Smurfit Kappa posts higher profit after thwarting International Paper

Smurfit Kappa’s first-half profit jumped by almost half after the corrugated packaging company fought off an attempted takeover by International Paper of the US.

Operating profit before exceptional items for the six months to the end of June rose 48% to €529m (£471m) as revenue rose 5% to €4.4bn. Pre-tax profit rose 70% to €416m while earnings before interest, tax and other items increased 27% to €724m.

The FTSE 100 company received two takeover approaches by International Paper in 2018 but the US company withdrew its interest in May when it decided not to launch a hostile bid. Smurfit Kappa argued it had better growth prospects alone and declined to discuss International Paper’s €8.9bn proposal to the frustration of some shareholders.

Dublin-based Smurfit Kappa said it benefited from lower recovered fibre costs worth €73m in the first half. The cost of recovered fibre, used in the company’s products, will rise in the longer term but the short-term outlook is uncertain, the company said.

Tony Smurfit, the company’s chief executive, said: “Our first-half performance reflects the quality of our assets, geographic reach and market positions. As we start the second half, business conditions remain strong. We are excited about our prospects and we continue to expect our 2018 [earnings] to be materially better than 2017.”