Smurfit Kappa reports 2017 revenue growth

Smurfit Kappa reports 2017 revenue growth

Containerboard producer also reports paying $147 million more for recovered fiber compared with 2016.

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February 9, 2018
Edited by Brian Taylor
Financial International Recycling News Paper

Ireland-based Smurfit Kappa Group has reported revenue growth of 5 percent for 2017 compared with 2016 and 7 percent for the fourth quarter of 2017 compared with 2016’s final quarter.

Regarding profitability, CEO Tony Smurfit remarks, “I am pleased to report EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter of €351 million ($431 million), an increase of 10 percent year on year. Our EBITDA margin for the quarter at 15.9 percent also improved both year on year and on a sequential basis. Our full-year EBITDA was €1.24 billion ($1.52 billion), a record for the group, with an EBITDA margin of 14.5 percent.”

As far as business conditions in the containerboard and box-making sectors, Smurfit adds, “Our full year result was delivered against a backdrop of an increase in excess of €120 million ($147 million) in recovered fiber costs, generally higher raw material costs and adverse currency movements.”

Adds Smurfit, “This improved result for the year, and more importantly for the fourth quarter, reflects the benefits of our continued focus on offering our customers cost-effective and innovative solutions, our capital expenditure program, input cost recovery through paper and box price increases and generally strong markets. We also continue to benefit from the group’s geographic reach and integrated model, which support our customers by ensuring security of supply in very tight markets.”

Of its largest market, Smurfit comments, “Our European business showed very strong progression for the quarter, growing its margin to 16.5 percent. This strong performance came as a result of high levels of demand across most product lines and input cost recovery. Security of supply for our customers is key for us and we have been investing accordingly.”

He continues, “In the Americas, reported EBITDA of €311 million ($382 million) and a 14.4 percent margin came in below our expectations. The result was impacted by a number of factors, including increased recovered fiber costs, adverse weather events in the latter half of the year, the continued rise in containerboard prices where we are a significant net buyer of approximately 300,000 metric tons and adverse currency moves.”

Looking forward, Smurfit says, “As we start 2018, the benefits of paper-based packaging are being increasingly recognized as the most sustainable, biodegradable solution for both our customers and their end customers. While we continue to experience currency volatility, wage inflation as well as higher energy and other input costs, 2018 has seen the continuation of good demand in Europe, further input cost recovery and signs of improvement in our Americas business. The group has exciting plans in place to continue our development and sustain our industry leadership into the future.”

Containerboard Earnings report OCC