Smurfit core profit down 5 per cent

Packaging group Smurfit Kappa has reported a 5 per cent drop in core profit for its fourth quarter and said it expected to deliver profit growth in 2010.

The company, which is Europe's biggest producer of containerboard, saw earnings before interest, tax, depreciation and amortisation (Ebitda) decline €186 million in the three months ended December 31st 2009 as against €195 million for the same quarter a year earlier.

Fourth quarter revenues were down 6pc to €1,631 million.

"In the fourth quarter of 2009, as anticipated, higher raw material costs compressed margins and affected the Group’s profitability.However, this was largely offset by further cost reduction actions and the commencement of the increase in SKG’s European corrugated and kraftliner pricing," said Smurfit Kappa chief executive Gary McCann.

For fiscal 2009 the company recorded a €52 million pre-tax loss, as against an €11 million loss in 2008.

Full-year Ebitda was down 21 per cent at €741 million while revenue was down 14 per cent to €6,057 million.

"On the demand side, the group has experienced a return to positive volume growth in the last two months of 2009, and continues to see improving order books into 2010," added Mr McCann.

The company said that a further increase in recovered fibre prices in early 2010 "is generating some near-term margin compression within the group’s system."