Cardboard acquired an unlikely lustre during the pandemic. Supernormal demand and rising prices caused packagers’ profits to surge in 2021, and growth continued into 2022 even as volumes slipped. Now, however, the dynamics have reversed. Customers are destocking, falling input costs are translating into lower prices, and the FTSE 100 box makers are lamenting the uncertain economic backdrop.
Dig a little deeper, though, and a more nuanced picture emerges. Mondi (MNDI) and Smurfit Kappa (SKG) both published their half-year results this month and, while both reported a fall in profits, the pain wasn't shared evenly. Mondi had a significantly rougher ride, with sales down by 14 per cent and underlying Ebitda tumbling by almost 30 per cent. Revenue at Smurfit Kappa declined by a less extreme 9 per cent, which dented adjusted Ebitda by just 5 per cent.