A reassuring outlook and announcement that Smurfit Kappa (SKG) intends to move its primary listing to the London Stock Exchange sent shares in the packaging products manufacturer soaring 13 per cent. Judging from the successes of fellow Irish companies DCC (DCC) and CRH (CRH) when moving to the UK, switching the group's core listing to a nation with a wider pool of potential investors could have huge benefits.
That encouraging news was enhanced by a positive period of trading. Against a backdrop of global economic uncertainty, adjusted cash profits grew 11 per cent to a record €326m (£252m) in the fourth quarter of 2015. A strong contribution from seven businesses acquired for over €380m, decent return on capital investments, cost-cutting and robust demand for packaging helped deliver this success.
In Europe, Smurfit Kappa benefited from its decision to increase containerboard prices by €30 per tonne. This was achieved thanks to strong demand and a lack of new capacity entering the market, a backdrop that management doesn't expect to change any time soon. Elsewhere, corrugated volumes increased by 18 per cent in the Americas in 2015, as acquisitions and strong appetite in the US, Colombia and Mexico helped to offset lower demand in Venezuela. Looking ahead, management is confident that price increases and synergies from new acquisitions can compensate for local currency weakness in South America.
Broker Investec forecasts EPS of 236¢ for the year to December 2016, up from 173¢ in FY2015.
| SMURFIT KAPPA (SKG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,106¢ | MARKET VALUE: | €4.9bn | |
| TOUCH: | 2,106-2,108¢ | 12-MONTH HIGH: | 3,031¢ | LOW: 1,824¢ |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 927¢* | NET DEBT: | 131% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 7.36 | 299 | 93.0 | 15.0 |
| 2012 | 7.34 | 319 | 106.9 | 28.0 |
| 2013 | 7.96 | 294 | 82.2 | 40.8 |
| 2014 | 8.08 | 378 | 106 | 55.4 |
| 2015 | 8.11 | 599 | 173 | 68.0 |
| % change | +0.3 | +58 | +63 | +23 |
Ex-div: 14 Apr Payment: 13 May *Includes intangible assets of €2.5bn, or 10,681¢ a share £1=€1.29 | ||||
