Smurfit Westrock last night reported a 51% drop in Smurfit Kappa's quarterly profit, hurt by softer consumer spending on goods crimping demand for packaging products as well as higher input costs.
While packaging companies are starting to see a return in demand after dealing with a year-long slowdown, sales still remain weak as overall consumer spending on goods has dwindled.
In September 2023, packaging groups Smurfit Kappa and WestRock entered into a deal to create Smurfit WestRock, one of the world's largest paper and packaging producers worth nearly $20 billion.
The deal was completed on July 5, and so the combined company's results will be reported from the third quarter of 2024.
Smurfit Kappa's second-quarter profit fell to $132m from $267m reported a year earlier due to additional expenses of $60m associated with the deal.
The Ireland-based company's revenue fell 3% to $2.97 billion in the quarter ended June 30.
"These results were also achieved against a backdrop of significantly higher recovered fiber costs and lower corrugated box prices. We expect these increased costs will be recovered through increased box pricing with the customary time lag," said CEO Tony Smurfit.
"On July 8, Smurfit Westrock listed on the NYSE and was included in the S&P 500. While we don't underestimate the amount of hard work ahead of us, there is tremendous energy and enthusiasm to ensure a successful future for Smurfit Westrock," Mr Smurfit said.
"I believe that with the quality of our people and the strength of our market positions, we are creating something truly unique. Smurfit Westrock will be the 'go-to' sustainable packaging company with the right product, in the right space at the right time," he added.
