Paper-packaging group Smurfit Kappa has reported a 5% year-on-year increase in revenue, to €4,233 million, for the first six months of 2017. However, group operating profit fell by 8%, to €358 million, while EBITDA decreased by 4%, to €569 million.
Performance
Smurfit Kappa has seen strong demand in Europe so far in 2017, with volumes of corrugated packaging growing by over 2.5%. The group also reported strong volume growth in Colombia, Mexico and Brazil, while Argentina and Venezuela remained challenging.
However, the company notes that high demand in Europe and the Far East has resulted in recovered-fibre costs continuing to increase, up nearly 20% in the first half of 2017, compared to the same period last year.
“We are pleased to report a good set of results for the first half, which were achieved against a backdrop of continued and unprecedented recovered-fibre cost inflation of approximately €75 million year on year," said Tony Smurfit, group CEO. "We are in the process of recovering these input costs as we move through the remainder of 2017 and into 2018."
Outlook
The company completed investments of €177 million during the first half of the year and expects to spend over €400 million by the end of 2017.
It says that growth and cost-reduction investments will continue to improve the prospects of the group across all its business areas.
“While recovered-fibre cost pressures present short-term challenges, Smurfit Kappa Group is better positioned today than at any other point in our recent history," added Smurfit.
"Our capital structure, our asset base, and our integrated business model continue to strengthen. This will enhance our ability to translate today’s market conditions into improved earnings in 2017 and beyond."
The company has increased its interim dividend by 5%, to €0.231 per share.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
