Smurfit Kappa profits up by 39%

Dublin-based paper and packaging group Smurfit Kappa has reported a 39% year-on-year increase in first-half pre-tax profits, to €190 million.

Basic earnings per share — for the six months to the end of June — were up by 65% on the same period, last year, at 51.6c, but the group’s first half revenue was unchanged — on a year-on-year basis — at €3.68 billion.

SKG’s share price rose by just over 2%, yesterday, on the back of the results to close the day at €6.17.

First half operating profit fell by 3%, year-on-year, to €305m; with the like-for-like second quarter decline measured at 7% to €156m.

Second quarter pre-tax profits were up by 46%, however, to €85m; with revenue for the quarter down by 1% on the same three months of last year to €1.857bn.

Commenting on the results, group chief executive, Gary McGann said: “This performance is underpinned by the strength of our integrated model, relatively stable box prices in the period, and our continuing focus on cost take-out and operating efficiency.

“Our Latin American business continues to provide us with geographic diversity, superior margins and good growth prospects.”

“In a challenging macro-economic environment, our European box volumes remained stable in the second quarter. This further demonstrates the resilience of our business and the value that our customers place in our strong market offering, service-led approach and unrivalled innovation capabilities,” he added.

SKG’s strong EBITDA (earnings before interest, tax, depreciation and amortisation) position remained, although the figure of €500m was down by 1% on the same period last year.

“While macro-economic risks remain, we continue to expect a 2012 full-year EBITDA similar to that achieved in 2011, just over €1bn). Our free cash flow generation will accelerate in the second half, thereby further expanding our available range of strategic and financial options. Our aim is to continue expanding our position as the industry leader in corrugated,” Mr McGann said.

The group’s net debt was reduced by 7% to just under €2.8bn during the second quarter of the year; SKG having now reduced its debt by over €500m in the last two years and reducing its financial risk in the process.

SKG’s board has recommended an interim dividend payment of 7.5c per share to shareholders.