Smurfit Kappa expect high prices to remain in the months ahead

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Smurfit Kappa
Smurfit Kappa

Paper packaging mill group Smurfit Kappa has said that it expects recovered fibre prices to stay high in the coming months.

In its 2021 annual results, the company revealed pre-tax profits of €1.7 billion (£1.42 billion), which had increased by 13% on 2020.

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However, its costs for recovered fibre had increased by €440 million (£368 million) in 2021 compared to the previous year, while energy costs had also gone up by €235 million (£197 million) in the same period.

The company expected to recover these costs through increased revenue from finished product sales.

Smurfit Kappa chief executive Tony Kappa said: “Driven by a number of long-term secular trends, we are reporting corrugated growth of 8%. This growth is a clear indication that paper-based packaging, renewable, recyclable and biodegradable, is the choice of our customers and the end consumer versus less sustainable alternatives.

“As noted above, 2021 was characterised by significant and unprecedented cost inflation. These costs, particularly in energy, recovered fibre and other categories of raw materials, remain at elevated levels. We expect to continue to recover these costs, with margin improvement, as we progress through 2022.”

He said that he expects the first few months of this trading year to be driven by strong recovered fibre prices. He added: “As we begin the year, current trading is strong and our integrated paper and packaging system remains effectively sold out. We continue to see significant opportunities across our geographic footprint and as such, we are investing to build a platform for durable growth to meet customer demand.”

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