Smurfit Kappa Group plc Releases 9-Month Trading Update for 2023

1. Financial Performance:
   • Smurfit Kappa Group (SKG) achieved an impressive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of €1,625 million, accompanied by an EBITDA margin of 19.0%.
   • The Return on Capital Employed (ROCE) stood at 18.0%, reflecting the continued benefits of strategic capital investments and operational excellence.
   • The Net Debt to EBITDA ratio, a crucial financial indicator, was at a healthy 1.4x.
2. Strategic Merger:
   • Notably, Smurfit Kappa made a significant announcement regarding its strategic direction. It revealed a transaction to merge with WestRock, an initiative aimed at creating a global industry leader in sustainable, fiber-based packaging solutions.

Tony Smurfit, the CEO of the Group, provided insightful commentary:

3. Financial Success:
   • Mr. Smurfit expressed satisfaction with the company’s financial performance for the first nine months. He highlighted the robust EBITDA of €1,625 million, a testament to the company’s strong financial health.
   • The EBITDA margin of 19.0% demonstrates SKG’s ability to generate substantial earnings relative to its revenue.
   • A ROCE of 18.0% signifies the efficient use of capital, which results from well-planned investments and operational excellence.
   • The low Net Debt to EBITDA ratio of 1.4x indicates a manageable level of debt in comparison to earnings, reflecting the company’s financial stability.
4. Factors Contributing to Success:
   • Mr. Smurfit acknowledged that these results are a consequence of the company’s multi-year capital investment plans, its extensive global presence, and the dedication of its workforce.
   • He emphasized that SKG is not only providing innovative and sustainable packaging solutions but also delivering them with the security and support of its integrated business model.
5. Market Trends:
   • The CEO discussed the box demand, mentioning that in the third quarter, the Group experienced demand approximately 2% behind 2022 levels. This is a positive shift compared to the negative trends observed in the first and second quarters, with Germany showing improved order books.
6. Merger Outlook:
   • Mr. Smurfit highlighted the agreement to merge with WestRock, emphasizing that this combination presents a unique opportunity for value creation for both companies.
   • He expressed increasing excitement about creating the preeminent choice for all stakeholders in the fiber-based packaging industry.
7. Consistent Success:
   • The CEO underlined the company’s track record of consistent delivery over many years, which reflects the quality of their business and the astute capital allocation decisions they have made.
   • He also provided guidance for the full year of 2023, with an expectation to achieve approximately €2,050 million in EBITDA, reaffirming their commitment to sustained growth and financial strength.

GSN