PACKAGING SPECIALIST Smurfit Kappa Group’s operations earned profits of €315 million in the first six months of the year, the company’s latest figures show.
The group said yesterday that revenues in the first half of the year were up 14 per cent on the comparable period in 2010, at €3.67 billion from €3.22 billion.
Operating profits in the first half grew 52 per cent to €315 million from €206 million in 2010.
Its pretax surplus was €136 million. The group recorded a €9 million loss under this heading last year following a number of charges, including finance costs and a once-off payment associated with an asset swap with rival Mondi. Basic earnings per share were 31.3 cent, compared with a loss of 17.4 cent in the first half of 2010. The group paid off €107 million of its debts during the six-month period. It has cut its liabilities by €288 million over the last 12 months.
Chief financial officer Ian Curley said yesterday the group intended to continue paying down its liabilities during the second half of the year.
At the end of June, its net debt stood at €3 billion. It plans to cut this to €2.85 billion by the end of the year. The group will use cashflow to reduce debts.
It generated free cashflow of €78 million in the first half of the year, compared with €69 million in the first six months of 2010.
Mr Curley said the group would likely refinance some of its debt next year. Some of its borrowings fall due in December 2013.
He pointed out that it would be normal practice to arrange to refinance this before it became short-term debt in December 2012.
Smurfit Kappa Group closed a mill in Nanterre, outside Paris, during the first half of the year. This resulted in an one-off charge of €35 million, of which Mr Curley said €18 million to €20 million was cash.
A write-down of the value of the property accounted for the balance. The group is likely to sell this. The Nanterre closure accounted for the bulk of the exceptionals charged to the group’s accounts during the half-year period.
Earnings before interest, tax and write-offs were up 25 per cent at €507 million, from €404 million in the first half of 2010. In the second quarter of this year, earnings jumped 20 per cent to €264 million.
Revenues during that period were up 10 per cent at €1.87 billion from €1.7 billion. Operating profits were up 40 per cent at €167 million from €119 million.
Smurfit manufactures and sells container-board and corrugated board packaging products in Europe, Scandinavia and South America. About 70 per cent of its business is in Europe.
In a statement yesterday, chief executive Gary McGann said that in light of the risks to the global economy, it was not possible to be definitive about the group’s prospects for the rest of the year.
Mr Curley said that volumes continued to grow through July.
Smurfit’s share price fell 2.41 per cent in Dublin yesterday to €5.05 from an opening quote of €5.175. The stock gained ground in early trade but fell back with the rest of the market yesterday afternoon.
