Ladies and gentlemen, hello and welcome to the Smurfit Kappa Q3 2022 trading update call. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Just to remind you that this conference call is being recorded. Today, I am pleased to present Mr. Tony Smurfit, Group CEO. Please go ahead with your meeting.
Thank you, operator, and good morning, and thank you all for taking the time to join us today. I'm joined on the call by our Group CFO, Ken Bowles, and before commencing, we would refer you to the note on forward-looking statements set out in our trading update, which also applies to our discussion today. Please note that Ken and I are calling in from separate locations, so please bear with us should there be any technical issues. You'll see from our release today that we've provided an exceptional level of disclosure, recognizing that we are operating in a volatile world to underscore both the strength and quality of our performance. We have delivered a very strong nine-month outturn, with revenue growth of 33%, EBITDA growth of 43%, a margin of 8.2%, and a ROCE of 20.6%.
A leverage multiple below 1.4x is at the lowest level in the group's history and should be seen in the context of significant capital investments to support customers and to optimize our integrated operating model. You're all well aware of the very significant challenges that are facing businesses during 2022, particularly around inflation, continued supply chain disruption, and uncertainty caused by the war in Ukraine. Our people, their dedication and commitment, and our relentless focusing on executing our strategy enables us to deliver against all performance measures for all of our stakeholders. Proud of how over the last number of years, but especially recently, we have delivered security, supply, and world-leading innovative and sustainable packaging to our over 65,000 customers globally. Volumes for the 9-month period for the group were flat year-on-year.
This is against exceptionally strong prior year comparisons, which were at a level which we consistently said was unsustainable. Given our scale and geographic reach, demand levels can vary from territory to territory. In Europe, the U.K. and Germany were the weaker regions, while Spain, France, and Italy were comparatively stronger. In the Americas, with the exception of our North American business, demand remains reasonable across most of our countries. Throughout the year, we have seen our volumes return to more normal levels as the COVID world we inhabit normalizes. During the period, we have seen demand shift from durable goods and at-home experiences to services and away from home and travel-related expenditure by consumers. As noted above, in Europe, the effects of the war in Ukraine and inflation globally are having an impact on volumes.
Positively, the long-term secular trends of e-commerce and demand for more sustainable packaging remain strong. As mentioned in the release, we continue to recover the input costs we've experienced throughout 2022 in our corrugated box system. In 2022, Smurfit Kappa has continued to progress across all aspects of our business, and our EBITDA outturn of nearly EUR 600 million in the quarter and nearly EUR 1.8 billion for the nine-month period reflects both the quality of our business and the value that we provide to our customers day in and day out. Our relentless focus is to build on the strong foundation we have established by investing to develop our assets to be the most sustainable company in our sector and to provide our customers the broadest range of innovative and specialist packaging.
Over the last two years, we have approved more than EUR 2 billion of capital to optimize our system and to support our customers' growth. We have also invested to ensure that we are making our products in an ever more sustainable way and progressing towards our own sustainability goals. We continue to see many opportunities across our markets and business areas. Scale and geographic balance provide us with multiple opportunities across different markets and at different times in different product sectors. This is a cornerstone of the Smurfit Kappa business and is a meaningful contributor to today's performance and tomorrow's prospects. Equally, with an eye to what is happening in the world around us, we have ensured that our capital structure is in the best shape that it has ever been in our history. With our debt to EBITDA multiple below 1.4 x.
Also, I would remind you that it is only one year ago when we completed our two-tranche 8- and 12-year green bond of EUR 500 million each at rates of just 0.5% and 1% respectively, and we have no maturities until 2025. By way of conclusion, I want to thank the whole Smurfit Kappa team for the part they play in navigating a complex environment, consistently delivering for our customers. The steps we have taken have built a business that is really unrecognizable from years past. Smurfit Kappa is now a better, stronger, and higher quality business. I'll now hand back to the operator for any questions that you may have.
Ladies and gentlemen, we now begin the question and answer session. If you wish to ask a question, please press star one one on your telephone. We got the first question. Please stand by.
The first question from Lars Kjellberg for Credit Suisse.
Good morning. Thank you for taking my questions. You have no doubt performed remarkably well in the current year. I just wanted to get some color on, you know, Q3 performance. If I may, Ken, direct it to you, can talk a bit about the bridge from EUR 660-EUR 593, and then also how we should think about the various moving parts into that, into your implied Q4 and full year number. Tony, when you're looking at the opportunities you talk about, if you could help us think about what those opportunities are, and as you transition into 2023, you know, considering the macro backdrop, how should we think about your continuation and commitment to, you know, developing your business and sustainability targets, et cetera? Those are my questions. Thank you.
