Packaging group Smurfit Kappa (SKG) saw cash profits (Ebitda) tumble by 13 per cent year-on-year in the six months to 30 June, to €735m (£667m). While the decline was partly down to Covid-19, the deciding factor was actually a drop in box prices.
Europe accounted for more than three-quarters of total cash profits, and volumes were flat across the first half – a 2 per cent increase in the first three months of the year was offset by a 2 per cent dip in the second quarter thanks to the pandemic. Within that movement, there was an uptick in demand from ‘fast moving consumer goods’ (FCMG) customers – particularly in food and healthcare – and a desire for more e-commerce packaging.
But while European prices for testliner cardboard were flat year-on-year, kraftliner prices fell by €25 per tonne. Both remain below the highs reached in October 2018.
Net debt has come down by 6 per cent since the December year-end, to €3.26bn. Equivalent to 2.1 times cash profits, this is within its 1.75 to 2.5 times target range. Meanwhile, lower capital expenditure and a smaller working capital outflow pushed free cash flow up by almost 50 per cent year-on-year to €238m. Full year capex is guided to be between €530m-570m, versus €730m in 2019.
Analyst consensus compiled by FactSet places cash profits at €1.34bn for the full year, down from €1.65bn in 2019.
| SMURFIT KAPPA (SKG) | ||||
| ORD PRICE: | 2,620p | MARKET VALUE: | £ 6.2bn | |
| TOUCH: | 2,618-2,622p | 12-MONTH HIGH: | 3,054p | LOW: 1,831p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 1,287¢* | NET DEBT: | 107% | |
| Half-year to 30 Jun | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 4.62 | 456 | 141 | 27.9 |
| 2020 | 4.20 | 383 | 117 | 80.9 |
| % change | -9 | -16 | -17 | +190 |
| Ex-div: | 13 Aug | |||
| Payment: | 11 Sep | |||
| £1=€1.10, *Includes €2.6bn in intangible assets or 1,085¢ a share | ||||
