Smurfit Kappa's Q2 profit tanks on softer demand, higher input costs
July 30 (Reuters) -Smurfit Westrock SWR.L, SW.N reported a 51% drop in Smurfit Kappa's quarterly profit on Tuesday, 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, hence the combined company's results will be reported from the third quarter of 2024.
Smurfit Kappa's second-quarter profit fell to $132 million from $267 million reported a year earlier due to additional expenses of $60 million associated with the deal.
"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.
The Ireland-based company's revenue fell 3% to $2.97 billion in the quarter ended June 30.
Reporting by Aatrayee Chatterjee in Bengaluru; editing by Alan Barona
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