Smurfit achieves 79% rise in profits

Packaging group Smurfit Kappa achieved a 79% increase in profits in the first six months of the year compared to the same period of 2013, it was announced yesterday.

The company’s profits before tax grew from €127m in the first half of 2013 to €228m at the end of June this year.

Its earnings per share and earnings before interest, tax, depreciation, and amortisation also rose.

Chief executive Gary McGann said: “The group’s particular sales approach to international customers in both Europe and the Americas is continuing to make an impact in these markets, with customers increasingly seeking a global and environmentally accredited partner for their packaging solutions.”

Revenues increased by 1% in the first half to €3.95bn, despite a 7% fall in revenue in its operations in the Americas, which resulted from new exchange rate mechanisms adopted in Venezuela.

Davy Stockbrokers analyst Barry Dixon said Smurfit Kappa’s results were impressive and in line with expectations. He added that there could be room for further improvements. “[Smurfit Kappa] has delivered another strong set of results, with 9% year-on-year growth in earnings before interest, tax, depreciation, and amortisation,” he said.

“More importantly, the company views current market conditions as supportive of the recently announced container-board price increases. If successfully implemented, these will drive increases in corrugated prices in 2015, providing a platform for forecast upgrades.”

Merrion Stockbrokers analyst David Holohan said the company had performed well in the first half.

“Management strike an upbeat tone both in terms of the internal efficiency measures that the group has achieved but also in noting that container-board pricing will be supported in the [second half] and demand continues to be good while there continues to be scope to increase corrugated prices during 2015,” he said.