Powerflute expects full year to be ahead of expectations

Listed packaging group Powerflute, which is chaired by Dermot Smurfit, has said its full-year performance is likely to be ahead of expectations.

In a trading update issued today, Powerflute said the group has performed strongly during the first half of the year in both its coreboard and cores and packaging papers activities, adding that the outlook for the second half of the year remains positive.

It said market conditions in the US and China remain broadly favourable with regard to coreboard and cores.

The company, which is listed on the AIM market in London, will report interim results on September 8th.

Davy Stockbrokers is forecasting first-half EBITDA of just over €22.3 million which includes the Corenso business for the first time. Full-year EBITDA is forecast at €44.8 million compared with €22 million in 2014 with the increase reflecting the impact of the Corenso acquisition.

Powerflute acquired Corenso, an international cores and cardboard producer, for €81 million last December.

Davy analyst Barry Dixon said these forecasts are based on 2 per cent volume growth in the packaging paper division and just 1 per cent in the cores business.

“Given that both businesses are highly correlated with the performance of corrugated packaging volumes, these growth assumptions could prove conservative,” he added.

Dermot Smurfit owns 15.6 per cent of Powerflute, while his brother Dr Michael Smurfit, former chief executive of the Jefferson Smurfit Group, owns 21.7 per cent.

Powerflute increased revenue by 10 per cent to €72.7 million for the six months to the end of June 2014.