Shares in Smurfit Kappa surge 6.7pc on back of strong results
Confidence high as firm posts 4pc increase in revenue on same period last year at €1.9bn
SHARES in Smurfit Kappa Group (SKG) rose sharply yesterday, after the company reported strong first quarter results and forecast higher demand for its products this year.
The packaging giant saw profits margins fall, but retained its profit forecasts for the year, boosting confidence in the firm.
For the first quarter, SKG said pre-tax profits fell 43pc to €57m on revenues of €1.9bn – up 4pc on the same period in 2012. Margins slid to 12.7pc from 13.4pc. Chief executive Gary McGann was pleased with is company's start to the year.
"The group has seen a strong increase in demand with European box volumes up 4pc on the same period last year when adjusted for two fewer working days in the first quarter.
"This has been achieved despite continued macroeconomic weakness throughout most of Europe, and bears testament to the group's focus on high quality, innovative packaging solutions," he said.
SKG had warned previously that prices for some of its products would fall this year, but paper price increases and a "good inventory position across Europe are creating an environment for corrugated price recovery in the second half of 2013", Mr McGann said.
Analysts welcomed the results, with Bank of America Merrill Lynch highlighting the "confident outlook".
"Going forward, market conditions remain relatively benign. A lack of US imports of kraftliner and low inventories is currently supportive of price increases.
"On the testliner side, management highlighted that OCC prices have increased slightly year to date, but the expected rally has been stifled to a degree by China's Green Fence policy, which has limited imports across the waste paper portfolio.
"Management believes that OCC and containerboard price increases should be catalysts for further increases in box prices in the second half of the year," they added.
Merrill has a "buy" rating on Smurfit Kappa Group.
By the close in Dulin shares in the company were up more than 6.7pc at €11.89. The stock has been one of the star performers and has almost doubled in the past year.