Smurfit Kappa eyes more expansion in Americas

Geoff Percival

Paper and packaging giant Smurfit Kappa Group (SKG) is eyeing acquisition opportunities in the Americas as it looks to grow further in the region.

The Dublin-headquartered group last month strengthened its European containerboard division by completing its €460m takeover of Dutch paper and recycling business Reparenco, having itself recently staved off a near-€9bn takeover approach from US group International Paper.

On the back of a strong set of first-half figures — including an 8% year-on-year increase, to €157m, in earnings from its Americas division — SKG chief executive Tony Smurfit said the region holds strong growth options.

“We see the Americas as a region for growth, with ongoing opportunities to expand our geographic reach,” he said.

The Americas reported a year-on-year improvement in EBITDA margin to 15.2% for the first half as the recovery of input costs continues.“Demand is strengthening with improving corrugated growth. Our 2017 mill investments in Mexico and Colombia continue to ramp-up and deliver incremental tonnage for integration

On a group-wide basis, Smurfit Kappa generated revenues of nearly €4.43bn for the first six months of the year, up 5% on the same period last year.

Earnings, on an EBITDA basis, were up 27% at €724m, pre-tax profits were ahead 70% at €416m, and basic earnings per share rose by 68% to 124.5c. Earnings from its European operations grew by 34% to €587m.

SKG’s shares were up by over 3% on the back of the results.

“Free cash flow will be even stronger than currently forecast. This will provide the company with further shareholder value-enhancing options. It is little wonder why the company’s board was so resistant to a takeover,” said Davy.