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Revenues of the largest European paper producers increased by at least 17%. At the same time, according to CEO’s forecast, 2023 will be weaker. (For comparison, in P.S. you can find the results of another major global manufacturer – the Brazilian Klabin)
“Set against a year of extraordinary circumstances, 2022 was another highly successful year for the Smurfit Kappa Group,” says Tony Smurfit, Group CEO. “Our performance reflects the ongoing benefits of our investment programme together with our customer-led innovation and sustainability initiatives. SKG’s integrated model together with our geographic footprint continue to deliver for all stakeholders.
“Revenue for the year was up 27% to €12.8bn. EBITDA for the full year was €2.355bn, a 38% increase over 2021, with an EBITDA margin of 18.4%, ROCE of 21.8% and a net debt to EBITDA of less than 1.3x. Our balance sheet metrics are the strongest in the Group’s history, providing SKG with significant strategic and financial flexibility.
“For the full year, box volumes for the Group were down less than 2%. The rate and pace of inflation clearly had a negative effect on the demand environment in 2022. As guided by the Group, this coincided with the partial reversal of the unsustainably high demand levels seen through the pandemic period. This slowdown was particularly evidenced in the latter part of the year, especially in the month of December, where we saw stock reductions and downtime taken by customers.
“In our European business, box volumes were down 2% year-on-year. While two of our larger countries, Germany and the UK, performed below our expectations, others, such as Spain and France, were less affected.
“Box volumes in the Americas, excluding acquisitions, were broadly flat year-on-year, with growth in Mexico, Colombia, Brazil and Argentina offset by a weaker performance in our North American business.
In 2022, Smurfit Kappa’s revenue grew by 27% to €12.815bn
“The year was characterised by unprecedented cost inflation, especially in energy, which moderated in the latter part of the year. As illustrated by our performance in 2022, SKG has successfully navigated this environment.
“In 2022 we invested close to €1bn to support our customers and capitalise on long-term demand growth drivers. We also continue to make progress towards our sustainability goals with investments to reduce our carbon footprint, reduce our impact on the environment and help our customers achieve their own carbon reduction and sustainability goals.
“The Group continued to expand its geographic footprint and product portfolio through acquisitions in 2022. In Europe, we purchased operations in Spain and the UK, while in the Americas, we acquired operations in Argentina and Brazil.
“We are immensely proud of the work of the Group and its employees in supporting many different social programs across the world. This includes significant support for the Ukrainian people impacted by the war. Additionally, we continue to invest in the communities in which we operate through programs in health, education and environmental protection while our employees devote time and energy to social projects.
“In September, the Group published its first Green Bond Allocation and Impact Report, detailing the use of the proceeds of the €1b dual-tranche Green Bonds issued in 2021. Issued with coupons of 0.5% and 1% respectively, for tenors of 8 and 12 years, these coupons are the lowest in the Group’s history.
“Although very early, 2023 has started well. While there are and always will be challenges, SKG has never been in better shape strategically, financially and operationally. We have put ourselves in a position with the steps that we have taken and continue to take, to deliver high quality performance and to take advantage of the many opportunities we see around us.
“Reflecting confidence in the strength, quality and performance of the Smurfit Kappa business, the Board is recommending a 12% increase in the final dividend to 107.6 cent per share.”
“Mondi delivered a strong performance across the business in 2022,” says Andrew King, Mondi Group CEO. “Underlying EBITDA from continuing operations of €1.848bn was up 60% as we continue to successfully partner with our customers to deliver innovative and sustainable packaging and paper solutions. Our integrated business model and strong operational performance enabled us to manage inflationary pressures and expand margins through price increases.
“My sincere thanks go to all our colleagues for their excellent delivery and continued professionalism, agility and commitment in what has been a year impacted by significant external challenges.
“Cash generated from continuing operations of €1.292bn, up 29% on 2021, led to a further strengthened balance sheet, ending the year with leverage of 0.5 times. This gives us the strength and strategic flexibility to continue to invest through the cycle, in turn reflecting our confidence in the long-term growth of the markets in which we operate and our leading positions within them.
