FTSE 100 Round-Up: Smurfit Kappa, DCC, Severn Trent

FTSE 100 stocks Smurfit Kappa, DCC Group and Severn Trent all released fresh trading statements on Wednesday. Here are the key takeaways from their midweek updates.

Smurfit Kappa

Packaging supplier Smurfit Kappa grew revenues strongly in 2022 despite a fall in cardboard box demand.

Revenues rose 27% last year to €12.8 billion even as box volumes dropped 2% year on year. Meanwhile, earnings before interest, tax, depreciation and amortisation (EBITDA) increased 38% to €2.4 billion, helped by a jump in EBITDA margin to 18.4% from 16.8% in 2021.

The solid performance encouraged the company to raise the full-year dividend 12% year on year, to 107.6 euro cents per share.

Chief executive Tony Smurfit said that "the rate and pace of inflation clearly had a negative effect on the demand environment in 2022." He added that "the partial reversal of the unsustainably high demand levels seen through the pandemic period" also affected full-year sales.

In Europe box volumes dropped 2% due to worse-than-expected demand in the UK and Germany. Excluding acquisitions, volumes in The Americas meanwhile were flat year on year.

Smurfit said that 2022 "was characterised by unprecedented cost inflation" and particularly in respect of energy prices which cooled during the latter part of the year. However, he commented that the company "has successfully navigated this environment."

He added that "although very early, 2023 has started well." Smurfit noted that "while there are and always will be challenges, SKG has never been in better shape strategically, financially and operationally."

DCC Group

Sales, marketing and support services business DCC Group said that group operating profit remained in line with expectations during the final three months of 2022. It commented that profits were ahead of the prior year and described it as "a good performance given the challenging macro environment."

At its DCC Energy arm, the FTSE 100 business said its Mobility and Solutions operations had enjoyed "good operating profit growth… notwithstanding the weather conditions being milder than average during the third quarter of the financial year."

Operating profit ducked at DCC Healthcare as customers at DCC Health & Beauty Solutions ran down existing inventories. Weakness here offset robust growth at DCC Vital which was helped by the acquisition of endoscopy device manufacturer Medi-Globe during the autumn.

Finally, DCC Group said that its DCC technology arm "delivered good operating profit growth" thanks to strong trading in North America.

DCC Group said that it "continues to expect that the year ending 31 March 2023 will be another year of strong operating profit growth" in line with market estimates.

Severn Trent

Water supplier Severn Trent said there have been no material changes to its business performance or outlook since its interim statement of 22 November. It said, therefore, that its guidance for the full financial year remains unchanged.

The FTSE 100 firm declared that "we have continued to deliver a strong service for our customers despite the driest summer on record and a challenging winter." It added that it remains on track to provide financial support to 315,000 of its "most vulnerable" customers by the end of the current AMP (asset management period).

The current five-year AMP period set by regulator Ofwat runs until 2025. It sets out key details like price increases and the amount utilities companies must spend on infrastructure.

Severn Trent also announced on Wednesday the acquisition of Andigestion Limited for its food recycling division. The company operates two food waste anaerobic digestion plants that will boost the water giant's annual energy generation by 45 GWh, a rise of 16%. The takeover is subject to regulatory approval.

Severn Trent said that the move enhances "our energy generation capacity and resilience." It noted that "we self-generate the equivalent of over 50% of our energy consumption, resulting in a natural economic hedge which significantly reduces the impact of higher power prices on our shareholder returns."