By the numbers: Full year 2023
2023 revenue: 11.27B euros
Down 12.0% year over year
2023 revenue in Americas business: 2.78B euros
Down 4.8% year over year
2023 revenue in European business: 8.5B euros
Down 14.2% year over year
- Results: 2023 proved to be a challenging year for Smurfit Kappa, with overall lower demand and volumes, said executives on Wednesday’s earnings call. Customer destocking struck a blow, although executives said the worst of it appears to be over. While box volumes dipped 3% overall in 2023, demand improved through the year, said CFO Ken Bowles, and Q4 brought a return to growth in Europe and the Americas. Executives pointed to increased box shipments per day in January as a promising sign for demand improvement. However, they said some micro factors affecting January numbers in the Americas, such as January’s uncommonly cold weather snap in the U.S. that affected Smurfit Kappa’s production, especially in Texas.
- Smurfit-WestRock deal update: Executives again discussed the deal announced in September to acquire WestRock. “This is one of the most significant events in the Smurfit Kappa history,” said Smurfit Kappa Group CEO Tony Smurfit. “When the opportunity came to combine with a company like WestRock ... [we] strongly believed that this was an opportunity not to be missed.” Executives said that capital investments Smurfit Kappa has made over the last several years set it up for a successful transaction. They reiterated the news from WestRock’s earnings release last week that the deal is now expected to close in early July, a slight delay from the previous projection of prior to the end of Q2. They also reiterated that the companies will make proxy statements publicly available for shareholder review prior to the combination. “We feel very comfortable and confident that the combination of Smurfit and WestRock ... is going to be a great one for the short, medium and long term of this business,” Smurfit said.
- Olympics bump: Executives expect a consumer spending boost this summer from the Olympics, which will be held in Paris from July 26 to Aug. 11, based on historic increases in consumption during the event. They said customers are poised for more promotional activity in the second half of the year, including for the Olympics.
- Outlook: The same positive volumes trend observed in January has continued during the first few days of February, according to Saverio Mayer, CEO of Smurfit Kappa Europe: “We want to assume this is the new level that we will see throughout the year.” He noted that containerboard prices have dipped over the last 18 months, but box prices will likely bounce back up as volumes increase. While executives hesitated to definitively predict strong recovery this year, Bowles said, “We're looking at a less volatile current backdrop.”
