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Interim Results

Smurfit Kappa improves H1 pretax profit

27 July 2016 07:44

Smurfit Kappa has improved its H1 pretax profit to €312m, from €243m, with revenue rising to €4.0bn, from €3.9bn. Interim dividend was hiked 10% to 22 euro cents a share.

CEO Tony Smurfit commented:

"We are pleased to deliver a strong first half result with EBITDA growth of 8% to €593 million. This result reflects the strength of our team; our portfolio of geographically diverse operations; and, our integrated business model delivering a strong ROCE of 15.4%.

"In Europe, we have delivered an improved earnings performance in the first half, with organic box volume growth of 2% and a relatively stable pricing environment in local currency terms.

"This result has been achieved despite higher than expected OCC costs, while negatively impacting our margin in the short-term, should provide a solid underpin to containerboard pricing and, in turn, box prices.

"In the Americas we have sustained our strong volume growth. Pricing initiatives across the region have helped offset some of the negative currency impact in the first half and we expect to implement price increases through the second half of the year.

"The Groups proven ability to drive strong free cash flows supports our strategic agenda. We continue to focus on operational efficiency and expanding our geographic reach.

"Our leverage multiple has reduced to 2.5 times net debt to EBITDA in advance of our more cash generative second half of the year. The Boards confidence in the strength of, and prospects for our business, is reflected in a 10 per cent increase in our interim dividend.

"Against a backdrop of higher than expected input costs, more pronounced currency volatility and a greater degree of macroeconomic risk, we expect to have a good year with earnings growth for 2016.

"SKG is well positioned for growth and business development. We are a clear market leader, in a growth industry, with a continuously improving business model. SKG continues to build balance sheet strength which increases the range of strategic and financial options open to us."

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