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Smurfit Kappa debt levels hit lowest level since flotation

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Smurfit Kappa chief executive Gary McGann

Smurfit Kappa chief executive Gary McGann

Smurfit Kappa chief executive Gary McGann

Smurfit Kappa remains focused on using its capital to pursue acquisitions and generating higher returns for shareholders as its debt levels hit the lowest level since the packaging giant's stock market flotation in 2007.

Speaking to the Irish Independent as the company reported third quarter results, group chief financial officer Ian Curley pointed out that Smurfit Kappa is now paying about €105m in dividends a year to shareholders. It's also incurring capital expenditure of €400m this year and €1.2bn over three years, on top of making acquisitions.

He said that while the company has previously said that in the absence of acquisitions it will look at options for returning cash to shareholders, the focus continues to be on acquisitions and other use of capital to generate returns.

Smurfit Kappa has consistently reduced its debt pile over the past few years, bringing it to its historic low. Mr Curley said the group's interest bill has been cut by an annual run rate of about €130m.

Chief executive Gary McGann said that the strong debt reduction had left Smurfit Kappa "better positioned today than at any other point in its recent history".

The firm reported third quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of €302m, ahead of consensus, as the packaging giant benefited from continued corrugated demand in Europe. Revenue was 1pc higher at €2bn.

In the year to date, revenue is 1pc higher at €5.97bn, with EBITDA up 6pc at €886m.

Despite tough economic conditions in most of Europe, Smurfit Kappa reported demand growth in there, with EBITDA 17pc higher at €244m in the third quarter.

Revenue in the region was up 2.5pc.

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