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Smurfit Kappa profits from e-commerce boom

It has seen its revenue rise but there are some concerns around inflating costs of raw materials and energy.
July 28, 2021
  • Net debt down to €2.5bn from €3.2bn
  • Free cash flow drops 51 per cent to €117m

The near-term future of paper and packaging company Smurfit Kappa (SKT) is largely dependent on two factors: cost inflation and the continued boom of e-commerce. In May, the United Nations Conference on Trade and Development published a report estimating that online retail’s share of total retail jumped from 16 per cent to 18 per cent in 2020. This trend contributed to Smurfit’s 11 per cent revenue increase. However, rising costs of raw materials and energy meant its cash profit margin was down 80-basis points to 16.7 per cent. The question for investors is: which of these forces will outlast the other?

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