Okay. Ken, do you want to take the first one?
Yeah, sure. Of course. Morning, Lars. I suppose, Lars, I'll probably bridge you from 2021 to 2022 rather than quarter to quarter because it'll be more meaningful, really. Look, as has been the feature throughout the year, the biggest kind of bridging part has always been energy. Energy, the headwind in the Q3 was about EUR 215 million. I think again to the underlying question here, if you think about us delivering EUR 600 million in the Q3 with that kind of headwind behind it, I think shows the underlying performance of the business. Box prices again took another little tick up in the Q3 , something in the order of 2%-3%.
Volume came back as you can kind of calculate yourself because we're flat for the nine months. And again, a little bit of factor on where recovered fiber was. Beginning to see a little bit of abating, if you like, around some of the other costs you would have said were kind of top heavy at the half year, particularly in that kind of area of distribution, logistics. And again, some of that volume piece coming off obviously gives you a bit of a benefit into the variable cost of producing because you're not running at weekends and in secondary shifts. The big moving part for the Q3 really is around energy.
On the other side of that, obviously, you know, further progression on box prices given, you know, there are other costs around outside of where energy and raw materials sit, particularly around labor inflation and wage inflation. For the full year, I suppose the logic, if you like, of kind of pinning it to EUR 2.3 billion is to kind of take away a lot of that kind of guesswork around what the moving parts might be for the remainder. Again, energy probably remains the biggest piece. I think at the half year, I probably said that headwind was something in the order of EUR 700 million plus. It's probably around EUR 800 million.
Again, savings on the other side of that around where distribution, logistics, and some of the other costs started to outbalance or kind of abated and kind of plateaued to where they might be at the end of the year. Really, you know, Lars, within that I suppose it's again maybe a bit more progression on box price volumes. We'll see where they go in the Q4 , but everything essentially baked into it to the EUR 2.3 billion.
In terms of.
Yeah. Sorry, Ken.
Quick.
Sorry, Lars. Go ahead, Lars.
Yeah, I was gonna say, you know, you did dare to call out some sort of energy headwind for 2023, as I've spoken on a few calls. Is that something you want to do today, or it's too difficult to do?
I suppose the one thing I realized when I did that, Lars, is I was wrong, and I was wrong the day after. If I told you a number now, it would be wrong in an hour's time because you can look at where spot prices are going at the moment. It was EUR 34 million yesterday. It's EUR 22 million as I wake up this morning, yet the forward prices remain, you know, in the mid-120s, 130s, 140s. I think it's probably a slightly dangerous game given the volatility we've seen over the last number of months. What I'd probably say is trust us. You can see the performance we've put in over the year in terms of how we've managed that. We clearly have some hedging going into 2023 and indeed into 2024.
We'd be able to give you better color, I think, as the winter kind of pushes through and we get to kind of February at the full year. It's a very difficult thing to kind of pin to a specific [to achieve labor] . I think it's kind of reflect back on the performance and how we've managed that as through this volatile environment is probably the best indicator I can give you.
Okay. Thank you.
Ken, if I could just add to what Ken said about energy. I mean, Lars, there was a tremendous amount of downtime taken in our sector during August and September based upon the tremendous level of cost, but we're not unique. I mean, the steel guys would have the same, I'm sure the glass guys the same, and many other industries have shifted over. Even in our own box plants, we shifted over from gas to fossil fuels because it was much cheaper. Around the edges, and then of course, governments have been also conserving. You know, stock levels of gas are you know, at very, very high levels, and we've had a very warm October and continuing so far into November.
You know, it's too early to say that the real danger has passed, but it certainly feels that way at this moment in time with regard to where energy sits for next year. As Ken just said, the forward rate is still much higher than the spot rate. You know, every day that goes by will indicate that the forward rate will start coming down as we don't eat into stock levels and that will see us through the winter. With regard to opportunities, I mean, we talk about opportunities because we see so many of them.
Obviously, you know, some of those are cost related opportunities that can be for increasing our output on mills and doing what we've been doing for the last 15 years, which is improving the efficiency of the footprint of our mill system. Our R&D taking out costs in our converting system, where there's still a myriad of opportunities to reduce costs. A lot of those costs become even more affordable, so to speak, to take them out because the cost of labor is, if we appreciate, gonna continue to go up.
