Europe's largest paper packaging producer Smurfit Kappa (SKG) said the decline in box demand continued to slow in the third quarter as it forecast that full-year core profit would fall by almost 13% to around €2.05 billion.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 8% in the first nine months of the year, Smurfit said in a trading update on Wednesday, as a rise in its EBITDA margin to 19.0% from 18.2% a year ago failed to offset a fall in volumes.
However, box demand in the third quarter fell.
Tony Smurfit, Group CEO, commented, “Box demand in the third quarter for the group was approximately 2% behind 2022 levels versus a negative 7% and 5% in the first and second quarters respectively.
"We expect this trend to continue, with Germany in particular showing improved order books."
The Irish group, which benefited from a boom in demand for packaging goods and e-commerce during COVID-19 lockdowns, said it expected this trend to continue, with Germany in particular showing improved order books.
Smurfit agreed an $11 billion deal in September to buy US rival WestRock and create the world's biggest paper packaging company.
“On 12 September, Smurfit Kappa and WestRock announced an agreement to combine to create Smurfit WestRock, a global leader in sustainable fibre-based packaging," Smurfit noted.
"This combination represents a unique point in time, value creation opportunity, for both companies. We are increasingly excited to create the ‘Go-To’ fibre-based packaging partner of choice for all stakeholders.
“Our consistent delivery, over many years, demonstrates the quality of our business and the capital allocation decisions we have made. For the full year 2023 we expect to deliver EBITDA of approximately €2,050 million.”
News by Reuters additional reporting and edited by Donna Ahern, Checkout. For more drinks stories click here. Click subscribe to sign up for the Checkout print edition.