Smurfit Kappa passing on cost increases as earnings rise

Packaging giant Smurfit Kappa said it was passing on cost increases via higher prices as it reported a rise in interim core earnings.

First-half earnings before interest, taxes, depreciation, and amortisation of €781m were up from €735m a year ago, but down compared with the record €847m reported in 2019 before the Covid pandemic struck.

Demand for cardboard packaging has soared during the crisis as online shopping took off during lockdowns.

“As a result of our past and current capital investments in our integrated business model, we have, for the most part, been able to fulfil our customers’ needs during this period of exceptionally strong demand,” said chief executive Tony Smurfit.

“It has also been a period of significant input cost pressures which we have and will continue to recover through corrugated price increases.”

The trend of passing on higher input costs to customers has also continued in the second half, Smurfit said.

Companies have been forced to lift prices in the face of higher raw materials prices, supply chain disruption and higher wages as demand soars as economies lift Covid-19 restrictions.

Smurfit said it planned to accelerate investment plans to meet customer needs and capitalise on significant growth opportunities.

It also announced the acquisition of a 600,000 tonne capacity recycled containerboard mill in Northern Italy for €360m, following on from recent similar deals in Peru and Mexico.