Smurfit Kappa operating profits jump by a fifth

Smurfit Kappa Group (SKG) has reported strong growth in its first quarter earnings on the back of a strong performance in its Americas business.

The packaging group, which held its annual general meeting in Dublin yesterday, said its earnings before interest, tax depreciation and amortisation climbed by 12 per cent to €269 million, while operating profits rose by 21 per cent to €169 million. Revenues rose by 2 per cent to €1.9 billion.

The company said the strong results also reflected price improvements in its European packaging operations, with European box prices up two per cent. Gary McGann, SKG’s chief executive, acknowledged that the momentum of price increases jad stalled in recent weeks, however.

Mr McGann said the group’s had reduced it financing costs significantly, which has freed up some of its cashflows for other use.

“The first quarter has delivered a strong underlying financial performance as a result of good demand growth and the successful implementation of price increases in the majority of countries,” he said.

“Following a number of years of debt paydown, the company has achieved its desired leverage range and is now focused on incremental high return capital projects and accretive acquisitions while sustaining a progressive dividend policy,” he added.

The group also took out costs of €32 million in the quarter, and said it is on target to achieve its savings target of €100 million for the year.

Speaking to the Irish Times following the AGM, Mr McGann said the company was now focused on seeking out acquisitons in the Americas and Eastern Europe in particular. “We have feet on the street looking for deals,” he said.

When asked about rumours that he was planning his departure, he acknowledged there wasa succession plan in place but saidnothing was imminent: “You never know what might happen.”