(Alliance News) - Smurfit Kappa Group PLC on Wednesday said both revenue and profit fell by double-digit percentages in the third quarter of the year, as it prepares for its merger with US peer WestRock Co.

The Dublin-headquartered paper-based packaging manufacturer said pretax profit dropped by 25% in the three months that ended September 30 to EUR281 million from EUR372 million a year before, as revenue declined by 19% to EUR2.70 billion from EUR3.34 billion.

For the full first nine months of 2023, Smurfit recorded pretax profit of EUR939 million on EUR8.53 billion in revenue, down from EUR1.14 billion profit on EUR9.72 billion revenue in the same period last year.

Despite the worsened results compared to 2022, Smurfit noted an improving trend during 2023. It said box demand was down just 2% on a year before in the third quarter, compared to down 7% and 5% in the first and second quarters, respectively.

"We expect this trend to continue, with Germany in particular showing improved order books," said Chief Executive Officer Tony Smurfit.

Earnings before interest, tax, depreciation and amortisation were EUR512 million in the third quarter, down 14% from EUR593 million a year before. More positively, Ebitda margin improved to 19.0% from 17.8%.

Back in September, Smurfit Kappa agreed to merge with Atlanta, Georgia-based WestRock to form Smurfit Westrock. This new "global leader in sustainable packaging" will be headquartered in Dublin but will have its primary listing in New York.

For each WestRock share, WestRock shareholders will receive one Smurfit WestRock share and USD5.00 in cash, while each Smurfit shareholder will receive one Smurfit Westrock share for each share in Smurfit.

Smurfit shareholders will own around 50.4% of the new company, while WestRock shareholders will hold the remaining 49.6%.

"This combination represents a unique point in time, value creation opportunity, for both companies," Tony Smurfit said on Wednesday. "We are increasingly excited to create the 'go-to' fibre-based packaging partner of choice for all stakeholders."

Smurfit shares were up 3.0% to 2,764.00 pence in London early Wednesday.

By Tom Waite, Alliance News editor

Comments and questions to newsroom@alliancenews.com

Copyright 2023 Alliance News Ltd. All Rights Reserved.