E-commerce boom limits pandemic pain for Smurfit Kappa

DUBLIN, Feb 10 (Reuters) - Smurfit Kappa said on Wednesday packaging used in e-commerce sales grew 25% in its main market Europe last year during the coronavirus crisis, helping the region’s largest paper packaging producer beat its 2020 earnings guidance.

The Irish group’s core earnings fell 9% to 1.51 billion euros ($1.83 billion) in 2020, but it was still ahead of the 1.46 billion to 1.48 billion it had forecast in November and the 1.48 billion forecast by nine analysts polled by Refinitiv.

The company’s London-listed shares were 3.1% higher at 3,644 pence by 0830 GMT after it said 2021 had started well amid an “increasingly positive” industry outlook driven by moves towards e-commerce and sustainability.

“Pure e-commerce, pure dot-com, it’s about 25% growth in Europe and it’s really in its infancy in the Americas, we had 70% growth in Brazil, 80% growth in Russia, 150% growth in Mexico,” Chief Executive Tony Smurfit told Reuters.

“Packaging paper across the world is sold out, there isn’t any paper at all in the world and that is because everyone’s busy and most are trying to move away from plastic where they can,” he said, adding that this was increasing paper prices.

The group, whose clients include Procter & Gamble, Unilever and Nestle, reported record free cash flow of 675 million euros last year and increased its final dividend by 8% to 87.4 euro cents per share.

Smurfit said tough COVID-19 restrictions in many of the 35 countries it operates in had not impacted demand so far in 2021 after a strong fourth quarter and he predicted a global economic boom once lockdowns are lifted and populations are vaccinated.

($1 = 0.8240 euros)

Reporting by Padraic Halpin; Editing by Edmund Blair