Smurfit Kappa (SKG) has lifted the price of recycled containerboard by €60 (£51) per tonne for new orders after a surge in demand and tighter inventories. The move takes place against a recently weak price environment for paper and packaging. From an October 2018 peak, European testliner and kraftliner pricing has reduced by €145 per tonne and €185 per tonne, respectively, to December 2019.
“The market has tightened up from… November-December onwards,” said chief executive Tony Smurfit. “As we came into January we have seen a very tight paper market. Others led, and we followed,” he added. The chief executive did, however, highlight the potential risk to demand posed by coronavirus.
Smurfit swung back into pre-tax profit as it avoided a repeat of €1.3bn in costs largely linked to the seizure of its Venezuela operations by President Maduro’s government, which it is contesting. Its cash profit margin rose to 18.2 per cent from 17.3 per cent, while capital expenditure also increased to €730m from €574m last year. In August, however, the company incurred a €124m fine from the Italian Competition Authority over allegations of orchestrating price-fixing with 50 competitors in the corrugated packaging industry, which it is appealing.
Bloomberg consensus forecasts give adjusted EPS of 267¢ in 2020, rising to 283¢ in 2021.
| SMURFIT KAPPA (SKG) | ||||
| ORD PRICE: | 2,838p | MARKET VALUE: | £8bn | |
| TOUCH: | 2,832-2,840p | 12-MONTH HIGH: | 2,976p | LOW: 2,072p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 1,241¢* | NET DEBT: | 116%** | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2015 | 8.11 | 599 | 173 | 68.0 |
| 2016 | 8.16 | 654 | 189 | 79.6 |
| 2017 | 8.56 | 576 | 177 | 87.6 |
| 2018 | 8.95 | -404 | -274 | 72.2 |
| 2019 | 9.05 | 677 | 202 | 80.9 |
| % change | +1 | - | - | +12 |
| Ex-div: | 16 Apr | |||
| Payment: | 15 May | |||
| £1=€1.18. *Includes intangible assets of €2.6bn, or 1,100¢ a share. **Includes lease liabilities of £377m | ||||
