31st Oct 2018 08:42
LONDON (Alliance News) - Irish paper and packaging firm Smurfit Kappa Group PLC said Wednesday nine month profit and revenue was boosted by a "very strong" performance.
Smurfit also announced it has acquired two Serbian plants and also appointed a new chairman-elect.
For the nine months ended September, pre-exceptional earnings before interest, taxes, depreciation and amortisation was 27% higher at EUR1.13 billion on the year prior. This was after Ebitda margins improved 290 basis points to 16.9%, while underlying revenue is 7% higher on the year prior.
Net debt stood at 2.1 times Ebitda.
Smurfit explained the "very strong" performance was due to "continued demand" across "most" of its markets. This was combined with "corrugated price recovery initiatives, the continued benefit of our capital investment programmes and lower average recovered fibre costs."
The benefits of this, however, were partially offset by higher labour, energy, and raw material costs as well as foreign exchange headwinds.
"As we start the fourth quarter, we see continued demand growth and further corrugated price recovery," Chief Executive Tony Smurfit said.
"Smurfit Kappa continues to lead the industry, delivering innovative and value added packaging solutions for our customers. In a world increasingly focused on the environment, demand for sustainable packaging solutions will only add to the existing strong secular drivers of corrugated use."
"In May of this year, we stated we expect 2018 to be materially better than 2017," Smurfit added.
"Smurfit is on track to deliver a materially better outcome in 2018 with our key performance measures showing significant and continuing improvement."
In a further announcement on Wednesday, the FTSE 100-listed firm appointed Irial Finan as its chair-designate with immediate effect. Finan - a non-executive at Smurfit since 2012 - served as executive vice president of soft-drinks maker Coca-Cola Co between 2004 and 2017.
Finan will replace current long-standing Chairman Liam O'Mahony from May 3. O'Mahony will have served over 10 years in the role.
"On behalf of the management team I want to sincerely thank Liam for his outstanding contribution to the board and the group over the past 10 years," Tony Smurfit added.
"He has fully dedicated himself to the role of chair and has overseen the significant development of the group over the period. His leadership and guidance has been invaluable and he leaves the group in a position of strength and with exciting prospects in the short, medium and long term."
"I would also like to welcome our new chair, Irial Finan," Tony Smurfit continued. "We look forward to working with him as we continue to build on our position as a global leader in our sector."
In another separate announcement, Smurfit announced it has agreed to buy two Serbian plants for EUR133 million from Kappa Star Group. The deal will see Smurfit acquire the Fabrika Hartije doo Beograd paper mill and Avala Ada doo Beograd corrugated plant in Belgrade.
"We are pleased to announce our agreement to acquire FHB and Avala Ada, which will be a cornerstone to the expansion of our business in Southeast Europe," CEO Smurfit added.
"We look forward to welcoming their experienced teams into the Smurfit Kappa Group, and we are confident their expertise and the high quality of the companies' asset bases will provide us with an excellent platform to grow in the region and further strengthen our European offering for our new and existing customers."
The takeover price is equivalent to a pre-synergy multiple of 7.6 times the expected 2018 Ebitda, implying an anticipated full year Ebitda for the plants of around EUR17.5 million. Smurfit will fund the deal using its existing resources.
Shares in Smurfit were 3.4% higher at 2,638.00 pence on Wednesday.
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