Smurfit profits rise despite higher costs
Shares in Smurfit Kappa, the Irish cardboard packaging group, spiked yesterday after the firm reported better-than-expected results for the first half of the year.
Operating profit at Smurfit Kappa, which floated in Dublin in March 2007, rose four per cent to €312m (£244m) despite rising energy costs and increased competition from US rivals benefiting from a weaker dollar.
“The group’s strong customer focus, geographic spread, increasingly efficient operating platform, strengthened financial capacity and continued capital restraint will deliver current market expectations for 2008,” said CEO Gary McGann. He added that Smurfit Kappa is “well positioned to outperform its peers”.
Despite the difficult market conditions, which McGann said he expected to remain “challenging” for the remainder of the year, the group managed to reduce net debt by eight per cent over the period to below €3.3bn.
Smurfit Kappa intends to cut costs by €100m by the end of 2010, while another prong of its strategy going forward would be to take advantage of faster growth in emerging markets by expanding in Latin America and China once asset prices fall further.
The stock closed up nine per cent at €4.9 on the Irish Stock Exchange.