Smurfit Kappa defends results

PAPER and packaging giant Smurfit Kappa Group has defended its performance over the past year, even after seeing its pre-tax losses heighten to €52 million and group revenue fall by 14%.

The company’s full-year 2009 financial results — published yesterday — showed a rise in pre-tax losses from €11m to €52m and a decline in revenue from just over €7 billion to a touch above €6bn.

Operating profit fell by 5% to €267m and the basic loss per share widened from 22.8c, at the end of 2008, to 55.8c as of the end of December. Full-year EBITDA (earnings before interest, tax, depreciation and amortisation) was down by 21% at €741m, and the EBITDA margin fell from 13.3% to 12.2% — a “resilient” result given the state of the international market, according to Smurfit Kappa chief executive Gary McGann.

Net debt was, however, also lowered — by 4% — last year to just over €3bn.

“In the context of a significant collapse in market demand and pricing, this outcome demonstrates the benefits of the group’s ongoing attention to cost and operating efficiency and a sustained contribution from its Latin American operations, which delivered strong profitability and earnings growth in 2009,” Mr McGann added.

The firm’s share price was up by 1.54% — or 10c — yesterday, closing at €6.60.

Higher raw material costs affected SKG’s profitability in the fourth quarter of last year — a three-month spell which saw a year-on-year fall of 6% in revenue to €1.54bn and an annualised turnaround from a quarterly operating loss of €133m to a profit of €51m.

Mr McGann added that further cost reduction actions offset this affect and said that a return to good demand has been evident as the end of 2009 has given way to the first couple of months of 2010.