DUBLIN, (Reuters) – Smurfit Kappa is expecting to raise prices this year in order to recover high cost after a combination of price increases and record demand led to record earnings amid “significantly and unprecedented cost inflation” by 2021.

Europe’s leading paper packaging company predicted inflation last July and stated on Wednesday that the energy and raw material costs continue at high levels. They will need to keep increasing prices in order to maintain margins.

Smurfit’s core earnings increased by 13% to record 1.7Billion euros ($1.94B), a rise of 13% over pre-pandemic levels. This is an exceptional demand for packaging in ecommerce, which was also higher than what Refinitiv had forecast at 1.67B.

Following the increase in price of recycled fibre, an important raw material used to make boxes, and rising energy costs (which rose by 235 millions euros), EBITDA margin for Irish groups fell to 16.8%. It was 17.7% one year prior.

Smurfit, whose customers include Procter & Gamble (NYSE:), Unilever (NYSE:) and Nestle, said current trading and demand for containerboard remain strong and that it expects the market to remain tight in the months ahead.

It added that the packaging manufacturer is still effectively selling out its product lines.

($1 = 0.8759 euros)