Powerflute embarks on the acquisition trail

Powerflute, the Finnish paper and packaging firm part-owned by Smurfit brothers Michael and Dermot, is on the lookout for bolt-on acquisitons after posting strong growth in its 2015 results.

The company saw its revenue more than double to €357 million last year. It said its performance was driven by the "transformational" acquisition of coreboard manufacturer Corenso, which was purchased for €81 million in late 2014.

The addition saw earnings before interest, tax and write-offs rise to €55.2 million, up from just under €21 million in 2014. Net debt, meanwhile, was reduced to €37.1 million from €61.5 million, corresponding to 0.7 times earnings.

As a result of the improved numbers, the company doubled its dividend from 1.5 cent per share to 3 cent per share.

Executive chairman Dermot Smurfit said the Corenso deal doubled the size and profitability of the group "and significantly increased its scale and global presence".

“Although we benefited significantly from favourable market conditions and foreign exchange rates throughout the year, our executive management teams have once again delivered improvement in the underlying operating performance across the group,” he said.

Mr Smurfit later told The Irish Times in an interview that Powerflute "still has a long way to go" to fully integrate Corenso.

“We have restructured a core US plant and a core German plant, and the benefits of those will flow be felt during 2016,” he said.

He said the company is not immediately looking for more acquisitions similar in scale to the Corenso deal, but it “is capable of doing a €200 million transaction in the morning”. It is hunting for smaller deals, however.

Mr Smurfit said a proposed buyout late last year of Powerflute by US Madison Dearborn failed because the price "wasn't high enough". He said he did not know "whether it or anyone else" would come back in for Powerflute.

He declined to comment when asked whether he and his brother, who between them control about 37 per cent, are keen to sell.

“The boardhas expressed huge confidence in the future of the company with the doubling of the dividend. Not many other companies are doing that at the moment,” he said.

Mr Smurfit said he planned to continue growing Powerflute.

“Despite some recent softening of market conditions, both coreboard and cores and packaging papers currently have satisfactory forward order books at price levels comparable with the prior year,” Mr Smurfit said.

“ In the absence of any marked change in the external environment, we currently expect that 2016 will be another successful year for the group.”