Smurfit Kappa inaugurates its first facility in North Africa
Smurfit Westrock, the merged paper and packaging giant, is expanding its presence in North Africa, following the opening of its first plant in Morocco. The company, which includes Smurfit Kappa as a key component, is eyeing potential future investments in Tunisia and Algeria as part of a broader regional expansion strategy.
The Moroccan plant, located in Rabat, is a significant step for Smurfit Westrock. According to Tony Smurfit, the company's group CEO, this marks the first corrugated operation in North Africa, an exciting development for the company. The Rabat plant, built at a cost of €35 million, will also generate 30% of its power from 1,500 solar panels, demonstrating Smurfit Westrock's commitment to sustainability.
The finance chief of Smurfit Westrock, Ken Bowles, likened the Rabat plant to a small investment in Thessaloniki, Greece in 2017, signifying the beginning of a real presence in North Africa for the company. The move aligns with Smurfit Westrock's strategic focus on the Europe, Middle East, and Africa (EMEA) region, alongside its North American and Latin American operations.
Cautious consumers have been pulling back in some areas, resulting in a "minor impact" on packaging volumes, as reported by Smurfit Westrock. Despite this, the company remains optimistic about the future, expecting demand to pick up as the year progresses following encouraging signs in April. This optimism is reflected in the company's share price, which moved higher in Dublin trade today.
Smurfit Westrock's growth strategy is bolstered by strong financial synergies and a focus on sustainable packaging innovations. One such innovation is Stretch Kraft™, a recyclable paper-based pallet wrap that aligns with evolving regulatory environments and market demands in global regions like North Africa.
Algeria's market is noted as receptive to growth in sectors tied to packaging and supply chain logistics due to government import selection and trade openings. This environment, combined with the company’s sustainability-driven innovations and the strategic merger forming Smurfit Westrock with a projected annual synergy of $400 million by end of 2025, suggest that Smurfit is well-positioned to make targeted investments in Tunisia and Algeria as part of its North African growth ambitions.
In addition to North Africa, Smurfit Westrock is also looking to grow in other regions. The company aims to become a much bigger player in Brazil and is also expanding its operations in countries like Poland, Peru, and Mexico, benefiting from the country's "nearshoring" boom.
Smurfit Westrock is due to report its half year results on August 2, providing more insight into the company's financial performance and future plans. The company's first quarter volumes fell for a third successive quarter, but the impact on volumes referred to the first part of the year. Nonetheless, the company remains optimistic about its future growth prospects, particularly in North Africa.
