Smurfit shares dip on results
Shares in paper and packaging group Smurfit Kappa ended 1.3% lower as it reported a 4% rise in pre-tax profits in the latest quarter, writes Pádraig Hoare.
Pre-tax profits in the fourth quarter of 2017 rose to €161m from €155m a year earlier, as revenues climbed 7% to over €2.2bn.
Full-year pre-tax profits dropped 12% to €576m in 2017 even as revenues grew 5% to over €8.56bn.
Group chief executive Tony Smurfit said: “The result was impacted by a number of factors including increased recovered fibre costs, adverse weather events in the latter half of the year, the continued rise in containerboard prices where we are a significant net buyer of approximately 300,000 tonnes, and adverse currency moves.”
Its earnings before interest, tax, depreciation, and amortisation in the fourth quarter climbed 10% to €351m.
The company said it would invest €1.6bn over the next four years, outside of the €320m it spends annually on maintenance.
The firm has 370 factories in 35 countries, employing 46,000 people.
Mr Smurfit said its European business showed “very strong progression” in the final quarter of the year.
“This strong performance came as a result of high levels of demand across most product lines and input cost recovery. Security of supply for our customers is key for us and we have been investing accordingly,” he said.
Analysts were generally upbeat about the results.
Investec said the €1.6bn investment plan means the firm has “clear projects in place to add five new box plants, 100 conversion machines in box plants, as well as 40 automation investments”.
It said the €1.6bn over the next four years gives the company “a window of around 18 months to find attractive merger and acquisition deals before it pulls the trigger on a new greenfield project, both in the Americas and Europe”.
Goodbody said the earnings generated in Europe “packed a punch”, and said recent investments in Latin America would support a better outlook there in 2018.
Davy said the outlook is positive for the coming year because of continuing strong demand.
The share price for the firm, which has a stock market value of over €6.4bn, were on a rollercoaster during the session. The shares had fallen as much as 4% at one stage, before recovering somewhat.
