Smurfit Kappa Full Year 2020 Results
Smurfit Kappa Group plc (‘SKG’ or ‘the Group’) today announced results for the full year ending 31 December 2020.
- EBITDA of €1,510 million with an EBITDA margin of 17.7%
- Strong Free Cash Flow of €675 million
- ROCE of 14.6%
- Increased sustainability targets including net zero CO2 emissions by 2050
- Successful capital raise of €660 million to pursue attractive growth opportunities
- Final dividend increased by 8% to 87.4 cent per share
Performance Review and Outlook
Tony Smurfit, Group CEO, commented:
“Smurfit Kappa is pleased to report an EBITDA of €1,510 million for the year 2020, ahead of our stated guidance. Both Europe and the Americas had strong demand in the fourth quarter offsetting significantly higher input costs, predominantly in recovered fibre. In what has been the most challenging year in recent memory I would like to acknowledge the tremendous efforts by all our 46,000 employees, and thank our over 65,000 customers for their continued support.
“Over a number of years SKG has transformed its business through disciplined capital allocation and a focus on innovation, further demonstrated today by our strong performance with an EBITDA of €1,510 million, an EBITDA margin of 17.7%, record free cash flow of €675 million and a ROCE of 14.6%.
“In November, we successfully completed a share placing to capitalise on structural drivers of growth; to invest in sustainability; and to increase our operating efficiencies. SKG is now increasingly well positioned to take advantage of these opportunities, from a position of enhanced financial strength.
“Our European business delivered a very strong performance with an EBITDA of €1,180 million and EBITDA margin of 17.8%. Demand accelerated in the second half, with a particularly strong fourth quarter driven by increased demand across our customer base.
“I am equally pleased with the performance in our Americas region which delivered an EBITDA of €372 million and a record EBITDA margin of 19.7%. This performance is as a result of our very strong market positions, our successful acquisitions and the high-return investments made in the region in recent years.
“SKG recognises the importance of dividends to shareholders and we were pleased to meet all our dividend commitments during 2020. In addition, we have repaid all specific government support schemes related to the pandemic. As noted in our third quarter trading update we initiated a programme during the fourth quarter to further increase our operating efficiency and effectiveness through new ways of working. We have taken an exceptional charge of €35 million in relation to this and expect to realise the benefits within two years.
“In recognition of our employees’ response to the pandemic, SKG made a unique reward in the fourth quarter to every employee. Furthermore, across our 35 countries, the Group has made donations to charities, research and medical institutions and frontline health professionals, in addition to our well established community engagement programmes.
“Our product, paper-based packaging, is renewable, recyclable and biodegradable and plays a fundamental part in addressing our customers’ sustainability challenges. In SKG, we produce our products in an ever more sustainable manner and we have, again, reset our targets in this area. We believe that all industries must do their part in contributing to a better world and we remain committed to using the best available technology to both help us reduce our impact on the planet and to help our customers meet their ambitions.
“Driven by strong secular trends such as e-commerce and sustainability, the outlook for our industry is increasingly positive. SKG has positioned itself as the leading company within the industry, with great people, providing our customers with unique packaging solutions centred around innovation, efficiency and sustainability. The inherent strength of our business together with the recent capital raise provides us with an unrivalled platform to accelerate our vision and the Group’s next phase of growth and development.
“While there remains some uncertainty on the impact and duration of COVID-19, the year has started well with the continuation of the demand trends seen during the last quarter. Reflecting the Board’s confidence in this performance and prospects for the business looking forward, the Board is proposing an increase in the final dividend of 8% to 87.4 cent per share.”
Forward Looking Statements
This Announcement contains certain statements that are forward-looking. Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations of the Group about future events, and involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Although the Group believes that current expectations and assumptions with respect to these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements should therefore be construed in the light of such factors. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. Other than in accordance with legal or regulatory obligations, the Group is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The forward-looking statements in this document do not constitute reports or statements published in compliance with any of Regulations 6 to 8 of the Transparency (Directive 2004/109/EC) Regulations 2007.