Smurfit Kappa is to introduce further corrugated price increases over the next year to recover rises in input costs.The group has experienced pressure on margins in its corrugated business, which increasingly specialises in retail-ready packaging, because box prices do not yet fully reflect higher input prices.
According to results published today (15 August), Smurfit Kappa's profits for the first six months of 2007, before exceptional items and share-based payments, increased by 28.4% on the same period last year to £348m (€514m), while sales rose 4% to £2.45bn.
However, pre-tax profit after exceptional items was £318,300, compared with a £33m loss this time last year.
Corrugated demand growth has remained strong in Europe, especially in the UK, Benelux and Germany, and Smurfit Kappa achieved a 3.7% rise in recovered paper and containerboard prices in the first half of 2007.
The group's kraftliner profits suffered in the first half of 2007 after it was unable to sustain anticipated price increases due to increased imports into the European market and higher wood costs.
The company has also reduced its net debt by a quarter since December 2006 to £2.4bn, mainly through a £1bn initial public offering.
Smurfit Kappa announced the closure of its Alaincourt containerboard mill in France during the first quarter of 2007. It will transfer the mill's machine to another of its plants, resulting in a net annual capacity reduction of 50,000 tonnes.
Smurfit Kappa said more than 1.5 million tonnes of higher-cost capacity had been removed from the European recycled containerboard market over the past 18 months, representing close to 8% of available industry capacity.
Source: packagingnews
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