Q3 Results 2017
Smurfit Kappa Group plc today announced results for the 3 months and 9 months ending 30 September 2017
Third Quarter & First Nine Months Key Points
Group revenue growth of 4% for the third quarter and year-to-date
Continued box price progression in the third quarter
Increased sequential EBITDA margin of 15.1%
Solid free cash flow delivery of €152 million for the quarter
Acquisitions in Russia and Greece, expanding the Group’s packaging footprint
Performance Review and Outlook
Tony Smurfit, Group CEO, commented:
“SKG continues to deliver, showing strong sequential progress with Group EBITDA margin at 15.1% for the quarter.
“Total Group corrugated volumes grew 3% for the quarter. Corrugated volumes in Europe improved by 4% on a days-adjusted basis with strong demand in most areas of activity. In the Americas demand growth was 3% with growth in most markets.
“In the third quarter, recovered fibre cost pressures remained, resulting in a headwind of almost €40 million for the quarter and €111 million for the year-to-date compared to 2016. SKG will continue to offset these cost pressures through further corrugated price recovery and ongoing efficiency improvements as we progress towards the year-end and into 2018.
“Reported third quarter EBITDA in Europe was up 3% year-on-year against a backdrop of increased recovered fibre costs of €26 million, with sequential margins expanding to 15.3% reflecting ongoing corrugated price recovery, strong demand in most markets, the continuation of our capital programmes and the strength of our integrated model.
“In the Americas, EBITDA decreased 8% year-on-year primarily as a result of increased input costs and currency headwinds. The region is strongly pursuing input cost recovery, which has contributed to improved sequential EBITDA margins at 15.4%. Recent investments in our mill system provide an improved operating platform for 2018 and beyond.
"We continue to expand our geographic reach through the acquisition of a corrugated plant in central Moscow. This acquisition establishes SKG as the largest international corrugated packaging producer in Russia. In October, we agreed to purchase a high-end display and corrugated business in Greece, which provides us with a platform for future expansion in the region. SKG remains a disciplined acquirer and is committed to growth through acquisition where it creates long-term value for our shareholders and enhances the overall quality of our business.
“The Group’s net debt to EBITDA ratio continues to improve and now stands at 2.3x.
“The demand backdrop remains strong and in these increasingly tight markets, the Group continues to invest in our asset base to support our customers through security of supply.
“The exceptional volatility in global recovered fibre trade flows continues to present some short-term uncertainty. The Group has shown sequential progress within that context, and remains on track to continue corrugated price recovery. We expect to deliver a full year EBITDA in line with current market expectations and will enter 2018 with optimism and good momentum.”