Those become much more attractive. With regard to markets, you know, obviously, we have many specialist areas within our business, and you'll have seen yesterday that Sealed Air bought a business called Liquibox, which is in bag and box, where we're the number two producer in the world with tremendous plans for bag and box. Also in specific areas such as label lamination, digital, we still see very strong growth in those areas for development of the box making. You know, we have over 250 converting facilities of ours across the world, and every one is different. You know, and they're different at different times. We see huge opportunity, for example, in our Fortaleza in Northern Brazil because we have 2% of the market there.
It's a very fast-growing agricultural region, and we are building a new box plant there to take advantage of that, which will be finished next year. We see customer wins in very different facilities, which we need to take advantage of and invest accordingly. Then I suppose, you know, overlaying all of that is our focus on innovation. You know, when we say that we have, and you have seen our experience centers, when we say we have the best technology for box making in the business, you know, it's been proven out over and over again by our customers coming to us, looking for us to help them either package differently, new designs or in a sustainability agenda. So that is a...
That's just an ever-growing thing that we do and it's a huge strategic advantage for us because we have the knowledge in our sector. When we think about opportunities, there'll be bumps in the road, of course. You know, we always say that success is never a straight line. Obviously, you know, we didn't expect to see volume down 3% in the Q3 . You know, given what's going on in the world, I think that's not a bad result. I think overall, you know, we're very happy with the result that we've put forward. You know, we still look forward to the future with big confidence.
Okay. Thank you.
Thanks, Lars Kjellberg.
Thank you for your question. We are now taking our next question, so please stand by. The next question from David O'Brien from Goodbody. Please go ahead.
Good morning. Thanks for taking my questions. Three areas of questions, if that's okay. Firstly, just on corrugated volumes. I guess, can you give us a flavor, and Tony, what is the direction of travel as you move through the quarter? Are we looking at order books telling us that, you know, activity is strengthening or weakening, or has it been fairly consistent, particularly as we go into Q4? Secondly, you know, on European testliner and markets, there's a lot to untangle from our point of view 'cause we're a little bit removed from the operating environment. We've seen the downtime taken, we've seen OCC prices come down, gas prices come down. But in reality, do you see this downtime coming back online quickly? How viable are some of these businesses?
How have your customers reacted to the fact that you have again supplied them through a very difficult operating period when others have decided to turn their machines off? The final question, just on the investment you made in Colombia. It's very hard to say exactly where returns on a project like that are going. Maybe to give us a flavor of how a similar investment has gone, and particularly if you look at how Nettingsdorf has played out, you know, what type of returns or what is the performance of the investment in Nettingsdorf to give us a clue to, you know, how important an investment like the one you're making in Colombia can be.
Well, I can take the last one, but just on the first two, David, how are you? Just to take the volume, the volume seen in Q4 is pretty similar to what we've seen in Q3. You know, we would have normally expected to see a pickup in October for Christmas. That hasn't happened really. But certainly some markets like the, as I mentioned, on my script, the UK and Germany have been, I think underwhelming in the last two or three months. I think specifically on the German market, I think we'll recover pretty quickly because as the fears of energy subside a little bit, I think the Germans will start spending again, and I think that will start to move back.
Every, as I said, every territory is moving in different directions at different times. You know, we had a huge growth, for example, in Colombia last year, you know, in the 30%, which was way unsustainable. They're sort of in line with last year, which is a great result considering that kind of growth. You know, what we tend to look at is what's happening in various different territories at various different times. When you amalgamate it all, it comes up with -3%, but it's very different and for different reasons in different markets.
You know, frankly speaking, as Ken mentioned a few seconds ago, that in many respects it helps us to have less volume because we were running terribly inefficiently last year with to meet our customers' demand, with you know, running Saturdays, Sundays, which was also not healthy for our people. You know, in some sense, we reduced our costs by having a little bit less volume in certain markets and that helps. Overall, we'd like to see obviously growth, but you know, I keep saying to people, with wars going on around the doorstep, you know, it's not with an inflation that's 10%, it's not really surprising that people are a little bit wary about purchasing things.
You know, obviously that's reflecting itself a little bit in volumes. Then I would say in, as well as that, I think you are seeing some degree of people being less concerned about the supply chain, less concerned this year about boxes, so probably having a little bit less stock. That's a bit of an outlier there. With regard to downtime, yeah, I think a lot of people took a lot of downtime in Q3 because, including ourselves, because of cost, mainly because of cost. We operate as, you know, an integrated system, which will basically use most of our tonnage throughout the year, you know, in our own system.
