Smurfit Kappa was named Company of the Month in July by Business and Finance Magazine, Ireland’s leading business magazine.
The Company of the Month Award is given to companies in recognition of outstanding performance for that month both at a national and international level. As well as financial performance, the award honours the role of the management team in that company’s success.
Smurfit Kappa received the award from Business and Finance in July following its reporting of strong quarterly financial results. Shares in the company rose to the highest price in six years, as the company’s second-quarter results beat analyst expectations and drove shares up more than 4%.
Business and Finance pointed out that Smurfit Kappa’s share price rose to over €15 on a number of occasions, the highest since 2007, and that shares have climbed from just under €6 a year ago. This increase came as Smurfit Kappa announced it was rising its interim dividend by 37%.
The magazine quoted Gary McGann, Smurfit Kappa CEO: “Smurfit Kappa Group is pleased to report first half revenue growth of 6% and strong EBITDA of €512mn. The strong result has been achieved through improved pricing, continued cost take-out and enhanced efficiency programmes. In spite of the recessionary conditions in Europe, the Group delivered like-for-like box volume growth in Europe of over 2% year-on-year and 5% volume growth in the Americas, excluding box volumes of SKOC."
The publication also recognised Smurfit’s Kappa’s success in today’s difficult economic environment: “Smurfit Kappa’s ability to win new business in the current challenging operating environment is evidence of the Group’s strong value proposition,” it said. “In July, the Group announced the development of a unique 3D tool entitled ‘Virtual Store’ to enhance the understanding of shopper behaviour. This will translate into real benefits for retail ready packaging design.”
Business and Finance honoured Smurfit Kappa’s good progress in the Americas, particularly in relation to the successful integration of Smurfit Kappa Orange County. “The accretive acquisition of SKOC reflects the Group’s ability to identify, acquire, and integrate complementary businesses,” it said. “The continued focus on increased geographic diversity, together with the integrated model, is underpinning the consistency of SKG’s earnings irrespective of economic circumstances.”
Business and Finance said that Smurfit Kappa’s successful completion of a new €1,375mn refinancing of its senior credit facility on a lower margin unsecured basis comprising a €750mn term loan with a margin of 2.25% and a €625mn revolving credit facility with a margin of 2.00% was “a major milestone in the evolution of the Group’s capital structure and concludes the successful re-positioning of SKG’s debt profile from leveraged to corporate, whilst reducing interest costs by approximately €13mn per annum.”
Lastly, the putting in place of a new receivables securitisation programme of up to €175million by the company was recognised, with such transactions giving financial flexibility, such as the ability to refinance bond debt when appropriate.