Powerflute's revenue surges 138%

Packaging firm Powerflute is considering further takeover opportunities after seeing its purchase of international cardboard manufacturer, Corenso in 2014, enhance earnings significantly last year.

The Irish-founded firm yesterday reported a 138% surge in annual revenues to €357.2m. Pre-tax profits, for 2015, amounted to €37.7m, up from €8.6m in 2014, and basic earnings per share rose from 2.2c to 9.1c. A 100% increase to 3c per share in annual dividend has also been proposed.

The Dermot Smurfit Snr- founded and chaired firm bought Corenso, for €81m, in late 2014. The deal has been described by management as “transformational” in that it has more than doubled Powerflute’s size and profitability and increased its overall scale and global presence.

In its results announcement, management said it remains “strongly committed” to its strategy of acquiring speciality paper and packaging businesses with established positions in attractive markets.

“We will continue to search for, identify, and explore suitable opportunities while at the same time developing and improving our existing businesses where there continue to be significant potential for profitable growth,” chief executive Marco Casiraghi said.

Powerflute, itself, became a takeover target last year. The Finnish-based firm was approached by US private equity house Madison Dearborn Partners in November but talks were terminated in December. Powerflute ended 2015 with net debt levels of €37.1m. This was down from €61.5m 12 months earlier and means that the company’s debt is now just 0.7 times its earnings and “leaves the group well-positioned to pursue future acquisition opportunities,” according to management. “The results reflect the company’s ability to acquire underperforming assets in niche markets and turn them around through a combination of improved operating efficiency and strategic investment,” Davy Stockbrokers said.

Powerflute’s 2015 performance was driven by a buoyant North American market more than Europe, where it suffered slightly from “sluggish” demand and “intense” competition.

Revenue from the group’s packaging papers division grew €10m to just over €144m, while the coreboard and cores arm saw sales balloon from around €16m to over €213m, again majorly helped by the Corenso deal.