We're not necessarily need to take downtime except in extremes, like at times like Christmas time, where we would build up too much stock during that period of time. You know, we obviously, you know, will take downtime if we need to, just to rebalance inventories as we go into year-end and not grow too much stock. But that's really all that we'll take. The industry will. You know, Ken mentioned the EUR 20 spot. It's very different to having to take downtime at EUR 20 spot than taking it at EUR 300 for energy. You know, people will make their own decisions based upon their own cost base and more importantly, their own market opportunity.
I think that's something that we just continue to follow. Stock levels overall in the industry are not too bad, considering especially the level of demand. We just have to wait and see what happens over the next couple of months. Ken, do you want to take the investment in Colombia?
Sure, yeah. Morning, David. Yeah, the Cali investment, I suppose that's a very significant part of our path towards, you know, the reduction of CO2 by 55% by 2030. Very much planning for that. At its full ramp-up, that will reduce our carbon emissions by about 6% or call it 262,000 tons. But you know, these are very long life projects. You know, I think Tony mentioned it there in when he spoke, which is, you know. When we tend to think about our investment cycles and our capital allocation, we tend to think about the blended portfolio of projects that kind of support the 17% return on capital employed.
Along with those kind of high growth projects we'd normally have through the corrugated system, we tend to put some of these projects in, plan them across those periods too. Because while they don't offer 20% return, the returns are still very, very good, because we feel in the double digits and the teens. They tend to get incrementally better over time, and we tend to be able to drive more efficiency at them from an energy perspective and a production perspective. They tend to give you a lot of stability through the paper machine as well when you put them in. They tend to deliver more over their life cycle of 60, 70 years than other projects.
We kind of have to bake that in, 'cause we tend to be, as you know, quite conservative. The Nettingsdorf example actually is a very good one, which you also mentioned. Like, if you think about when we did Nettingsdorf, I'm gonna get carbon credits for probably, you know, EUR 10-15 a ton. If you think about where they are now in the context of that boiler and the reduction in CO2, which is about 40,000 tons, I think that project clearly has returns way in excess of 20% when you consider that. I think it points to two things. I think it points to, one, our ambition on ESG and our sustainability targets.
You know, placing EUR 100 million capital behind that in the environment we're in, I think is a strong statement of our absolute goal to get to net 55% down by 2030. Too, secondly, I think you know that these are, remember, long-term projects. You know, we won't be putting a boiler into Cali for, you know, till even you might be retired, David, at that stage. It's a long lifetime. But they tend to deliver much better returns over time because of that. Hope that helps, David.
That's great. Thanks very much, guys. Take care.
Thank you.
Thank you for your question. We're now taking our next question. The next question from Cole Hathorn from Jefferies. Please go ahead.
Morning. Thanks for taking my question. Just following up a little bit on what David was saying about your mill system. You've often talked about the benefits of your integrated business model. I want to focus more on the paper mill system. I mean, in my view, your scale and asset base means that you should be more profitable than the independents in the fragmented market. However, what I think is unappreciated is how you manage your containerboard mill system. In a challenging market, I would imagine that your profitability is probably substantially better than a number of those smaller fragmented peers. Doing site visits to your paper mills in the past, I mean, your operating teams often talked about your paper carousel.
Given demand visibility from your box business, the largest in Europe, plus some independents, they always call out the production was allocated out from a central team to your mill system to optimize production and delivery costs, effectively allowing you to optimize your operating rates and have less fixed cost absorption. I'm just wondering, can you give a little bit of color, you know, around this kind of paper carousel system at Smurfit and you know, why you think your operating rates should be better, probably versus industry and your fixed cost absorption better versus the industry in the paper mill system? Thank you.
Thanks, Cole, and Ken, jump in whenever you want. I mean, basically our whole model is to have an integrated system that functions, and we've been saying this for a long period of time, that functions seamlessly. For the most part, we get that right. You know, we have lower transportation costs than I would say anyone else in the industry because our mill systems are dedicated towards box plants that are close by to them. Together with that, as you say, the carousel system runs optimizing the grades that we run on our paper machines that are suited to those paper machines, you know, whether it's basis weight or width, and that allows us to, you know, be very, very optimized.
I suppose the third point, which is really important, is that we sell to ourselves, and we have a guaranteed customer, so we don't have to take downtime. We don't have to sell to export. We don't have to sell to places in if you're in Italy, if you take the Verzuolo mill, you know, part of its customer base was in northern Germany, when we took it over. You know, you can imagine what the transportation cost of that is to an independent third party, you know, corrugator, even if the paper was the same price. The net to the mill was much, much, much lower.