“We continue to accelerate our growth ambitions, making good progress with our significant expansionary capital investment pipeline. Projects focus on expanding capacity to serve growing markets, productivity improvements, enhancing cost competitiveness and delivering sustainability benefits.
Mondi’s revenue amounted to €8.902bn. This is 28% more than in 2021
“Particularly pleasing is the strong growth we are seeing in our market-leading Flexible Packaging business. Our innovative product offering means we can use paper where possible and plastic when useful to provide customers with a uniquely broad choice of flexible packaging solutions to meet their needs.
“We are widely recognised as a leader in sustainability including maintaining our AAA rating from MSCI, being recognised in CDP’s A List for leading practices in forestry and water security, and among the top 10 ranked companies globally in the World Benchmarking Alliance’s inaugural Nature Benchmark. We continue to make good progress across our Mondi Action Plan 2030 sustainability framework. We are developing fit-for-purpose solutions, set apart by our broad product offering and innovative capabilities, as we work towards making all our packaging and paper solutions reusable, recyclable or compostable by 2025. We have accelerated our climate ambition, being among the first packaging and paper companies to have Net-Zero targets validated by the Science Based Targets initiative.
“With our strong financial position and confidence in the future of the business, the Board has recommended an increase in the final dividend to 48.33 euro cents per share. This represents a total dividend of 70.00 euro cents per share, an increase of 8% over last year.”
“2021/22 has been a year of strong momentum in the business despite continuing to operate within a Covid-19 environment for much of the year and more recently the uncertainty caused by the Russian invasion of Ukraine and the impact on the macroeconomic environment,” says Geoffrey Drabble, Chairman at DS Smith.
A year of momentum
“I am pleased with our performance, with record volume growth translating to 29% profit growth through managing our supply chain and cost base and increasing packaging prices to recover the significantly increasing input costs. We saw good growth across all our customer base, with volumes from our bedrock of fastmoving consumer goods customers growing particularly well.
“We have seen particularly strong performances from regions where we have invested significantly recently, with the North America and Southern Europe regions delivering the highest margins of the Group. In the US, we are seeing the benefit of the Indiana (Lebanon) site contributing to exceptional volume growth in the region, and in the Southern region, Europac (Spain) has delivered a very strong operational and financial performance.
DS Smith’s revenue was £7.241bn (€8.21bn), up 26% compared to 2021
“We are driving the transition to the circular economy with a fully circular business model which has delivered during the period, with excellent cash generation, despite increasing our investment in the business and an inflationary environment. We have reduced our leverage down to 1.6 times EBITDA versus our medium-term target of 2.0 times, and have made good progress in our return on sales and in particular return on average capital employed during the year.
Investing in our business
“We have consistently invested to benefit from long-term growth drivers of a changing retail environment and sustainable solutions in anticipation of the growth which is now playing out, with e-commerce in particular accelerated by Covid-19. That investment has taken the form of designers, technicians and equipment, resulting in a range of innovative and sustainable solutions via our Circular Design Principles and e-commerce products and services, so that our packaging adds value, helping our customers in the transition to a more circular economy and achieve their own sustainability targets.
“We have also added an additional 4% capacity through new greenfield packaging sites in Italy and Poland.
Sustainability
“Sustainability is at the heart of our business, both in how we operate our own business, but also how we help our customers solve their sustainability challenges. In the year, we announced our commitment to a science-based target in line with the 1.5°C trajectory which equates to a 46% absolute reduction in CO₂ by 2030 versus 2019 and are committed to Net Zero carbon emissions by 2050.
“We saw a greater acceleration in our customers’ aspirations for plastic replacement and we continue to take a leadership position in the debate with our presence at COP26 and our collaboration with the Ellen MacArthur Foundation. Our engagement with stakeholders on the topic of ESG has increased significantly as the interests and requirements of customers, investors and consumers continue to grow.
Dividend
“We have a longstanding capital allocation and dividend policy of paying a dividend with cover of 2.0–2.5 times to adjusted EPS. In respect of 2021/22, we paid an interim dividend of 4.8 pence and propose a final dividend of 10.2 pence, together 15.0 pence (€0.17), representing cover of 2.0 times, in line with our policy.
