Paper and packaging specialist Smurfit Kappa has reported a 69 per cent rise in first quarter operating profit to €148 million, compared to €87 million a year earlier.

The company said revenues increased 18 per cent from €1.53 billion to €1.8 billion while Ebitda growth was 32 per cent higher at €242 million, as against €184 million for the same quarter in 2010.

Smurfit’s net debt reduced by €49 million to €3.06 billion. Compared to the same quarter a year earlier, net debt at the end of March 2011 was €101 million lower, the equivalent of a 3 per cent reduction.

Sales revenue was €54 million higher compared to the preceding quarter.

The group said it experienced good demand growth in the first quarter. However, it said the increase in raw materials, energy and other costs has proven sharper and more sustained than previously expected, thereby causing some near-term margin pressure.

Raw material costs were 10 per cent higher compared to the fourth quarter of 2010, the company said, while energy costs rose by 5 per cent.

"Entering the second quarter, while demand remains good, input costs have risen further, which if sustained will require additional price increases,” said Smurfit Kappa chief executive Gary McCann.

“Higher end-product prices, together with SKG’s continuing focus on operating efficiency and strong financial discipline should deliver earnings growth and meaningful debt paydown in 2011," he added.