Smurfit Kappa revenues up 14%

Revenues at paper and packaging group Smurfit Kappa rose 14 per cent to €3.67 billion during the first half of 2011.

This compares to revenues of €3.26 billion for the same period last year.

The company returned a profit of €136 million during the first six months of 2011 compared to a loss of €9 million for the same period a year earlier.

Operating profit before exceptional items rose 52 per cent from €206 million to €315 million and the group said it reduced its net debt by €107m in the first half of the year.

Earnings before interest, tax, depreciation and amortisation (Ebitda) charges, and exceptional items rose 25 per cent from €404 million to €507 million.

Earnings per share was 31.3 cent for the six months to June 2011. Adjusting for the exceptional charge in the six months to June of €36 million, pre-exceptional EPS was 47.4 cent.

"We are pleased to report significant net debt reduction of €107 million in the first half. In the last twelve months, we have reduced net debt by €288 million. This strong performance highlights continued disciplined cash flow management, which combined with sustained earnings growth delivered a reduction of our net debt to Ebitda ratio to below 3.0x at the end of June 2011," said group chief executive Gary McCann.

Notwithstanding the positive operating performance in the first half, with risks to the global economy increasing, it is difficult to be definitive about the business outlook. In that context, we are maintaining our focus on delivering enhanced packaging solutions for our customers, while continuing our drive on cost efficiency, corrugated pricing recovery, and debt pay down. Our target is to reduce net debt to €2.85 billion by the year end," he added.

During the first half of 2011, SKG's European corrugated prices increased by 4.5 per cent, including over 2 per cent in the second quarter.

Sales revenues was 10 per cent higher at €1,867 million in the second quarter compared to the same three-month period a year earlier. However, allowing for currency fluctuations and hyperinflation accounting of €32 million, together with a net €10 million in respect of acquisitions, disposals and closures, the underlying increase in revenue was €213 million, the equivalent of approximately 13 per cent.

Compared to the first quarter of 2011, sales revenue in the second quarter was €64 million higher with an underlying increase of €70 million, the equivalent of 4 per cent.

At €264 million, Ebitda in the second quarter was €43 million higher than the same quarter last year. On a comparable basis Ebitda increased year-on-year by €45 million, the equivalent of 21 per cent. Compared to the first quarter of 2011, Ebitda rose by €21 million.

At €132 million, operating profit after exceptional items for the second quarter of 2011 was €55 million higher than in 2010, an increase of approximately 72 per cent.