You know, the whole system is designed that we are basically balanced, and we were under-balanced because of our growth for the last couple of years, which we've now fixed with Verzuolo. And you know, with the exception, as I just mentioned today, where we have to maybe take a little bit of downtime, where we have to take downtime because of our need at Christmas time, you know, basically our system is balanced, so our mills will be optimized, which I can say that nobody else in the industry can do. And that's through the cycle. When the market's weaker, it you know, obviously we make sure that our mills are still running full, with an optimized system.
When the market's strong, we make sure that we do the exact same. Hopefully look for further acquisition of building opportunities in the future as we expand our box system. It's a key competitive strength over, you know, forever because it's, as we keep saying to people, our assets are irreplaceable and our mill system and our box system is irreplaceable. Ken, do you wanna add anything?
Good morning, Cole. I'd only add two small things, Cole, which is the carousel also allows us to innovate, if you like, from paper through the system. You know, because we're, as Tony mentioned, we're buying from ourselves, it allows us to innovate not only at the box but at the paper level, which is kind of key to our customer targets around, say, Scope 3, so as in a source, if you like.
The second piece that's also related to sustainability, which is, you know, in the context of green supply chains and chain of custody, our ability through that circular model and the integrated model at the heart of that to be able to kind of secure and understand the fiber source from the start right through to the box and back again to that kind of circular economy, circular model we operate is also kind of part of that proposition. It operates on, as Tony mentioned, an operational level very effectively, but also from a sustainability level and a customer supply chain resilience level also incredibly well.
Thank you. You called out a bit earlier about,
Thanks, Cole.
Thanks, Tony. Thanks, Ken. You called out a little bit earlier on, your CapEx projects. I mean, you've brought out free cash flow on this trading update today. How are you thinking about, some of your CapEx spend projects? I mean, are you focusing more on kind of the cost optimization type products? Has there been any shift in the capital allocation when the teams ask for projects up to you? Thank you.
No, I think, Cole, within that I suppose, you know, we guided, you know, CapEx is worth EUR 900 million plus at the half year. That would still be the number we guide now as part of this number. I think the shift happened probably about a year or so ago when we accelerated a lot of projects because of the demand patterns we were seeing, you know, to kind of get ahead of that demand, which allowed us last year to trap a lot of demand. There's been no shift in change in patterns. It's as we always said, it always remains flexible and agile. That's kind of at the heart of everything we do. Cost optimization projects, as they come through, tend to have a quicker return.
It sort of goes back to, you know, when we'd have spoken even at the time of the equity raise back in 2020 or the updated plan we would have had this year, it sort of goes back to that kind of portfolio approach, portfolio approach of projects that bring you back to in excess of, if you like, the 17% return. To Tony's point, being able to kind of have a capital plan that allows you to focus on either at the paper end when we're kind of paper short, which we fixed at Verzuolo this time last year, roughly. Then focus, if you like, on the downstream activities through corrugated when we have that kind of the paper system full and ready to go and be launched for growth.
We've always kind of managed to balance the system here, which is our capital allocation remains very much at the heart of everything we do with a view to making sure that the integrated model remains strong and we keep that kind of balance between paper and corrugated and trap growth and get ahead of it as it comes.
Thank you.
Thank you.
Thanks, Cole.
Thank you for the question. We are now taking our next question. Please stand by. The next question from [James Ainley from Citigroup].
Yes. Thank you very much for taking my question. I've got two questions. Firstly, the 3% volume fall in the quarter that you mentioned, could you sort of split that out between sort of LatAm and Europe, given you mentioned there'd been some, you know, pretty rapid growth last year in Colombia, for example, just to get an idea. Secondly, your volumes you're saying are flat for the year. Could you just give an idea about how e-commerce is doing, especially given that we're obviously comparing with a sort of COVID period the year before, and how much of your sales are in that area now? Those are my questions. Thanks.
I'll let Ken answer the e-commerce question. On the 3%, we're basically the same in both regions.
You know, broadly speaking, I think, you know, we are affected more in the North American markets than we would have anticipated. Even if it's only a relatively small amount of our business. When I say North American, I mean Northern Mexico as well, which is a sort of North American-facing business because it's of the Matamoros region. That's really heavily influenced by, you know, the move from durables towards more, you know, travel-related stuff that we see and people out and about, but not necessarily spending on their homes. Those markets are very industrially led. We're seeing, you know, quite a substantial hit in those areas for this last quarter.
