Fourth Quarter and Full Year Results 2012
SKG Fourth Quarter and Full Year Results 2012
Smurfit Kappa Group today announced results for the 3 months and 12 months ending 31 December 2012.
Full Year 2012 Highlights
Pre-exceptional EPS growth of 8% to 108.3 cent per share
Strong EBITDA of €1,020 million and EBITDA margin of 13.9%
Final dividend per share increased by 37% from 15 cent to 20.5 cent
Two bond transactions completed in 2012 with a combined value of €690 million. A further €400 million bond issued in January 2013 at a rate of 4.125% maturing 2020
Orange County Container Group (‘OCCG’) acquisition finalised on 30 November 2012 and immediately earnings accretive on acquisition
Strong growth in sales to our Pan European customers in 2012
Performance Review & Outlook
Gary McGann, Smurfit Kappa Group CEO commented: “Continuing our drive for earnings growth, we are pleased to report EBITDA of €1,020 million with strong pre-exceptional EPS growth of 8% to 108.3 cent for the full year 2012. Notwithstanding the challenging macro environment, a robust operational performance has allowed SKG to undertake a number of financial and strategic initiatives, which have left the Group in a very good position to drive future growth and deliver increased value to shareholders.
SKG continues to be the best positioned supplier of innovative, market leading paper-based packaging in its chosen markets of Europe and the Americas. The high quality of its earnings is supported by the Group’s market oriented integrated model, the substantial geographic footprint of its operations and its clear focus on customer service which allows SKG to at least meet, and in many cases define, customer needs.
The recovery of only €20 to €30 per tonne of the €100 per tonne testliner price increase sought in the fourth quarter of 2012 has resulted in the price level for these paper grades continuing at an uneconomically low level. As a result, the Group has announced a €60 per tonne price increase for our recycled containerboard grades with effect from 1 February. Throughout 2012 SKG’s kraftliner operations performed well and are benefiting from price increases implemented during the year, alongside efficiency improvements.
In line with SKG’s stated strategy to focus on higher growth markets, the acquisition of OCCG was finalised on 30 November 2012 at a consideration of approximately €260 million, the Group’s first substantial acquisition since the 2007 IPO. OCCG is an integrated paper-based packaging company with significant corrugated and converting operations in Mexico, and two corrugated plants and a paper mill in the United States. Full year 2012 EBITDA for OCCG was US$60 million, compared with pro-forma EBITDA of US$53 million, and the integration of the new company is progressing very well to date.
Reflecting SKG’s increasing ability to fund accretive acquisitions from operating cash flows, net debt has been maintained at 2.7 times EBITDA notwithstanding the acquisition of OCCG. The Group remains committed to its target of remaining below 3.0 times Net Debt/EBITDA through the cycle.
In spite of the continuing challenging environment the Group is reporting a solid start to the year, and in line with SKG’s strong financial progress, the Board is recommending a final dividend of 20.5 cent for 2012, a 37% increase on last year. This step reflects the Board’s confidence in the underlying performance and prospects of the Group and the sustainable strength of its business model”.