Monday 25 September 2017

Profit down 21pc for the first six months of 2017 at Smurfit Kappa despite increased revenue

Profit before tax at paper packaging company Smurfit Kappa was down 21pc to €245m for the first six months of 2017
Profit before tax at paper packaging company Smurfit Kappa was down 21pc to €245m for the first six months of 2017
Ellie Donnelly

Ellie Donnelly

Profit before tax at paper packaging company Smurfit Kappa was down 21pc to €245m for the first six months of 2017, compared to the same period last year, according to the group’s half year report.

Despite the fall in profit in the first six months of the year, revenue at the company, which employs around 45,000 people globally, increased by 5pc to €4.2bn year on year, with the company reporting strong demand in most markets.

Read more: Smurfit Kappa chief's total pay drops to €2.4m

Earnings Before Interest, Taxation, Depreciation, and Amortization (EBITDA) was €569m for the first six months of the year, a 4pc drop on the same period last year, which the company said was driven by reduced working days due to the timing of Easter and the continued pressure of increasing recovered fibre costs – one of the main raw materials for Smurfit Kappa.

"We are pleased to report a good set of results for the first half which were achieved against a backdrop of continued and unprecedented recovered fibre cost inflation of approximately €75m year-on-year.

We are in the process of recovering these input costs as we move through the remainder of 2017 and into 2018," Tony Smurfit, group CEO, said.

The company’s interim dividend increased by 5pc to 23.1 cent per share, a statement from Smurfit Kappa said.

On a quarter by quarter basis, profit was up 24pc to €136m in the three months to 30 June 2017 compared to the three months to 31 March 2017.

In addition EBITDA also increased by 5pc this quarter to €292m compared to the three months to 31 March 2017, driven by improved margins in both Europe and the Americas.

Read more: Profits at Smurfit Kappa down 15pc in the first three months of 2017

Kraftliner demand was robust with additional €50 per tonne price increase implemented in the third quarter, the company said.

In addition the company said that containerboard price increases were feeding through to corrugated price recovery.

Looking at the results on a regional basis, European EBITDA were €227m driven by 5pc like-for-like growth in box volumes in the three months to 30 June 2017.

Volumes in the Americas were up 3pc, while corrugated prices were better also.

"Smurfit Kappa Group is better positioned today than at any other point in our recent history.

Our capital structure, our asset base and our integrated business model continue to strengthen. This will enhance our ability to translate today’s market conditions into improved earnings in 2017 and beyond," Mr Smurfit said.

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