That's really influencing the Latin American figure, you know, quite a bit, even if it's relatively small. That's the really area I'd call out, as I've called out UK and in Europe for basically all the year, and now Germany because of, I think, the fear of energy. They're sort of outlier markets, and then the other ones are sort of plus or minus a bit better. You know, like Brazil is doing much better this year, whereas El Salvador is doing worse, you know. Overall, you know, it ends up being around 3% for both regions. Ken?
Morning, James . E-commerce is always kind of difficult because just about everybody has an e-commerce model now. You know, I think year-over-year, we're still seeing strong growth. I think 2022 over 2021 would probably be in the kind of 10%-11% in terms of volume growth. I think while you would have seen some, you know, some mix change between people consuming at home versus going out, that kind of stuff, I think the reality is that e-commerce, particularly in Europe, is still a model that has a long way to go to maturity and indeed in Latin America. I think year-over-year, it's still seeing volume growth of that kind of 10%-11%.
Yeah. James, we're not heavily exposed to any one customer in e-commerce. So we have lots of, let's call it little customers that continue to do their own e-commerce. Plus some are growing very strongly and some are not. You know, if you're looking for a read-through, I think Ken's point is very valid that, you know, we're still seeing people going online, but that doesn't necessarily mean that there isn't sectors in the business that are not suffering and neither are. At this time, we haven't been exposed to those yet. That answer your question, James?
Yes. Thank you very much.
Thank you for your question. We are now taking our next question. The next question from Kevin McGeehan for Numis. Please go ahead.
Good morning, guys, and thanks for taking my question. It's really around pricing and what you can say about the outlook here. As you can see, I guess, given, you know, what you've seen in terms of kind of recovered fiber and the energy dynamics in the background, you indicated some potential for price progression in Q4. I guess given what you're seeing currently, particularly on the input side, what do you think the prospects are for a price progression to continue into 2023, just given, you know, the kind of demand dynamics you reported in Q3, from a volume perspective as well? I just sort of wondered if you could sort of tie that all up and then think about pricing as you go into next year.
Sort of question, I guess, bearing in mind the kind of unindexed part of your portfolio, what potential there might be to sort of to increase prices as you go into next year.
Well, I think, Kevin, I think that, you know, we have to be realistic. The reality is that our. We've pushed pricing of corrugated and we've pushed pricing on paper based upon very strong input costs, both on energy and both on all other materials, including waste paper. Waste paper, as you'd be aware, has come down from EUR mid-200s to. Or sorry, let's say low 200s down to less than EUR 100 in the spot market. The energy market is certainly not as, at least in the spot area, certainly not as challenged as it was. You know, in that environment, you know, you.
It's very difficult to see price increases going forward, and margins in mill systems will expand rapidly if they have the demands in that environment. Then the question is, you know, will some of that be given back to market? I think the reality is you'd have to expect some of it is gonna be given back to market. We've already seen an announcement yesterday by one of our German competitors that they're announcing that they're gonna do so as from sometime in mid-November. You know, but as I say, demand margins have actually very significantly increased in the mill systems with the current cost abatement that we've seen. With regards to next year, I mean, I think it's just too early to say.
I mean, many contracts with inflation clauses built in now that we didn't have before, because clearly there was—inflation wasn't a problem until last year. Now we've renegotiated all of our contracts with inflation clauses built in, which will help offset some of the issues that are out there. I think we just have to wait and see what happens with regard to how box prices move as we go into next year. Ken, do you wanna add anything?
No, I think you've got that. I think, Kevin, you get the prize for the sneakiest 2023 question to be asked. Other than that.
I thought I'd give it a go at least. Thanks very much, guys.
Thank you, Kevin.
Thank you for your question. We have no further question at the moment. I will hand back to conference to Mr. Smurfit.
Yeah. Thank you very much, operator. Just to wrap things up, you know, as I said, we have really navigated in 2022 all the complexities that have been presented to us. The year, at the end of the year, we'll have our best year ever, and we'll be in the best shape ever, both operationally and financially. We will deliver an expected record EBITDA outcome of somewhere around EUR 2.3 billion. Of course, in Smurfit Kappa, you know, we're never complacent, but we do have incredible conviction about the strength of the business that we are operating and its long-term prospects, which is wholly undiminished despite the very complex environments that we're operating in.
I want to thank you for your time on the call, and, I wish you a very good day. Thank you, operator.
That concludes the conference for today. Thank you for participating. Your line is now disconnected.