Smurfit growth tipped to continue

Analysts are anticipating Smurfit Kappa Group’s strong performance in the year to date to carry over into 2016, despite management not guiding beyond the end of this year.

The paper and packaging group yesterday reported a near 80% annualised jump in third-quarter pre-tax profits to €165m, and a 27% rise in profitability for the first nine months of the year to €408m.

Group revenue for the year to date is up 1%, year-on-year, at €6.02bn. The strong showing, especially for the third quarter, came against a number of headwinds relating to currency movements and raw material prices.

New chief executive Tony Smurfit said the good performance reflects “the resilience of Smurfit Kappa’s integrated and geographically diversified business model, and the good underlying level of growth in the business.”

In terms of outlook however, he didn’t go beyond saying that management expects a full-year earnings before interest, tax, depreciation. and amortisation (slightly down at €855m for the nine months) result “in-line with market expectations”. But analysts were more adventurous, yesterday.

“While there is no explicit guidance for 2016, comments throughout the results statement imply a relatively positive outlook,” said Barry Dixon of Davy Stockbrokers.

“The demand environment remains solid, despite the slight slowdown in the third quarter and management appears to be confident of recovering the full €30 per tonne increase in corrugated prices,” he said.