Packaging firm Smurfit Kappa has announced that it increased its prices during the first half of the year, offsetting significant input cost pressures and resulting in an earnings boost.
Exceptional demand for packaging used in e-commerce at the height of the COVID-19 pandemic helped limit the damage from disruption elsewhere for the Irish group, whose core earnings fell 9% during 2020.
“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," commented Tony Smurfit, chief executive.
"It has also been a period of significant input cost pressures which we have and will continue to recover through corrugated price increases."
Smurfit Kappa Sees EBITDA Rise
First-half EBITDA of €781 million was up on €735 million it reported in the same, partly pandemic-disrupted period a year ago, but down on the record €847 million reported in the first six months of 2019.
The group said it continued to see strong demand for its core products and has for the most part been able to fulfil its customers' needs.
The trend of passing on higher input costs to customers has also continued in the second half, Smurfit Kappa said.
A slew of major companies reeling from the impact of the high prices of raw materials, increased labour expenses and supply-chain woes are raising product prices as demand for several goods rebound with a reopening of economies.
Smurfit Kappa 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, following on from recent similar deals in France, Peru and Mexico. It also recently launched an 'e-commerce packaging lab'.
"We are accelerating our investment plans to capitalise on the significant growth opportunities available to us," Smurfit added. "This growth is coming from the structural drivers of paper-based packaging, as the sustainable product of choice by consumers and customers alike, as well as the continued strong growth in e-commerce.
"I am very proud of our product development teams in SKG who have ensured our product offering in innovation and design is the best in the industry globally."