SKG Full Year 2021 Results

Performance Review and Outlook
Tony Smurfit, Group CEO, commented:
“I am happy to report that Smurfit Kappa has delivered another excellent performance in 2021. This was particularly pleasing as the year was characterised by unprecedented cost inflation. Full year EBITDA was €1,702 million, an increase of 13% on 2020, with an EBITDA margin of 16.8%. This performance demonstrates the strength of the integrated model, the quality of our business, our 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.

“A key differentiating factor for SKG has always been our people and in a world of significant supply constraints, I am incredibly proud of how our 48,000 employees have responded to ensure our customers’ needs were met and indeed, continue to be met as we begin 2022.

“Driven by a number of long-term secular trends, we are reporting corrugated growth of 8%. This growth is a clear indication that paper-based packaging, renewable, recyclable and biodegradable, is the choice of our customers and the end consumer versus less sustainable alternatives.

“As noted above, 2021 was characterised by significant and unprecedented cost inflation. These costs, particularly in energy, recovered fibre and other categories of raw materials, remain at elevated levels. We expect to continue to recover these costs, with margin improvement, as we progress through 2022.

“Both our European and Americas businesses delivered excellent performances in the year. Our European business recorded EBITDA of €1,302 million with an EBITDA margin of 16.6% while our Americas business recorded EBITDA of €441 million with an EBITDA margin of 19.5%.

“Key to the performance of Smurfit Kappa over recent years has been to invest both organically and through acquisitions to meet growing customer demand for innovative and environmentally sustainable packaging solutions. In 2021, we approved 82 new converting machines and seven new corrugators in our operations across Europe and the Americas. We also approved material investments in our paper system to increase efficiency and capacity and to meet our ambitious sustainability targets.

“In early October, we completed the acquisition of a recycled containerboard mill in Italy with a capacity of 600,000 tonnes. This acquisition provides additional security of supply to our customers. In our Americas region, we continued our geographic expansion through acquisitions in Mexico and Peru. Our continuing, customer-led investment in converting assets, the most significant within the industry, together with our Verzuolo mill, will sustain a clear competitive advantage for Smurfit Kappa.

“In September, we launched our Green Finance Framework, under which we issued our dual tranche inaugural green bonds, comprising €500 million 8 year bonds with a coupon of 0.5% and €500 million 12 year bonds with a coupon of 1%. Sustainability has always been at the core of our operations and is now embedded within our capital structure.

“In December, the Group received approval from SBTi for our emissions targets. These targets are not only in line with the Paris Agreement but also industry leading and a further sign of SKG’s leadership in sustainability. That leadership not only extends through the products we make and how we make them but through the work we do in the communities in which we operate.

“As we begin the year, current trading is strong and our integrated paper and packaging system remains effectively sold out. 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. I am proud of how Smurfit Kappa continues to deliver across all performance measures and reflecting that confidence and the ever increasing strength of and prospects for the business, the Board is recommending a 10% increase in the final dividend to 96.1 cent per share.”