Powerflute's profits fall 52pc amid tough market and project delays
Packaging maker Powerflute, the AIM-listed firm chaired by Dermot Smurfit, saw its operating profit slump 52pc to €6.9m last year as it endured tough trading and costs associated with capital projects.
Powerflute has a plant in Finland and its products are mainly used in the food industry, with about 90pc of output being used to ship fruit and vegetables. It said that revenue last year fell 7pc to €113.1m.
Mr Smurfit said 2012 had been difficult due to "a combination of the tough macro-economic environment, competitive pressure and delays to investment projects".
He said that, despite this, the company had achieved an earnings margin before interest, tax, depreciation and amortisation of 10pc and had net cash of €10m at the end of the financial year.
Although there was downward pressure on selling prices and margins in the first half of 2012, market conditions improved in the second half.
"More intense competition weighed heavily on the market during the first half of the year, particularly in southern European fruit and vegetable producing countries, and average selling prices were lower than those of the prior year," said the company.
"Our own performance was compromised by complications encountered with a number of essential investment projects," it added. "Modernisation of key sections of the paper machine took longer than expected."
Powerflute's shares plunged last summer after it issued a profit warning in relation to its first-half results. Mr Smurfit and his family own about 16pc of Powerflute, while his brother Michael owns 21pc.
The company has also become embroiled in a tax dispute with Finnish authorities.
Vero, the Finnish tax administration, has said it considers Powerflute to be a venture capitalist firm and not an industrial company.
It's insisting that gains in relation to a disposal of its graphics business in 2011 are taxable. Vero says the firm is liable in relation to two separate transactions, including that disposal, in order to avoid penalties and interest.