independent

Sunday 20 April 2014

Smurfit Kappa still able to pack a punch

So Smurfit Kappa stock is still trading at a discount to the packaging sector.

That's unlikely to cause many sleepless nights for management at the firm, who are credited with running a tight ship.

Value will out eventually. The company continues to chip away at its now €2.64bn debt pile and coupled with cost takeouts and price increases, Smurfit Kappa's financial position is continually improving.

And even without the self-help measures, there are other events that could play into its hands.

The UK and Ireland arm of fast-food giant KFC, part of the Yum! Brands stable that also includes Pizza Hut and Taco Bell, has caved into environmental pressure and banned the use of products from the Singapore- headquartered firm Asia Pulp and Paper (APP) for its packaging.

A Greenpeace probe had found that KFC was using packaging in Britain and Ireland that contained mixed tropical hardwood.

That meant the wood used to make the packaging had come from tropical rainforests. APP's products used wood felled in Indonesia.

KFC in Britain and Ireland will now only use packaging from suppliers which source paper and pulp products from sustainable sources.

It joins other companies, including Disney, Unilever and Xerox, which won't use products sourced from APP.

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