Paper and packaging giant Smurfit Kappa said trading in the first four months of the year was "significantly ahead" of the same period last year thanks to a tight market and a positive price environment, writes Claire Shoesmith.
Releasing first-quarter results yesterday, the first since it returned to the stock market in March, Smurfit Kappa said earnings before interest, taxation, depreciation and amortisation, and excluding exceptional items, increased 40 per cent to €254 million.
Revenue in the period - the three months to the end of March - was 3.6 per cent ahead of the same period last year at €1.8 billion.
Garry McGann, the group's chief executive, yesterday described the financial performance as solid. "Demand is strong and capacity is increasingly coming into balance across each of our markets."
He also said that inventory levels were significantly below prior-year levels, a factor that boded well for the company going forward.
However, he did acknowledge that Smurfit Kappa was experiencing some pressure on margins, which in turn had affected the overall ebitda margin in the first quarter when compared with the final quarter of last year.
He said pricing pressure tended to be more of an issue at the start of the year, and he expected things to improve as the year progressed.
Analysts were broadly happy with the results, which were in line with expectations, although traders said there was some disappointment in the market that the group had indicated full-year results would be in line with forecasts. Dealers said there had been hope of an upgrade.
As a result, the shares fell almost 2 per cent, or 40 cent, to close at €19.85, although volume was light. Prior to yesterday the stock had risen 16 per cent since it listed in March.
During the period Smurfit Kappa continued the rationalisation of its business following the merger of JSG and Kappa, delivering €34 million worth of synergy benefits. The company also reduced its net debt by €1.3 billion, to €3.5 billion.
Mr McGann said while he could not rule out further closures - last month the company announced plans to shut its carton-manufacturing plant in Coolock, Dublin - there were no immediate plans to close more sites.
