Smurfit Kappa today reported pre-tax
profits of €83m for the second quarter of this year, almost
double the same period last year. But this mainly related to
once-off charges a year earlier which did not occur in this
period. There was a 7% year-on-year increase in operating
profit in the first half of 2008.
Underlying earnings
- stripping out once-off costs and share payments - were down 1%
to €257m, while total sales edged up 1% to just under €1.85
billion.
In total, operating profit amounted to €283
million in the first half of 2008 compared to €265 million in
2007, representing an increase of over €18 million. In addition
to this 7% year-on-year increase in operating profit, results
were boosted by a decrease of €33 million in our pre-exceptional
net interest cost, reflecting our lower average level of
indebtedness following the IPO in March 2007. Total finance
costs in 2007 included an exceptional element of €103 million in
respect of debt settlement costs following the paydown of debt
from the IPO proceeds.
Gary McGann, Smurfit
Kappa Group CEO, commented: "The Group is pleased
to report EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) of €514 million for the six month period to 30
June, 2008. A strong cash flow performance has delivered further
net debt reduction for the period.
As anticipated early this year, the Group
expects conditions to remain challenging for the remainder of
2008, characterised by a slow down in corrugated demand growth
and broad-based cost inflation.
Notwithstanding that, we believe that the
Group’s strong customer focus, geographic spread, increasingly
efficient operating platform, strengthened financial capacity
and continued capital restraint will deliver current market
expectations for 2008.
As can be seen from our first half results,
the Group is well positioned to outperform its peers and deliver
strong returns across all metrics through the cycle.”
Barry Dixon of Davy commented today:
"Smurfit Kappa Group (SKG)
has reported Q2 EBITDA of €257m, over 12% ahead of
our forecast. Debt levels fell by €88m to €3,285m,
implying a debt/full-year EBITDA ratio of 3.5 times,
well below banking covenants of 4.75 times. The
outlook is broadly unchanged with market conditions
remaining challenging. It is unlikely that we will
change our full-year EBITDA forecast of €937m.
The performance of
the European packaging business was better than
expected despite flat box prices and lower volumes.
Lower raw material costs and better cost management
contributed to the outperformance.
The Latin American
performance was slightly below expectations, with
box volumes down 2% in the first half of the year.
Cash generation
was impressive at €88m, which included the proceeds
from the sale of Duropack during the quarter.
The outlook
remains unchanged from the end of Q1, with box
demand and pricing likely to be lower in the second
half. This will be offset somewhat by lower raw
material prices and potentially lower-than-forecast
energy prices.
It is unlikely
that we will change our full-year EBITDA forecast of
€938m, which is based on lower box prices and
volumes in the second half. We will have a clearer
idea on this following the conference call at
09.00."
Results Detail
