Wednesday 17 October 2018

Earnings jump by over 20pc at Smurfit Kappa

the group’s earnings margin of 15.7pc was a “significant” year-on-year improvement Stock Image
the group’s earnings margin of 15.7pc was a “significant” year-on-year improvement Stock Image
Ellie Donnelly

Ellie Donnelly

Group earnings before interest, taxation, depreciation, and amortisation (EBITDA) at packaging giant Smurfit Kappa have jumped 22pc year-on-year to €340m in the three months to 31 March.

While the group’s earnings margin of 15.7pc was a "significant" year-on-year improvement, the company said in a trading update this morning.

During the period Europe’s largest box maker saw its revenue grow by 7pc year-on-year to €2.2bn.

The company said the performance was driven by ongoing benefits of its capital investment programme and strong demand in most of its markets.

In addition, Smurfit Kappa said that the three month period was positively influenced by lower average recovered fibre costs of €17m year-on-year, however these recovered costs were largely offset by higher other costs and a negative currency translation impact primarily related to the fall in the US dollar versus the euro.

"Paper-based packaging is the sustainable, renewable and recyclable packaging option for our customers and is increasingly used as a key merchandising medium across industries," Tony Smurfit, CEO of Smurfit Kappa, said.

"We have what we consider to be the team, unique performance culture, asset base, innovation capability and financial capacity to capitalise on an increasingly attractive outlook for our business."

Looking forwards and the group said that its full-year outcome was expected to be materially better than 2017, delivering continued EBITDA growth.

"Trading in the second quarter remains very encouraging with good demand across most regions, continued corrugated price recovery and lower sequential recovered fibre costs," Mr Smurfit said.

"For the year, while recovered fibre pricing remains uncertain, we have strong momentum in the business and expect continued corrugated price recovery and execution of our medium-term plan, further enhancing SKG’s operating platform for sustained growth."

The company, which was recently the subject of a takeover bid, said that it intends to invest €1.6bn above base capital expenditure over the next four years.

To the end of April, Smurfit Kappa said it had ordered or approved over €230m of new investment as part of this plan.

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