Smurfit Kappa Group plc, one of the world’s largest integrated manufacturers of paper-based packaging products, today announced results for the 3 months and 9 months ending 30 September, 2008 andreported pre-tax profits of €61m for the three months to the end of September, down from €105.8m the same time last year. Basic earnings per share dropped 56% to 16.8 cent from 38.6 cent the same time last year.
Revenue of €5.4 billion in the first nine months of 2008 was flat compared to the same period in 2007. However, allowing for the negative impact of currency of €91 million and net disposals and closures of €28 million, revenue shows an underlying increase of €96 million, the equivalent of almost 2%.
EBITDA (Earnings before interest, taxes, depreciation and amortization) of €745 million in the first nine months of 2008 was €44 million, or 6% lower than in the comparable period in 2007, mainly reflecting the margin pressure experienced in the Group’s containerboard system, primarily in the third quarter, offset by synergies and cost take-out.
Revenue of €1,753 million in the third quarter of 2008 represents a 4% decrease, or €76 million, compared with revenue of €1,829 million in the third quarter of 2007. Allowing for the negative impact of currency of €31 million offset by net acquisitions, disposals and closures of €2 million, revenue shows an underlying decrease of €47 million, the equivalent of 3%.
At €231 million for the third quarter, EBITDA was €44 million lower than in the same period last year. This includes a negative currency impact of €5 million. On a comparable basis, EBITDA was lower by €39 million, the equivalent of 14% year-on-year.
The group reduced its net debt by €212 million over the first nine months of the year, a 6% reduction.
Gary McGann, Smurfit Kappa Group CEO, commented: "The Group is pleased to report a strong free cash flow performance of €226 million in the first nine months of 2008, double the levels of the corresponding period in 2007. Net debt was significantly reduced over the period.
This positive outcome primarily reflects the benefits of the Group’s integrated model, the resilience of its downstream corrugated business, the superior profitability of its growing Latin American operations and its leading Kraftliner presence across Europe, a market positively influenced by the recent strengthening of the US$.
In the current credit market environment, the Group continues to benefit from its low cost of financing and long term debt profile with no material maturity in the next four years. The Group also benefits from strong liquidity, with approximately €730 million of cash on its balance sheet and unused committed credit lines of approximately €600 million.
As indicated since its first quarter 2008 report, the Group expects conditions to remain challenging for the remainder of the year, characterised by the slowdown in corrugated demand and pressure on pricing. Against that backdrop, the Group is pleased to confirm that it remains on target to deliver the expected level of financial performance in 2008.
While declining interest rates, a stronger dollar, further capacity rationalisation decisions and increased financing risk for the announced new capacity are potentially positive factors as we look forward, nonetheless the Group expects a continuation of tough operating conditions for 2009. In that context, to further increase its cash flow generation capability and to maximise its debt paydown through the cycle, the Group will progressively reduce its capital expenditure from current levels.”
Results detail
