Smurfit Kappa returns to profit
The Dublin-headquartered group said that progress was made in its European packaging division, which benefited from price increases and rising demand levels.
The group is now expecting its free cash flow generation to be “materially stronger” this year, which should translate into “significant” debt pay-down and enhance its range of available strategic and financial options.
“Current business conditions support continued price recovery, with input costs rising and demand remaining strong. Industry inventory levels remain at a satisfactory level and the supply outlook is favourable. These factors — together with our ongoing cost control initiatives — should deliver further performance improvement and earnings growth in 2011,” said chief executive, Gary McGann.
The group’s 2010 full-year results also showed a 53% increase in operating profit, to €409m, a 22% increase in EBITDA to €904m and a 10% rise in revenue to €6.67 billion.
Earnings per share, for the year, amounted to 22.9c, a turnaround from a loss per share of 55.8c in the preceding 12 months.
The fourth quarter saw a 14% year-on-year increase in sales to €1.75bn and a 126% like-for-like rise in operating profit to €115m, despite the company seeing upward pressure on its main operating costs in the final three months of the year.
Meanwhile, the group also saw healthy increases in its other main market, Latin America. The region continues to be a significant contributor to the group’s financial performance, with EBITDA of €200m generated in 2010 and making up 22% of total group earnings for the year. Demand for the company’s products in Mexico increased by 10% last year, and despite the government in Venezuela taking over the assets of many foreign-owned businesses, the company’s intention is “to continue to operate a viable and sustainable business” there. Mexico represents around 4% of its entire revenues.
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