Smurfit says Asia demand behind revenue rise

Strong demand in Asia and increased prices boosted earnings and cashflow at packaging manufacturer Smurfit Kappa during the first nine months of the year, the group said yesterday.

Revenues for the period grew 4.5 per cent to €5.4 billion from €5.2 billion during the first nine months of 2006. Sales for the three months to September 30th grew at similar rate year-on-year to €1.83 billion from €1.73 billion.

Earnings before interest, tax and write-offs (Ebidta) for the nine-month period increased 25.5 per cent to €789 million from €629 million. Third-quarter earnings were up 20 per cent at €275 million this year from €229 million in 2006.

Profit before tax for the nine-month period was €253.4 million from €60 million during the first three quarters of 2006. However, when a number of once-off items, that related mainly restructuring and re-organisation were included, the company ended the period with a €147 million loss, compared with a €160 million loss last year.

Profit before tax and exceptional items for the third quarter hit €114 million from €27 million in 2006. The group generated €150 million in free cashflow during the third quarter, compared with €64 million last year and net debt fell by €157 million to €3.44 billion during the period.

In a statement, Smurfit Kappa said demand had been lower than expected in some European markets during the summer. However, it added that good demand in Asian markets helped to offset this. Prices for corrugated boxes were up 2.8 per cent this year.

Smurfit said that the increase helped to compensate for inflation in raw material costs.

Commenting on the results yesterday, Davy Stockbrokers analyst Barry Dixon said earnings for the third quarter were ahead of the €270 million figure the group predicted for the third quarter.

In a note issued following the results, Mr Dixon forecasted that earnings for the year would reach €1.05 billion. Davy set a price target for the stock of €18. Smurfit Kappa shares closed 2.4 per cent up at €13.11 in Dublin last night.