Smurfit Kappa Group (SKG) chief executive Tony Smurfit has said that waste paper prices have gone “through the roof” recently and this is expected to continue in early 2021.
On reporting pre-tax profits of £748 million, he said that earnings had been hit by rising waste paper prices in the second half of the year in particular.
He added: “Our raw material [prices] have gone through the roof. There isn’t a single free tonne of paper in the world at the moment and that’s obviously pushing up prices.”
But he also warned that “There is more paper being thrown away and less being collected” despite a switch to online shopping during the pandemic.
In its 2020 financial year results document, the paper packaging manufacturer said: “Across Europe and the Americas, recovered fibre prices were lower in 2020. However, prices rose rapidly in the second half of the year and we continue to see prices increasing in early 2021.
“Energy prices have also been increasing. Reflecting this, containerboard prices have been rising and the supply of containerboard remains very tight globally, both for kraftliner and testliner.”
Despite this, Tony Smurfit is confident that the company is well-placed to take advantage of current trends. He added: “Driven by strong secular trends such as e-commerce and sustainability, the outlook for our industry is increasingly positive. SKG has positioned itself as the leading company within the industry, with great people, providing our customers with unique packaging solutions centred around innovation, efficiency and sustainability.
“The inherent strength of our business together with the recent capital raise provides us with an unrivalled platform to accelerate our vision and the Group’s next phase of growth and development.
“While there remains some uncertainty on the impact and duration of COVID-19, the year has started well with the continuation of the demand trends seen during the last quarter.”