Yes vote on fiscal treaty is 'only choice', says Smurfit Kappa chief
THE chief executive of Irish packaging group Smurfit Kappa, Gary McGann, has insisted that Ireland needs to approve the fiscal treaty later this month if it's to remain an active part of the European market.
Mr McGann was speaking after the company's annual general meeting in Dublin.
Smurfit Kappa, which is Europe's biggest maker of cardboard boxes that are used by a range of consumer goods companies, yesterday reported much better earnings before interest, tax, depreciation and amortisation (EBITDA) for the first quarter of 2012 than had been anticipated by analysts.
EBITDA for the first three months, at €246m, was 1pc higher year-on-year but was as much as 11pc higher than had been expected.
Analysts had been pencilling in EBITDA of €222m for the quarter based on the assumption that sales of boxes around Europe would dip and pricing would soften more than it did.
Its margins also held up better than expected, despite what Mr McGann described as "significant increases" in input costs and downward pressure on box prices in the period.
Shares in Smurfit Kappa rose 1.1pc initially as the company said it expected full-year EBITDA to be broadly similar to last year's figure of about €1.01bn. That's 10pc ahead of what analysts had been forecasting.
Revenue for the period rose 1pc to €1.82bn, but stripping out positive currency and other impacts, it had been relatively flat. Its operation in Latin America also performed strongly, generating EBITDA of €55m in the quarter, up 11pc on the same quarter in 2011.
Chairman Liam O'Mahony told shareholders the board believed Smurfit Kappa had the "capital structure and cash flow characteristics to sustain a progressive dividend stream".
While net debt rose by €23m in the first quarter compared with analyst expectations of a fall of €20m, Smurfit Kappa has reduced its net debt by €289m in the past 12 months.
The company also expects to eliminate another €100m in costs this year. It took out €30m in costs during the first quarter.
Speaking to the Irish Independent following the annual general meeting, Mr McGann advocated a Yes vote in the referendum.
"As an international company based in Ireland, it's critically important to be part of the the big market place and to be competitive. That speaks for itself. There's only one choice in those circumstances," he said.