Friday 23 August 2019

Smurfit Kappa's profit before tax rises 27pc to €408m

Smurfit Kappa
Smurfit Kappa

Michael Cogley

Smurfit Kappa, paper-based packaging company, posted its third quarter results today which showed a sequential earnings before interest tax depreciation and amortization (EBITDA) increase of 7pc and a pre-exceptional increase in its earnings per share (EPS) of 20pc to date.

Revenues in the group have risen 1pc on the year to date up to €6.02bn while during the third quarter of the year they remained practically constant year on year at €2.02bn.

Operating profits in the first nine months of the year before exceptional items at Smurfit fell by 2pc, down to €551m however its profit before income tax rose by 27pc up to €408m in the year to date.

The group's return on capital employed increased by 15pc, which met the company's targets and the group continues to use its strong free cash flow to reduce its net debt.

Chief executive at Smurfit Kappa, Tony Smurfit said: “The Group’s corrugated packaging volumes grew by over 6pc in the year to date and over 5pc in the quarter as a result of acquisitions in both Europe and the Americas combined with good organic growth.

"There was some evidence of a slower rate of growth in Europe in the third quarter when compared to the second quarter. However, organic growth remains at a solid level, supported by our drive to enhance the value proposition delivered to our customers. Overall demand levels remain good, and as a consequence the European containerboard market remains well balanced. The industry’s solid fundamental outlook and the containerboard price increases implemented in July will support our current focus on driving corrugated price recovery.

“In the Americas, our business has operated well with margins improving through the year despite currency headwinds. Over 80pc of our business in the region is across the three more developed markets of the US, Mexico and Colombia. We will continue to invest in this region where we can identify earnings value enhancing opportunities, as evidenced by our recent acquisition of Sound Packaging in the US in October 2015.

“The Group’s capacity to deliver strong free cash flows expands our range of strategic and financial options. Our capital investment projects are progressing well across all our operating units and our UK mill re-build is now on track. We will continue to deploy capital to grow the business through internal investment and acquisitions where we can exceed our ROCE target of 15pc, and to focus on driving higher capital returns for our shareholders.

“Based on current operating conditions, the Group expects to deliver a full year EBITDA result in line with market expectations. This result reflects the resilience of Smurfit Kappa’s integrated and geographically diversified business model, and the good underlying level of growth in the business.”

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