Smurfit Kappa, the corrugated packaging giant, has revealed that its EBITDA rose by more than 27% in the first half of its 2018 fiscal year in its second-quarter report.
The group’s EBITA rose to €724 million in the first half of the year, with EBITDA margin for the period increased to 16.4%, which chief executive Tony Smurfit said reflects the “quality” of its assets, geographic reach and market positions.
“SKG's integrated business model and a performance-led culture continue to drive demonstrably superior returns,” Tony Smurfit said.
“The performance during the first half is a measure of the tremendous efforts of our people and our continued success in developing innovative packaging solutions for our customers.”
Market Performance
In the European market, the group reported an EBITDA margin of 17.3% and corrugated volumes increased by 3%, helped by strong market demands.
The group’s EBITDA margin in the Americas also grew to 15.2% as a result of the recovery of input costs. It also noted that mill investments in Mexico and Colombia “continue to ramp-up and deliver incremental tonnage for integration”.
“We see the Americas as a region for growth with ongoing opportunities to expand our geographic reach,’ Smurfit added.
The group’s first-half performance was greatly boosted by the acquisition of Reparenco in July, the group reports.
Tony Smurfit praised the acquisition of the Dutch recycling business, worth €460 million, and called it a “compelling strategic fit” for the group and delivers a ‘significant and early step in our Medium Term Plan”.
Looking Ahead
As a result of the recent performance and its ongoing opportunities for growth, the group announced an increased medium-term performance with targets including an objective to invest an incremental €1.6 billion above base capex to capitalise on internal and external growth opportunities.
It also announced increased medium-term ROCE target of 17% and a lower target leverage range of 1.75x to 2.5x net debt to EBITDA.
“Our first half performance represents an early yet significant step towards the delivery of these targets,” Tony Smurfit concluded.
“As we start the second half, business conditions remain strong. We are excited about our prospects and we continue to expect our 2018 EBITDA to be materially better than 2017.”
© 2018 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click subscribe to sign up for the Checkout print edition.
