Paper Maker Smurfit Kappa Expands into Morocco with New Plant

Rabat – Smurfit Kappa, Europe’s largest paper and packaging producer, is eyeing wider expansion in North Africa following the opening of its first plant in Morocco, according to the company’s Chief Financial Officer.

According to a report from Reuters, the Irish company, which operates across Europe, the Americas, and Central and South America, inaugurated its €35 million ($38.5 million) facility in Rabat on Wednesday, marking a significant step in its €4.7 billion investment drive over the past five years.

Smurfit Kappa’s CFO, Ken Bowles, likened the Moroccan venture to a previous investment in the Greek city of Thessaloniki, where the acquisition of a small box plant served as a springboard for expansion 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? Does Algeria?” Bowles said in an interview at Smurfit’s Dublin headquarters.

He added: “Morocco is the starting point for establishing a real presence in North Africa.”

The Rabat plant, equipped with 1,500 solar panels to generate 30% of its power, follows Smurfit Kappa’s strategy of investing in emerging economies where the demand for packaging grows at a faster pace compared to the relatively stable but less exciting rates in Europe.

In addition to its North African expansion, Smurfit Kappa aims to increase its presence in Ecuador and become a major player in Brazil, leveraging recent investments in these countries.

The company has also expanded operations in Poland, Peru, and Mexico, capitalizing on Mexico’s “nearshoring” boom.

While Smurfit reported a 13% rise in core profit for the first quarter, it experienced declining volumes for the third consecutive quarter. The company expected demand to recover as the year progressed, following encouraging signs in April.

However, Bowles noted that the consumer landscape has not changed significantly since then, with cautious spending in some areas while consumers continue to allocate their funds towards services and experiences, resulting in a minor impact on packaging.

He concluded: “Consumers are clearly still concerned about inflation, interest rates, and the fear of a recession, and that’s having an impact on volumes.”