Global packaging giant Smurfit Kappa Group (SKG) reported pre-taxprofits of €105 million for the third quarter, a 24 per cent boost, with a 33 per cent increase for the nine months ending 30 September. This strong performance is in spite of a revenue drop of 2 per cent in the third quarter, to €1,830 billion.
The Ireland-based group posted a 6 per cent increase in EBITDA, reaching €280 million in the quarter, which the group said was a reflection of its "robust" performance. Chief executive Gary McGann said that the full year EBITDA is expected to match 2011's figure, despite difficulties in the market.
EBITDA for its European operations across 21 countries increased by 4 per cent year-on-year in the first nine months to €644 million, as a result of cost-cutting measures and reduced fibre costs.
Total corrugated volumes for Europe were mostly stable in the third quarter with a decline of 1 per cent in the year to date, due to the group's focus on price over volume. Eastern Europe performed well with 3 per cent growth in the Polish box market.
Latin America provided 19 per cent of group revenue, bringing in €1,032 million in the first nine months. SKG said the region "is integral to the long term strategic goals of the Group" as it provides opportunities for growth although EBITDA was down 10 per cent to €160 million in the period.
The group is to acquire Orange County Container Group for $340 million at 5.1x 2012 EBITDA post synergies which will strengthen its position in northern Mexico.
SKG had two successful bond offerings during the period, totalling €690 million.
Smurfit Kappa's "cost take-out programme'' delivered €20 million in savings in the third quarter, with a total saving of €164 million over the last 21 months.
McGann said, "The range of steps we have undertaken in our business positions SKG for performance and growth, and our objective is to continue to deliver a quality earnings stream with industry leading EBITDA margins. The consistent quality of our earnings, together with the relentless focus on cash flow, will enable us to maintain an appropriate debt level and a sustained and progressive dividend policy, whilst continuing to target accretive acquisitions to enhance growth.” (8 Nov)
© 2012 - ESM: European Supermarket Magazine