Outlook
“The new financial year has started well, building on the momentum from the previous year. Whilst there remains considerable uncertainty about the overall economic environment, our expectations remain unchanged. Strong customer demand reinforces our confidence to invest in the business, with capital expenditure expected to further increase in the current year. We currently expect to see 2–4% growth in our volumes, aided by our focus on resilient end markets, a strong performance in the US and the opening of new sites in regions where demand is buoyant.”
“After what has been an exceptional year in many ways, I am proud that we have delivered against our financial guidance for 2022 despite a disruptive, highly inflationary, and challenging environment,” says Stora Enso’s President and CEO Annica Bresky.
“We have completed significant strategic projects, while making good progress to invest in strategic assets and innovation for growth in renewable packaging, sustainable building solutions and biomaterials innovations. Our performance in 2022 demonstrates the strength of our leading market positions and our ability to be proactive and agile in making necessary adjustments for a new reality both short and long term.
“We have delivered exceptional performance in 2022, with sales of €11,680m and, as in 2021, we have once again achieved a historically high operational EBIT for the full year 2022 of €1,891m, a year-on-year increase of 24% and the highest since 2000. The fourth quarter delivered a sales increase of 5% to €2,864m. The quarter has been characterised by the gloomy general macro-economic outlook along with accelerated market weakness in certain segments such as sawn wood and containerboard. Despite this backdrop, we delivered an operational EBIT of €355m. This was mainly a result of the strong performance of the Biomaterials division, a stable result in the Forest division and a good result in the remaining paper business.
Stora Enso’s Packaging Materials and Packaging Solutions divisions generated total sales of €5.427bn, up 17% from 2021
“We have taken a number of steps throughout the quarter such as pricing actions, flexibility in capacity management and inventories, and reinforced cost control to mitigate the sharp increase in variable costs and the margin squeeze across the Group. We will continue on this path also going forward until we recover the profitability as we see that 2023 will be a weaker year than in 2022. The relatively high energy self-sufficiency and wood supply, along with strong sourcing operations support us in market fluctuations.
“In the Packaging Materials division, we experienced stable demand and market share with a strong order book for consumer board, while market demand and prices weakened in containerboard. Overall, profitability in this division weakened due to margin squeeze from escalated variable costs and lower volumes. The temporarily elevated costs for scheduled annual maintenance shutdowns at some of our largest sites, represented the majority of the maintenance costs for the Group. Renegotiated sales contracts for consumer board during the quarter will gradually compensate inflationary pressures through price increases. In the Packaging Solutions division, demand for corrugated packaging was relatively stable quarter-on-quarter, but lower than in Q4/2021, with a weaker ending to the seasonally strong fourth quarter primarily due to lower consumer confidence.
Delivering on our strategic roadmap
“During the year, particularly the last three months, we have executed on many strategic initiatives on our agenda to build resilience, accelerate our growth agenda and reshape the focus of the business.
“During the fourth quarter, we also started a process to divest our consumer board and forestry operations in Beihai in China. This divestment will enable us to increase resource allocation to sites with economies of scale which serve a global and growing packaging market including China.
“To further our growth strategy, we have exited the majority of our paper business and allocated resources to key strategic areas. We invested in cost-leading cartonboard production at Oulu in Finland and expanded our presence in renewable packaging through the large acquisition of De Jong Packaging Group in The Netherlands with the aim of building market share in Western Europe.
“We have entered several new collaborations, partnerships, and joint developments to accelerate innovation, knowledge sharing and market access including monitoring the development of battery technologies within wood-based materials. This month (January), we are delighted to have signed a partnership with the EV automotive brand Polestar to contribute to their Polestar 0 project of climate neutral car for 2030 with our Lignode material for batteries.
The green transition is expediting our strategy
“There is long-term, growing demand for Stora Enso’s products globally and we are confident that our strategy will continue to deliver market share gains and sustainable growth from a more resilient and powerful business platform during market downturns.
“Innovation and a sustainable business strategy that are closely integrated with our capital allocation, business conduct and design guidelines are key for our long-term success. There are countless national policies around the world being implemented to secure the much-needed green transition. For example, European regulations such as the Single-Use Plastics Directive, the Waste Framework Directive, Construction Products Regulation, the EU Batteries regulation as well as policies like the New European Bauhaus support our innovation initiatives towards the creation of new renewable products. This is reinforced by our ambition of offering 100% regenerative solutions, 100% circular and carbon positive products and achieving net positive biodiversity by 2050.
