Stock Exchange.
London has lost several high-profile listings in recent years to Wall Street, where companies can potentially access larger pools of capital and higher valuations.
Plumbing products distributor Ferguson, construction materials supplier CRH Holdings and gold mining operator AngloGold Ashanti recently changed their primary listings to New York.
Tui, the world’s largest tourism company, is also considering leaving the London Stock Exchange and moving its main listing to Frankfurt’s MDax.