Smurfit results in line with expectations for this year

SMURFIT Kappa, one of the world’s largest producers of paper-based packaging, has delivered results in line with expectations for the third quarter of 2010.

Sales of €1.7 billion were 12% better than the third quarter of last year.

As a result of the better sales and improving margins SKG made pre-tax profits of €41m, compared with the €40m loss reported in the same quarter of last year.

EBITDA of €243m was in line with the consensus forecast.

SKG said the third quarter outcome primarily reflected the progress in its European packaging business performance, supported by healthy demand levels and further advances in corrugated price recovery. It added that an incremental €20m of cost savings achieved in the quarter also contributed to the significantly better performance over the same period in 2009.

SKG’s results reflect the positive contribution of its Latin American operations, underlined by the higher EBITDA margin of 17.1% in the region for the first nine months of 2010.

Corrugated demand in Latin America grew at a solid 8% year-on-year in the third quarter, broadly continuing the trend experienced in the first half of the year.

European underlying corrugated volumes were 1% lower than in the second quarter reflecting typical trends within our business, but 3% higher than in the third quarter of 2009, the statement with the results said.

The group enjoyed good cash flow of €128m over the three months allowing a reduction of €168m in the group’s net debt, which is a 5% decline in its overall borrowings. That left net debt at €3.12bn.

Looking ahead, the company said that good market conditions combined with higher input costs underpin continued corrugated price recovery.

The value of the stock fell yesterday by over 3.6% to €7.7800, a dip of 29 cent.