“I am very grateful for the commitment of our teams to deliver innovative products, financial performance, and to meaningfully contribute to a better environment and value for all stakeholders. With our values to “lead” and “do what is right”, we will future proof our business for tomorrow and beyond.
“The renewable future grows in the forest.”
Dividend proposal
The Board of Directors will propose an all-time high dividend of €0.60 (€0.55) per share at the Annual General Meeting on 16 March 2023.
“Metsä Board had a strong year in 2022,” says the company’s CEO Mika Joukio. “We achieved a record profitability in an operating environment that proved difficult to predict. Our sales amounted to €2.48bn, and our comparable operating result totalled €521m. Our comparable return on capital employed exceeded 20%, and the ratio of interest-bearing net liabilities to comparable EBITDA, which was 0.2 at the end of the year, reflects our strong financial position. Our result improved especially thanks to the higher prices of fresh fibre paperboards, supported by a favourable currency effect. Successful price increases compensated the rapid cost inflation. Higher sales prices and a strong US dollar boosted also the result of Metsä Fibre, our associated company, to record figures. In addition, we achieved an annual all-time high in the production volumes of pulp and BCTMP.
“In the first half of the year, demand for paperboards was strong in all our market areas. We used the folding boxboard volumes freed up from Russian sales to support our key customers’ growth in Europe and North America. In the second half of the year, paperboard sales normalised, as high inflation and rising interest rates quickly eroded households’ purchasing power and weakened general consumer demand. In addition, during the last quarter, adjustments to inventories in the value chain affected our sales, and we adjusted our paperboard production to meet the demand. Nevertheless, our sales in October–December totalled €600m, and our comparable operating result €101m. This was an excellent achievement, given that raw material and energy prices continued to rise throughout the period.
Metsä Board’s sales in 2022 were €2.48bn, up 19%
“The past year has been overshadowed by Russia’s war against Ukraine. In addition to human suffering, Russia’s military operations have triggered the most severe energy crisis in Europe’s recent history, making energy self-sufficiency a significant competitive factor. The new recovery boiler and turbine that started up at the Husum integrated mill at the end of the year will increase the pulp mill’s bioenergy production and further improve our energy self-sufficiency.
“For the second year in a row, we achieved a place in the A List in CDP’s three environmental focus areas: climate change mitigation; water security; and forest protection. This is something of which we can be proud, as only 12 out of 15,000 companies achieved the same excellent result. We are continuing our long-term efforts to combat climate change and reduce water consumption, and we aim for fully fossil free production and products by the end of 2030. Furthermore, our resource-efficient lightweight paperboards made of renewable raw material have a smaller carbon footprint than many other packaging materials, and they are an excellent match for circular economy needs. Packaging design carried out in cooperation with our customers helps us continuously reduce the amount of packaging material and waste.
“Our strategy has proved itself in a rapidly changing market environment. We continue to grow in fibre-based packaging materials and to renew our industrial operations. In 2023, our paperboard capacity will increase by a tenth, when the Kemi kraftliner and the Husum folding boxboard investments are completed. We have also launched pre-engineering for a new folding boxboard mill in Kaskinen, where we aim for the world’s most resource-efficient paperboard mill, world-class competitiveness and a product concept that enables a lower carbon footprint.
“Our strong financial position creates a firm foundation for our growth investments, contributing to the long-term increase in shareholder value. As further proof of the confidence in our future success, the Board proposes a dividend of €0.58 per share to be paid in 2022 in accordance with our dividend policy.”
P.S. And here’s how things were with another world’s largest producer of pulp and paper products – the Brazilian Klabin.
Last year, the company sold coated, uncoated and corrugated board for a total of R$11.333bn (€2.04bn, about 56,5% of its total revenue of €3.613bn). This is 21% more than in 2021. Overall EBITDA increased by 15% to R$7.931bn (€1.43bn). The total volume of sales of finished products increased by 1% to 3.852m tons.
gofro.expert
