SKG Q1 2012 Results
Smurfit Kappa Group plc (“SKG” or the “Group”), one of the world’s largest integrated
manufacturers of paper-based packaging products, with operations in Europe and Latin America, today announced results for the three months ending 31 March 2012.
Strong EBITDA of €246 million despite significant cost pressures during the quarter
Performance reflects the strength and efficiency of SKG’s integrated system
Net debt/EBITDA of 2.7x stable versus year-end 2011 despite increased working capital
High input costs and positive supply environment underpin continued pricing progress
Expect full year 2012 EBITDA performance broadly similar to that achieved in 2011
Performance Review and Outlook
Gary McGann, Smurfit Kappa Group CEO, commented: “We are pleased to report a relatively strong EBITDA of €246 million for the first quarter. Despite significant increases in input costs and downward pressure on box prices in the period, our EBITDA margin of 13.5% reflects the efficiency of our integrated system in Europe. Our Latin American businesses also continued to perform well, contributing to 23% of the Group’s overall EBITDA in the quarter.
Basic EPS is 74% up compared to last year, primarily as a result of exceptional gains. Sequentially, both our basic and pre-exceptional EPS declined, largely as a result of a tax credit in the fourth quarter of 2011.
Notwithstanding increased working capital levels in the quarter, our net debt to EBITDA ratio was unchanged at 2.7x at the end of March, and well within our objective of remaining below 3.0x through the cycle. In the first quarter, we successfully completed amendments to our Senior Credit Facility, providing us with increased financial flexibility and extended debt maturities to 2016 and 2017.
During quarter one, 2012, box demand in Europe was stable compared to the fourth quarter, 2011 levels, and industry inventories reduced. This market backdrop combined with rising input costs allowed SKG to implement price increases for testliner and kraftliner during the first quarter and into April 2012 which should underpin some box price recovery during the second half of the year.
For the full year 2012, subject to macro-economic volatility and normal business risk, we expect to deliver an EBITDA performance broadly similar to that achieved in 2011. This will in turn support good free cash flow generation and further de-leveraging, thereby continuing to expand our available range of strategic and financial options.
This strong performance expectation is underpinned by our leadership position in packaging innovation and sustainability, our efficient integrated operating system, and our continued financial discipline at all levels of the company.”