Shares in paper and packaging giant Smurfit Kappa Group rose over 1% yesterday on the back of a strong set of third quarter figures and indications of improvements in the European market, which still makes up the vast majority of group revenue.
The Dublin-headquartered group reported a 10% year-on-year increase in third quarter revenues (covering the three months to the end of September) to €2.02bn; and an 8% annualised increase in revenue for the first nine months of the year, to just over €5.9bn.
Operating profit — before exceptional items — rose by 4% in the nine months and by 9% (to €196m) for the third quarter.
Ebitda, meanwhile, increased (again, on a pre-exceptional basis) by 5% (year-on-year) to €815m in the nine months and by 9% to €303m for the third quarter.
Commenting on the growth, group chief executive, Gary McGann noted that the Americas (currently a 19%, or so, contributor to annual group revenue) had been a strong contributor to the Ebitda performance in the latest quarter.
“While Europe’s performance has been somewhat weaker, it is showing sequential improvement with initial indications of pricing recovery.
“The Americas provides us with important geographic diversity of earnings and exposure to higher growth markets in the region,” he added.
European revenue in the third quarter rose by €45m, year-on-year, as a result of higher containerboard pricing and in spite of negative currency movements. There was a €141m rise in revenues in the Americas division, meanwhile. SKG’s management recently estimated that annual revenue contribution from its markets outside of Western Europe will nearly double over the next two years, to a combined 40%.
The group said the business remains on track to deliver the expected level of Ebitda growth in 2013.
“The strength of our capital structure today, together with our expectation of materially-improved free cash flow, continues to expand the available range of options to deliver and to drive value from 2014,” Mr McGann added.
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