Smurfit Kappa looks to China for future growth
Prior to its merger with Kappa Group in 2005, Jefferson Smurfit Group (JSG) had operations in China but pulled out of the country as a means of cutting costs in a tightening global marketplace.
A round of individual media briefings under-taken by the group’s management in Britain last week, resulted in the Daily Telegraph reporting that SKG was eagerly looking to re-enter the Chinese market and had already drawn up a shopping list of takeover and joint venture targets in the country.
However, although the newspaper quoted chief executive Gary McGann as saying that “it is almost inevitable that we will go back into China”, a spokesperson for Smurfit said last night that things were not that far progressed and that no acquisition or joint venture agreement was imminent.
Up until now, the group — which publishes second quarter results next month — has only really talked about Eastern Europe and Latin America as real possibilities for geographic growth.
The business had sales of more than €7 billion last year and its 40,000 employees are based across 22 offices in Europe and nine in Latin America.
However, the latest reports suggest that SKG is specifically on the look-out for box-making factories in China. The whole paper and packaging industry in China grew by nearly 10% last year, a slight slowdown on the previous year but still very strong. The country’s food and beverage packaging sector is expected to see growth of nearly 50% this year — something which is of possible interest to SKG, considering up to 60% of its existing European packaging interests are in the food and beverage field.
After a poor day for Dublin’s ISEQ market yesterday — when just more than €2.4bn was wiped off the combined value of Irish shares — Smurfit Kappa didn’t escape damage, its share price falling by 8c — or 2.32% — to close at €3.20.
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