Sunday 17 December 2017

Smurfit Kappa shares soar on strong results and UK listing move

Chief executive Tony Smurfit
Chief executive Tony Smurfit
John Mulligan

John Mulligan

Shares in packaging giant Smurfit Kappa soared as much as 15pc yesterday on the back of record fourth-quarter results, with the company also pledging to retain a stock market listing in Dublin.

Chief executive Tony Smurfit told the Irish Independent that the company remains committed to retaining the Dublin presence, as it forges ahead with plans to secure a premium listing in London in order to attract a wider investment base.

Mr Smurfit said that the company would not disenfranchise euro shareholders at the expense of new investors.

During the fourth quarter, Smurfit Kappa reported €326m of earnings before interest, tax, depreciation and amortisation (EBITDA), which was 11pc higher year-on-year. Its revenue in the quarter dipped 1pc to €2.08bn.

For the full year, EBITDA was flat at €8.1bn, with EBITDA rising 2pc to €1.18bn.

The company also raised its final dividend by 20pc to 48 cent, bringing the total for the year to 68 cent, which was ahead of the 65 cent that had been pencilled in by Davy Stockbrokers.

Mr Smurfit also said the company should deliver good earnings growth this year. The firm confirmed that it's reviewing its listing arrangements. It said it's specifically considering transferring the listing in the UK from a standard to a premium listing, and to switch the shares on the London Stock Exchange from euro to sterling on March 1.

It believes the changes would position the company for potential future admission to the FTSE indices.

"There's absolutely no way we're going to disenfranchise our existing euro shareholders for the benefit of a bunch of new shareholders, who we do think are going to be very important," said Mr Smurfit.

"We're really trying to broaden the investor appeal. I've spoken to investors before who had told me they'd like to invest in the company, but that it's not UK-listed and so they can't." He said that the changes will with all likelihood proceed as planned.

"There's a high degree of certainty we'll get it done."

Smurfit Kappa also announced that its long-standing chief financial officer, Ian Curley, is to step down from his role at the end of March.

He's being succeeded by Ken Bowles, who has served in a number of senior roles in the group.

Smurfit Kappa completed a bolt-on acquisition in Arizona last month, it said, as it continues to diversify its geographic footprint. Last year, the company made its first foray into Brazil, paying a total of €186m for two companies there.

Mr Smurfit said the group is currently looking at a couple of potential acquisitions in California, but they are "quite small".

"We have our hands full with integrating Brazil," he said. "When you're investing €450m in your businesses, as we did last year and planning to do the same again, that takes a lot of concentration and effort.

"If you make a mess of that then you can cost yourself a lot of money. We're far from perfect as a company and sometimes our investments don't go the way we expect them to."

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