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Highlights
- The packaging industry in the United Kingdom witnessed significant growth amid a boom in e-commerce sales during the Covid-19 pandemic.
- Companies operating in the paper and packaging industry witnessed a robust business environment, leading to improvement in revenue and profitability.
The packaging industry in the United Kingdom witnessed significant growth amid a boom in e-commerce sales during the Covid-19 pandemic. Also, demand from the food and beverage industry for a recyclable packaging solution was on the rise.
During the Covid-19 led lockdown, only a few essential industries were operating, leading to a fall in demand. However, the economic recovery after the pandemic has propelled the demand for packaging and labelling services from different sectors.
Companies operating in the paper and packaging industry witnessed a robust business environment in 2021, leading to improvement in revenue and profitability. As per the industry experts, the high demand for packaging solutions is expected to continue amid rising demand from the ecommerce industry.
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Let us look at three FTSE listed top paper and packaging stocks and their investment prospects:
DS Smith Plc (LON: SMDS)
FTSE100 listed company is engaged in the packaging business. It provides paper & packaging solutions and recycling services to its clients. Its main clients include companies operating in the ecommerce & e-retailing business as well as the food & beverage segment.
DS Smith reported solid business growth in the six months to 31 October 2021. Its total revenue was up by 22% at £3,362 million, mainly due to strong organic growth and higher demand from the FMCG sector, which represent 80% of the company’s total volume. The profit before tax stood at £175 million during the period.
The company has a positive outlook and plans to boost its packaging capacity by setting up two new manufacturing facilities. As a result, it expects significant improvement in profitability in the second half.
DS Smith Plc currently trades at GBX 382.70, down by 0.91% on 11 February 2022 at 10:45 am GMT+1, with a market cap of £5,306 million. The current dividend yield of the company stands at 3.8%.
Smurfit Kappa Group Plc (LON: SKG)
The paper-based packaging company has primary operations in Europe and the American market. It serves food & beverage as well as the retail industry.
The company reported solid business growth with a return on capital employed (ROCE) at 16%. Its total revenue grew by 18% to €10,107 million, driven by volume growth and a rise in box prices.
Revenue in the European market was up by 17%, while the US market revenue grew by 20% during the period. In addition, the company’s board is recommending a 10% rise in the final dividend to 96.1c per share for its shareholders.
Smurfit Kappa Group Plc currently trades at GBX 4,135, down by 0.36% on 11 February 2022 at 10:45 am GMT+1, with a market cap of £10,749 million. The current dividend yield of the company stands at 2.7%.
Mondi Plc (LON: MNDI)
The company manufactures and sells various packaging and paper products like bags, pouches, flexible packaging, uncoated fine papers to its clients in different countries.
Mondi witnessed robust demand for its various products amid economic recovery across industries in 2021. Its underlying EBITDA was up by 27% to €388 million for the third quarter of 2021. Also, the company has set specific science-based targets to achieve net-zero emission targets by 2050.
Mondi Plc currently trades at GBX 1,921, down by 1.51% on 11 February 2022 at 10:45 am GMT+1, with a market cap of £9,470 million. The current dividend yield of the company stands at 3.9%.
