Smurfit Kappa profits jump 50% but warns some demand slowing

Water vapour billows from smokestacks on the Smurfit Kappa Cellulose du Pin in Facture plant, southwestern France, December 22, 2009. REUTERS/Regis Duvignau

DUBLIN, July 27 (Reuters) – Packaging big Smurfit Kappa (SKG.I) posted a 50% bounce in first-half core revenue on Wednesday, sending shares in Europe’s largest paper packaging producer sharply greater.

Income development of 33% pushed its core earnings as much as a contemporary file 1.2 billion euros ($1.22 billion), prompting Smurfit to extend its interim dividend by 8% to 31.6 euro cents per share.

Nevertheless CEO Tony Smurfit warned that demand, after booming because the pandemic bolstered demand for e-commerce and shelf packaging rose as economies reopened, is slowing in some components of Europe as inflation makes shoppers extra cautious.

“Within the UK, it (demand) has been sluggish all 12 months. We now have seen a deterioration in orders within the extra industrialised nations like Germany. The U.S., which we’re not an actual benchmark for, has slowed down for us,” Smurfit informed Reuters in an interview.

Different markets equivalent to Brazil, Columbia and Spain are nonetheless rising strongly, he added.

In its earnings assertion, the corporate mentioned it was very assured about its future prospects and continued to see many alternatives for development.

Smurfit Kappa shares, down 30% this 12 months, had been up 6.2% at 34.2 euros by 0805 GMT.

The Irish group, which a 12 months in the past was one of many first main European firms to foretell that inflation was right here to remain, will not be seeing these pressures getting any higher, its chief government mentioned.

Smurfit added that the one manner he noticed value pressures easing in Europe within the quick time period was if there’s a “very massive recession”, however that the corporate doesn’t anticipate that to occur “at this second in time”.

Smurfit Kappa handed prices on to prospects within the second quarter and has finished within the third, Smurfit mentioned. The costs it expenses are 35% to 40% greater than they had been two years in the past.

After being successfully offered out of its product vary within the 36 nations the place it operates through the latest growth, Smurfit now has spare capability in markets equivalent to Britain.

It plans to decelerate some manufacturing in August to save lots of on power prices.

($1 = 0.9863 euros)

Reporting by Padraic Halpin; enhancing by Louise Heavens and Jason Neely

: .