Smurfit Kappa forecasts revenue boost

Smurfit Kappa Group has estimated that annual revenue contribution from its markets outside of Western Europe will nearly double over the next two years.

Addressing media at a strategy and outlook briefing in Dublin, yesterday, the paper and packaging giant’s management team said it anticipates revenues from non-Western European markets to represent a combined 40% of group annual sales by 2015.

Currently, SKG’s operations outside of Western Europe make up 23% of overall revenue; 19% in the Americas and 4% from Eastern Europe. Western Europe remains dominant, with a 77% contribution rate. However, by the time of the group’s 2015 full- year earnings presentation; Western Europe is likely to represent 60% of overall group revenue, with other markets contributing 40% of sales; the Americas making up 30% of that.

Management also reiterated its intention to sustain a progressive dividend policy — previously alluded to at its AGM in May.

Yesterday, chief financial officer Ian Curley stated that as profits grow, dividends will grow; while CEO, Gary McGann noted that the business is “now, squarely, back in the zone of looking at shareholders’ best interests”.

SKG restarted paying dividends early last year after suspending them, in 2009, to focus on reducing debt levels. In July, the group said it could save €13m per year from a senior debt refinancing agreement reached with 22 of its lenders and added, yesterday, that it could refinance a further €1bn worth of callable debt this year and next.

SKG showed its best financial results last year, since floating in 2007 and recently-released first-half figures for 2013 showed continued growth.

Management said, yesterday, that while debt lowering is still a priority, it remains alert to acquisition opportunities; having made its first major purchase for some time last year, through the €260m takeover of US packaging firm, Orange County Container Group. Mr McGann said it is unlikely to consider other territories as “plenty of opportunities” still existing in the Americas and Europe.