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Investing.com — Smurfit Kappa Group PLC (LON:SKG) has posted a sharp jump in full-year income, but still missed estimates, as a pandemic-era surge in customer demand eased and expenses grew at the paper packaging company.
Profit before income tax rose by 42% during the 12 months to the end of December to €1.3 billion (€1 = $1.0747), although this was still below Bloomberg consensus expectations of €1.48B. London-listed shares in the firm edged lower in early European trading on Wednesday.
On an annual basis, box volumes dipped by less than 2%, reflecting the negative impact of the “rate and pace” of inflation on customer spending throughout the year. Smurfit Kappa added that this trend also coincided with a partial reversal of the “unsustainably high” COVID-era demand levels, particularly in December.
Energy cost growth, which the group described as “unprecedented,” also weighed on yearly returns, but showed signs of moderating in the latter part of the period.
Despite these broader economic headwinds, Smurfit still recommended a 12% increase to its final dividend, and provided an upbeat account of the start of its current trading year.
“Although very early, 2023 has started well. While there are and always will be challenges, SKG has never been in better shape strategically, financially and operationally,” Smurfit Kappa said in a statement. “We have put ourselves in a position with the steps that we have taken and continue to take, to deliver high quality performance and to take advantage of the many opportunities we see around us.”
Analysts at Jefferies noted that the company results were only a “small miss” compared to heightened buy-side forecasts, adding that the outlook is “encouraging despite macro uncertainty.”
