Elsewhere, the drought conditions in Europe and the energy crisis are both likely to have some effects on the trio of FTSE-100 listed packaging companies, of which DS Smith PLC (LSE:SMDS) will reveal its fiscal first quarter results on Tuesday.
In packaging, while Rhine water levels have “limited direct impact” to the paper & packaging (P&P) sector, broker Jefferies said there are also potential indirect negative macroeconomic and demand effects.
“Fresh produce accounts for circa 11% of boxes, and weather may be a modest negative to box demand in fruit/veg harvesting regions,” the Jefferies analysts said.
Also, as rival Mondi mentioned in its recent update, wood and therefore paper costs are rising as Europeans look for new fuel sources amid a dearth of Russian gas.
It was one of several P&P operators that have called out rising wood costs & limited availability, also driven by reduced woodchip availability from sawmills, which have lowered output volumes, and lower calamity wood harvest benefits from the last few years.
"The effect from the ban of Russian pulpwood imports will be seen via further upward pressure on Nordic wood costs. We expect more debate around benefits of reliable wood sourcing & forest ownership," Jefferies said.
On the demand side, the continued rise of e-commerce has contributed towards strong results in recent years.
But added to the focus on cost inflation, Jefferies said sentiment in the companies is also being dented by investor concern about how the macro uncertainty might affect industrial and consumer box demand and paper packaging pricing in the second-half of 2022 and into 2023.
In June, DS Smith said it anticipates corrugated box volume growth of 2-4% in the current year, with price increases and cost management offsetting inflationary costs.
Investors will clearly be keen to hear if this is still the expectation, as the the company packed in a 24% increase in its dividend for the year ended 30 April after earnings came in much higher than expected, as strong demand allowed it to hike prices to above inflation levels.
Chief executive Miles Roberts said three months ago the new financial year “started well” and despite uncertainty about the overall economic environment, internal expectations remained unchanged.
After a big spike during the pandemic, as investors cottoned onto the demand for boxes being linked to the online shopping boom, the shares have plummeted 32% since the beginning of 2022.