Paper and packaging giant Smurfit Kappa said it expects to increase prices further this year to recover high costs after a mix of price hikes and bumper demand delivered record earnings amid "significant and unprecedented cost inflation" in 2021.
Smurfit Kappa said its profit before income tax rose by 22% to €913m from €748m the previous year, while revenues increased by 18% to €10.107 billion from €8.530 billion in 2020.
Europe's largest paper packaging producer also said its final dividend increased by 10% to 96.1 cent per share.
Smurfit Kappa said that in Europe, its EBITDA increased by 10% to €1.302 billion for the year.
It noted that corrugated demand was up about 8% for the year with strong performances in all countries, which it said showed the robust demand backdrop for its products.
Corrugated pricing has continued to improve in line with the company's expectations, it added.
In the Americas, EBITDA increased by 19% on 2020 to €441m, Smurfit Kappa said, with Colombia, Mexico and the US accounting for over 77% of the region's earnings with strong performances in all three countries.
Volumes in the Americas were up 9% year-on-year and as in Europe, the group continued to build on its operating platform with significant capacity and sustainability related investment in the corrugated, containerboard and speciality businesses.
During the summer, the company announced the expansion of its Latin America business with acquisitions in Peru and Mexico.
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Smurfit Kappa said that pricing for containerboard in both Europe and the Americas continued the upward trend during the year.
This was driven by strong demand and rising recovered fibre prices at first and then in the latter part of the year in Europe, by rising energy prices.
It noted that increasing recovered fibre prices cost the group an additional €440m in 2021 compared to 2020 while rising energy prices cost it an additional €235m.
In October, the company bought the state-of-the-art Verzuolo mill in Italy, which brings 600,000 tonnes of containerboard into its integrated system. It said this will ensure it continues to meet customers' needs and capture future growth.
Smurfit's customers include Procter & Gamble, Unilever and Nestle.
It said current trading and demand for containerboard remain strong and that it expects the market to remain tight in the months ahead.
Tony Smurfit, Group CEO, said Smurfit Kappa's performance demonstrates the strength of the integrated model, the quality of the business, its operational efficiency and increasing geographic and product diversity.
"Over the last number of years, the group has made significant investments enabling us to meet our customers' need for resilience, ensuring they have security of supply and access to the most innovative, sustainable packaging solutions," Tony Smurfit said.
Mr Smurfit said that as the company begins the year, current trading is strong and its integrated paper and packaging system remains effectively sold out in each of the 36 countries it operates in with the exception of Brazil.
"We continue to see significant opportunities across our geographic footprint and as such, we are investing to build a platform for durable growth to meet customer demand," he said.
Analysts at Davy Stockbrokers said they were raising their 2022 earnings forecast for Smurfit Kappa by 4% to €1.95 billion, noting the confidence shown by a 10% increase in Smurfit's final dividend.
Smurfit Kappa shares moved higher in Dublin trade today.
