Wednesday, December 16, 2009
THE packaging giant Smurfit Kappa, which suspended share payments this year, is committed to expansion through takeovers according to chief executive Gary McGann.
He said that the company may carry out deals to produce the level of growth shareholders expect.
He told journalists at a briefing in Dublin that the group’s key acquisition targets would be eastern Europe and South America.
He said that Smurfit wouldn’t chase deals and added that any acquisition would have to be fully justified to the markets.
"We won’t overpay and there would have to be ‘synergies’ capable of having a near immediate positive impact on the bottom line," he said.
Looking to the future he said appetite for risk has changed and the group has had to acknowledge that.
McGann said the group was prepared to move provided a deal satisfied investors while also meeting the group’s strategic needs.
Smurfit Kappa employs about 40,000 people in Europe and South America covering 30 countries.
It has been taking costs out of the system to reflect the global economic downturn which has a huge immediate impact on companies similar to Smurfit Kappa.
Costcutting has resulted in savings of €210 million with a further €40m to be made next year as the group gears up for an increase in demand.
McGann told journalists he doesn’t see a consumer- led recovery anywhere yet.
He added that the shock to the system from the banking collapse and the global economic slowdown has been huge.
On the prospects for Ireland, Mr McGann said "the key question is whether the right steps have been taken" to address the underlying difficulties.
Looking at Ireland from outside it becomes obvious the problems facing the country "are not unique", he said.
Asked if he was confident about our prospects he said: "From an Ireland Inc perspective we have much better educated people than we had in the previous downturn. They have proven themselves in markets all over the world and continue to do so and at the end of the day what natural assets has Ireland got? — its people," he said.
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