# Smurfit Kappa eyes wider North Africa expansion after Morocco opening
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-07-12
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Smurfit Kappa Expands in North Africa with Morocco Plant
Meta Description: Smurfit Kappa plans further North Africa expansion after opening Morocco plant, targeting fast-growing consumer goods market in the region.
URL: https://financedigest.com/smurfit-kappa-eyes-wider-north-africa-expansion-after-morocco-openinghtml

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By Padraic Halpin

DUBLIN (Reuters) -Europe’s largest paper and packaging producer Smurfit Kappa expects the opening of its first North African plant in Morocco to set the stage for further expansion in a fast growing region for consumer goods, its chief financial officer told Reuters.

The Irish company, which operates in 22 European countries and 13 in South, Central and North America, opened the 35 million euro ($38.5 million) plant in Rabat on Wednesday, part of a 4.7 billion euro investment drive over the last five years.

[Finance chief](https://www.financedigest.com/boohoo-says-exposure-to-sterling-plunge-is-limited-finance-chief.html "Boohoo says exposure to sterling plunge is limited – finance chief") Ken Bowles likened it to another relatively small investment in the Greek port city of Thessaloniki in 2017, when the acquisition of a small box plant became a platform to expand into Bulgaria and Serbia two years later.

“Thessaloniki wouldn’t necessarily be where you start world domination and Morocco fits that profile… Then you look, does Tunisia [offer you a market](https://www.financedigest.com/world-shares-rally-as-china-offers-markets-a-hand.html "World shares rally as China offers markets a hand")? Does Algeria?” Bowles said in an interview at Smurfit’s suburban Dublin headquarters.

“Morocco is the starting of a real presence in North Africa.”

The Rabat plant, which will generate 30% of its power from 1,500 solar panels, follows a pattern of investments in other [emerging economies](https://www.financedigest.com/global-fuel-injector-cleaner-market-emerging-economies-expected-to-influence-growth-until-2031.html "Global Fuel Injector Cleaner Market: Emerging Economies Expected to Influence Growth until 2031") where the consumption of packaging can grow at a much faster pace than “the relatively stable but not particularly exciting” rates in Europe.

Bowles said Smurfit would like to grow in Ecuador and become a much bigger player in [Brazil following recent investments](https://www.financedigest.com/heineken-to-invest-300-million-in-brazil-to-expand-premium-beer-portfolio.html "Heineken to invest 0 million in Brazil to expand premium beer portfolio") there. It has also expanded in Poland, Peru and Mexico, where it is benefiting from the country’s so-called “nearshoring” boom.

Smurfit [reported a 13% rise in first quarter core profit](https://www.financedigest.com/sugar-group-tereos-reports-leap-in-core-profit-as-prices-rise.html "Sugar group Tereos reports leap in core profit as prices rise") in April, but saw volumes fall for a third successive quarter. It expected at the time that [demand would pick](https://www.financedigest.com/boeing-supplier-senior-sees-strong-h2-as-demand-picks-up-supply-issues-ease.html "Boeing supplier Senior sees strong H2 as demand picks up, supply issues ease") up as the year went on following encouraging signs in April.

Bowles said the picture has not changed much since then with cautious consumers pulling back in some areas while still clearly spending on services and on [experiences with a resulting “minor impact”](https://www.financedigest.com/revolutionising-finance-exploring-the-impact-of-omnichannel-insurance-on-customer-experience.html "Revolutionising Finance: Exploring the Impact of Omnichannel Insurance on Customer Experience") on packaging.

Consumers clearly are still [worried about inflation and interest rates](https://www.financedigest.com/oil-prices-wobble-on-worries-over-china-economy-us-rate-path.html "Oil prices wobble on worries over China economy, US rate path") and the fear of recession, and that’s clearly having an impact on volumes,” Bowles said.

Bowles said the [impact](https://www.financedigest.com/electric-vehicle-polymers-market-what-factors-will-drive-the-market-in-upcoming-years-and-how-it-is-going-to-impact-on-global-industry-2021-2029.html "Electric Vehicle Polymers Market? What Factors Will Drive The Market In Upcoming Years And How It Is Going To Impact On Global Industry 2021-2029") on volumes referred to the first part of the year. Smurfit [reports its half year](https://www.financedigest.com/naturgys-profit-rises-on-lng-gains-soothing-shareholders-by-pietro-lombardi-madrid-reuters-spanish-power-utility-naturgy-reported-on-monday-an-88-jump-in-profit-for-the-first-six-months-of.html "Naturgy’s profit rises on LNG gains, soothing shareholders By Pietro Lombardi MADRID (Reuters) – Spanish power utility Naturgy reported on Monday an 88% jump in profit for the first six months of the year, boosted by strong earnings at its liquefied natural gas (LNG) business, which could help it to win over restive investors. Earlier this month, the company said it would increase its dividend floor through 2025 while trimming expected investment, as it sought to make rewarding shareholders a priority. Pleasing them has become a focus as Naturgy considers changes that could reshape the company and after arguments over the potential appointment of a chief executive. Naturgy’s first-half net profit jumped to 1.05 billion euros (.16 billion), boosted by its liquefied natural gas (LNG) business. Shares were down 0.2% in mid-morning trading, bucking deeper declines, in particular for Spain’s blue-chip banks and utilities after a general election on Sunday produced no clear winner. Renta 4 Banco analyst Angel Perez Llamazares said Naturgy performed better than expected, adding “cash flows also beat our expectation,” and debt fell more than expected. After natural gas prices hit record levels last year, Naturgy said a fall in procurement costs this year and hedging gains had boosed profits. In the first half of the year, the company “exceeded the objectives of operating efficiency, cash generation, investment materialisation and debt reduction,” Executive Chairman and CEO Francisco Reynes said. After rival Iberdrola named a separate CEO last year, Naturgy is the only large energy company in Spain to combine the roles of executive chairman and CEO. Earlier this month, the company raised the dividend floor to 1.40 euros a share, from 1.20 euros. Operating profit (earnings before interest, tax, depreciation and amortisation) is expected to reach 5.1 billion euros, compared with a previous guidance of 4.8 billion euros. It said it was targeting net profit of 1.8 billion euros in 2025. Naturgy also relaunched its plan to split regulated infrastructure operations and liberalised energy businesses into two listed companies. The project had been suspended after the Ukraine war disrupted energy markets and analysts are still sceptical. “We believe it is unlikely that Naturgy will be able to implement its asset split in the short term and it is also unlikely that a big change in the shareholding of the company would occur,” said RBC analyst Fernando Garcia. ( = 0.8986 euros) (Reporting by Pietro Lombardi, editing by Inti Landauro and Barbara Lewis)") results on Aug. 2.

“What’s the best way to characterize it? Not getting worse.”

($1 = 0.9103 euros)

(Reporting by Padraic Halpin; Editing by Conor Humphries and Louise Heavens)


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