Smurfit Kappa shares rise as box demand stabilises

Paper-based packaging group Smurfit Kappa on Wednesday reported a further deterioration in sales in the third quarter – but shares rose strongly as the company said recent declines in box demand had started to stabilise.

The company said that box demand in the third quarter was around 2% behind levels seen a year ago, an improvement from the 7% and 5% declines seen in the first and second quarters, respectively.

"We expect this trend to continue, with Germany in particular showing improved order books," saiid chief executive Tony Smurfit.

Nevertheless, revenues totalled just €2.70bn in the three months to 30 September, down 19% on the same period last year, after a 9% drop in sales registered in the first half.

EBITDA fell 14% to €512m, after a 5% decline in the first half, though EBITDA margins improved by 1.2 percentage points on last year to 19%.

Smurfit, which is currently undergoing an merger with US peer WestRock to create the world's biggest paper and packaging company worth around $20bn, is now guiding to full-year EBITDA of €2.05bn, which will represent a fall of 13% on 2022.

Despite the double-digit profit decline, Tony Smurfit said the company put in an "excellent performance" over the first three quarters.

“These results continue to demonstrate the effectiveness of our multi-year capital plans, our geographic footprint and the service and dedication of our people," he said.

The stock was up 3% at 2,758p by 0844 GMT.