1 August 2012
Smurfit Kappa Group plc (“SKG” or the “Group”) today announced results for the 3 months and 6 months ending 30 June 2012.
Strong EBITDA performance of €500 million in H1. Integrated system underpins quality of earnings
Robust free cash flow of €63 million in Q2. Free cash flow generation will accelerate in H2
Net debt reduced by over €500 million in last 2 years. Net debt/EBITDA of 2.8x well within stated target
Containerboard price increases announced
Full year EBITDA guidance re-affirmed
Performance Review and Outlook
Gary McGann, Smurfit Kappa Group CEO, commented: “SKG is pleased to report a strong EBITDA of €500 million for the first half. This performance is underpinned by the strength of our integrated model, relatively stable box prices in the period, and our continuing focus on cost take-out and operating efficiency. Our Latin American business continues to provide us with geographic diversity, superior margins, and good growth prospects.
In a challenging macro-economic environment, our European box volumes remained stable in the second quarter. This further demonstrates the resilience of our business and the value that our customers place in our strong market offering, service led approach and unrivalled innovation capabilities.
Our first half performance also benefited from our leading position in the increasingly consolidated kraftliner market. The favourable supply/demand balance for that grade allowed us to successfully implement a price increase in the second quarter, with further pricing progress announced for the second half.
In recycled containerboard, the price reduction experienced in Europe since the beginning of April has been more pronounced than the decline in OCC costs, resulting in significant margin compression. To restore viable margins for that part of our business, we recently announced a €100 per tonne price increase.
In the last two years, we have reduced net debt by over €500 million, thereby sustainably reducing financial risk. Our decision at the end of 2011 to re-instate a dividend stream reflects that progress and provides shareholders with certainty of value. The operating and financial disciplines which have contributed to our current strong position are continuing to define our approach to business.
While macro-economic risks remain, we continue to expect a 2012 full year EBITDA similar to that achieved in 2011. Our free cash flow generation will accelerate in the second half, thereby further expanding our available range of strategic and financial options. Our aim is to continue expanding our position as the industry leader in corrugated.”