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08 Feb 2012

Q4 and Full Year Results 2011

Smurfit Kappa Group today announced results for the 3 months and 12 months ending 31 December 2011.

Full Year 2011 Highlights
  • EBITDA growth of 12% to €1,015 million
  • Pre-exceptional EPS growth of 69% to €1.00
  • Improved EBITDA margin of 13.8% and ROCE of 12.5% reflects continued operating efficiency
  • Year-end net debt of €2.75 billion, exceeding net debt reduction target. Net debt/EBITDA of 2.7x
  • Launching amendment to further extend debt maturities. Cash balance of €857 million at year-end
  • Strong operating performance & capital structure now provide expanded range of strategic options
  • Dividend reinstatement. The Board recommends a final dividend of 15 cent (current yield of over 3%)

Performance Review & Outlook

Gary McGann, Smurfit Kappa Group CEO commented: “We are pleased to report EBITDA growth of 12% to €1,015 million and pre-exceptional EPS growth of 69% to €1.00 for the full year of 2011. Our strong free cash flow generation delivered a net debt reduction of €358 million to €2.75 billion in 2011, which exceeded our net debt reduction target. Lower net debt combined with a strong EBITDA outcome delivered a reduction of our net debt to EBITDA ratio to 2.7x at year-end.

Our strong financial performance demonstrates the benefits of our continued efficiency improvements and market-leading platform, which delivered material growth in our pan-European business. A number of significant development investments were carried out in 2011, reinforcing our position as the leading integrated business in our industry, in both Europe and Latin America. We are continuing our unrelenting focus on customer service, product innovation and operating efficiency.

Within the past 18 months, we have materially improved the financial profile and flexibility of SKG, by reducing net debt by approximately €540 million, while maintaining a strong liquidity position and diverse funding sources. The amendment request launched today, to extend the maturities of our Senior Credit Facility to 2016 and 2017 and to further increase our financial flexibility, forms part of an ongoing process of efficient balance sheet management.

The sustained strength of our operating performance together with our enhanced capital structure provide us with an expanded range of strategic and financial options. These include continued debt paydown, increased presence in higher growth markets and a progressive dividend stream. Opportunities will be prioritised to maximise shareholder returns, with a clear objective of maintaining a net debt to EBITDA ratio of below 3.0x through the cycle.

While macro-economic risks remain, in 2012 and beyond, we expect to continue delivering strong free cash flow through the cycle. As a consequence of our increased financial flexibility and sustained confidence in the long-term outlook for our business, we are satisfied that it is appropriate and timely for SKG to reinstate a sustainable dividend stream.

Consequently, the Board is recommending a final dividend of 15 cent per share for 2011, currently representing an annualised yield of over 3%.”

SKG Q4 2011 Press Release 8 February 2012