12th Feb 2014 10:01
LONDON (Alliance News) - Ireland's Smurfit Kappa Group PLC, one of the world's largest producers of cardboard boxes, Wednesday reported a jump in fourth quarter profits and revenues, driven by a strong performance in the Americas and a slow recovery in Europe.
The company saw its shares rise sharply as it increased its final dividend by 50% to 30.75 euro cents, from 20.50 cents, and predicted further earnings growth for 2014.
It reported a pretax profit of EUR62 million for the fourth quarter of 2013, up from EUR33 million a year earlier, as revenues rose to EUR2.03 billion, from EUR1.82 billion. For the year as a whole, pretax profit fell to EUR294 million, from EUR319 million, hit by exceptional items it had booked earlier in the year and higher finance costs. Full-year revenues rose to EUR7.96 billion, from EUR7.34 billion.
Its return on capital employed rose to 13.1%, from 12.0%.
Smurfit has been cutting costs as part of an attempt to reduce a high debt burden in recent years, while it also refinanced about EUR2 billion in 2013 as it tried to reduce its finance costs. It said net debt declined to EUR2.62 billion at the end of 2013, from EUR2.79 billion a year earlier.
?During 2013 the group has completed its main financial restructuring activity moving from being a leveraged company to achieving a corporate credit profile. As a consequence, the profile of the group has fundamentally changed and the progress made offers the company a wide range of strategic and financial options," Chief Executive Gary McGann said in the statement.
Smurfit said it had hit its cost cutting target in 2013, taking out EUR101 million of incremental costs, and it is looking to take out a further EUR100 million in 2014.
Operationally, revenues were up EUR43 million in Europe in the fourth quarter, mainly thanks to the acquisition of CRP in the UK. The growth was capped by currency moves that went against it. Packaging volumes accelerated to 2% in the quarter, while the company increased prices to cover higher energy and labour costs.
Revenues were up EUR583 million in the Americas for 2013 as a whole, as volumes grew strongly in Argentina and Colombia and its US operation performed well. The company had to raise prices to offset higher input costs in this region too, and currency moves weighed on its euro-denominated results.
McGann said product prices would have to rise further to offset higher energy and labour costs in an interview with CNBC.
However, he said concerns about slowing growth in emerging markets weren't clear cut, noting that much of the recent turmoil in those markets has been about currency devaluation, which can be beneficial to local operations.
McGann said the company is set to continue to with its acquisition strategy as it seeks to grow its businesses in the Americas and Eastern Europe.
Smurfit Kappa shares were up 5.6% at EUR19.14 in London Wednesday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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