While makers of newsprint and office paper continue to fight against a tide of non-ink-on-paper communication options, makers of cardboard box and paperboard packaging materials have been reporting consistently strong sales figures.
July and August brought with them first-half 2015 earnings reports from several makers of containerboard and other packaging grades, and the numbers calculated were largely positive.
Ireland-based Smurfit Kappa Group, which designs, makes and sells packaging products at 350 production sites in 33 nations, has reported an improved earnings per share (EPS) figure for its global operations in the first half of 2015.
The company’s revenue of €4.00 million ($4.37 million) in the first half of 2015 increased by 1% from the €3.95 million ($4.32 million) figure from the first half of 2014. “In the first half of the year the group delivered EPS growth of 38%, underpinned by good underlying business conditions,” says Gary McGann, Smurfit Kappa’s CEO.
McCann says he foresees a tight containerboard supply picture emerging in Europe. “European corrugated packaging volumes have remained strong, delivering volume growth of over 4% in the first half of 2015. As a consequence [the] European containerboard market has continued to tighten.”
The picture is optimistic enough for Smurfit Kappa to attempt a price increase. “As a result the group has sought and is achieving virgin and recycled containerboard price increases and these increases are expected to support higher corrugated pricing at the back end of the year and into 2016,” states McCann.
Two United States-based containerboard producers also disclosed first-half 2015 results that largely portrayed healthy demand for packaging and paperboard products.
International Paper (IP) has reported sales of $5.7 billion in the second quarter of 2015 compared with $5.5 billion in the first quarter of 2015 and $5.9 billion in the second quarter of 2014. The company’s operating profits in the second quarter of 2015 were $663 million, compared with $623 million in the previous quarter.
Although profits have remained relatively stable, the company cites the strong U.S. dollar as a disadvantage, stating “revenues continue to be negatively impacted by foreign exchange translation.”
“IP delivered another strong quarter of earnings and free cash flow,” says Mark Sutton, IP chairman and CEO. “Operations around the globe ran well.”
IP employs about 58,000 people at paper mills and other facilities and offices in more than 24 countries in North America, Europe, Latin America, Russia, Asia and North Africa.
Packaging Corp. of America (PCA) has reported record second quarter 2015 income of $114 million, or $1.16 per share, compared to 2014 second quarter net income of $100 million, or $1.01 per share. PCA bills itself as the fourth largest producer of containerboard and corrugated packaging products in the U.S.
The financial results jibe with mill capacity statistics released by the American Forest & Paper Association, which announced in mid-July that containerboard mills in the U.S. operated at a 97.4% capacity rate in June 2015.
European and North American demand for old corrugated containers (OCC) to feed their mills is being joined by renewed demand for OCC from Chinese mills, according to a late July report from RISI.
The U.S.-based information organisation reported that China’s June 2015 recovered fibre imports were up 11.5% compared to June 2014, with a “surge” in demand for OCC being a leading factor.
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