Smurfit Kappa buys Italian containerboard mill for €360m

Smurfit reports 11% rise in revenue and 8% increase in profit for first six months of year

Smurfit Kappa chief executive  Tony Smurfit: “We believe this acquisition represents another positive step for the group, our customers and all shareholders.” Photograph: Alan Betson

Smurfit Kappa chief executive Tony Smurfit: “We believe this acquisition represents another positive step for the group, our customers and all shareholders.” Photograph: Alan Betson

 

Smurfit Kappa has agreed to buy an Italian maker of containerboard, which is used to produce cardboard boxes, for €360 million.

The Dublin-based group’s first half results, also published Wednesday, show that its revenues rose by 11 per cent to €4.7 billion while pre-tax profit was by 8 per cent higher at €413 million amid soaring demand for cardboard boxes.

“Smurfit Kappa is in a sweet spot, benefitting from the switch to online shopping and an increasing awareness of sustainability, driving the greater use of paper based packaging,” said Richard Flood, investment manager at Brewin Dolphin Ireland. “With rising costs a concern among many companies, Smurfit Kappa has been successfully passing on its higher costs by raising prices to defend its profit margins.”

Smurfit Kappa raised €660 million in a share sale last November to give it more firepower for investment to take advantage of a surge in ecommerce and a shift across the consumer goods industry towards sustainable packaging.

The Italian mill being acquired, called Verzuolo, is based close to the port of Savona in the northwest of the country and is owned by local packaging business, the Burgo Group. The machine was built in 2002 and converted into a 600,000 tonne capacity recycled containerboard machine in 2019, Smurfit Kappa said.

“We believe this acquisition represents another positive step for the group, our customers and all shareholders,” said Smurfit Kappa chief executive Tony Smurfit, adding that the group “has a proven ability to identify, acquire, integrate and optimise complementary businesses”.

Acquisitions

Earlier this month, the group acquired Cartonbox, a folding carton company located in Monterrey in the northeast of Mexico. It bought Peruvian packaging firm Cartones del Pacifico last month. It did not reveal the value of either deal at the time.

The company has also been investing heavily in expanding its existing plants.

Smurfit Kappa said that Verzuolo is highly complementary its existing business and is strategically positioned to serve both the southern European region and other markets. It is expected that the acquisition will complete during the fourth quarter, subject to customary closing conditions including regulatory approval.

The FTSE 100 company is one of the leading providers of paper-based packaging solutions in the world, with approximately 46,000 employees at more than 350 production sites across 36 countries and with revenue of €8.5 billion in 2020.

Smurfit’s first half results, also published Wednesday, show that its revenues rose by 11 per cent to €4.7 million while its pre-tax profit increased by 8 per cent to €413 million.